Dr Liu Youfa, Consul General, Peoples Republic of China in Mumbai
Did you know that the volume of trade between India and China has increased over 10 times in the past 11 years? Indeed, the bilateral trade climbed to almost $50 billion during the first nine months of the last fiscal, making China Indias top trading partner. One-and-a-half years ago, both countries readjusted their policies to boost economic relations. It was at this time that Dr Liu Youfa, Consul General, Peoples Republic of China in Mumbai, was posted to India to offer his expertise as an economist. They say, experience is the leader of all things - this holds true for the diplomat, who joined the foreign service in 1977 and is now serving his last posting in India.
"We have every reason to foresee a bright future for bilateral relations," Dr Youfa says, supporting this with three reasons: first, Indias Prime Minister Narendra Modi is pragmatic and strategic in running his party and government powerfully; second, both countries are major economies at the same stage of economic and social development; and third, one can choose friends but never neighbours. Insisting that we will get nowhere unless we deal with our neighbours in a friendly manner, he elaborates upon the Sino-Indian trade relationship in conversation with SHRIYAL SETHUMADHAVAN.
How do you see the trade ties of Asias two largest neighbours developing?
China and India are natural partners in trade. However, our bilateral trade is yet to realise its full potential to benefit both economies in terms of growth modality and industrial structure readjustments. To achieve this, both countries should take stock of the momentum of political relations and chart out a new roadmap for bilateral trade. First, both sides should produce more tradable goods to meet the market expectations of the other side. Second, areas for trade should be expanded so more goods can be traded effectively. Third, two-way investment should be encouraged to cut down on the trade deficit on the Indian side. Fourth, industrial cooperation should be expedited to help offset the trade imbalance. And last, both sides should cut down on trade protectionist measures that have held back the growth of bilateral trade. Also, we have every reason to expect that our new leaders and governments will kick off a brand new start in terms of two-way trade and investment.
What has been the trade flow, over the past two to three years?
For the past few years, our bilateral trade volume was hovering around $65 billion and, two-way investment stood at $4 billion, with the Tata Group being the biggest investor in China. In terms of contract project engineering, Chinese companies have been constructing power projects across India; this has involved a total capital injection of over $10 billion and a considerable inflow of goods and services. In line with the agreement between Chinas President Xi Jinping and Indias Prime Minister Narendra Modi, we should see a drastic growth in project cooperation in modernisation of the existing railway systems across India, and in the construction of new fast railway networks and highways. Both countries should strive to move forward our win-win cooperation while compartmentalising pending issues such as border disputes and security exertions.
How can China contribute to developing Indias infrastructure?
It is a fact that infrastructure is one outstanding short board of the Indian economy, while China has basically gone through the pain of national construction in the said field, and has accumulated all the experience and project managerial knowhow that my Indian friends can tap into. In India, infrastructure has become the most tangible area at the moment to once again kick-start our win-win cooperation. That said, we should see some real progress in cooperation in terms of railway system upgrade, fast-speed railway system construction, power generation, subways, highways, intercity commuter train systems, etc.
With the Indian Government allocating Rs 7,000-crore plus for smart cities in India, what role can China play?
Smart cities are a new concept that came up from the developed countries or economies; today, it is the future for all developing countries. The construction of smart cities started in China a few years ago. As a result, the Chinese government has gathered some experience and companies have accumulated technologies in this regard and construction experience in the managerial hub. We see Chinese companies forming partnerships with local companies to drive the construction of smart cities.
Chinas National Development and Reform Commission recently listed 80 infrastructure projects that foreign investors can participate in. Are there any opportunities for Indian companies here?
Yes; these projects are meant to further improve Chinas national network of highways, railways, city transportation networks, ports, hydropower stations, wind-power stations, oil and gas pipelines, as well as projects in the coal chemistry and petroleum industries. As China and India are both members of BRICS and G20, Indian companies will have direct access to the project bidding in line with their economic and technical merits.
Can you share any success stories of China-based companies with a growing and profitable business in India and vice versa?
Since our countries established the strategic partner relationship in 2005, there has been a gradual increase of two-way investment, during which there have been success stories from both sides. From the Chinese side, Huawei, Sany and SEPCO III Electric Power Construction Corporation have established themselves in India. From the Indian side, the Tata Group and Mahindra have been successful in China with their patented products and service. In fact, the Tata Group now has over 20 enterprises spreading across China.
What important projects are both countries currently collaborating on or eyeing?
In a recent meeting in Brazil, Prime Minister Modi and President Jinping agreed that both countries would step up cooperation in railway construction, which would result in more business opportunities for companies from both sides. The two leaders have also agreed to kick-start the construction of industrial parks where entrepreneurs from both sides can launch various projects in clusters.
What are the existing challenges in Sino-Indian economic relations? What measures are being taken by both countries to overcome these?
Some challenges have become stumbling blocks for the healthy growth of trade and economic relations. First, the lack of political trust has been weighing on the Indian side. Second, in terms of market access, project review and follow-up services, when projects or enterprises are materialised in India, relevant Indian authorities are yet to meet benchmarks with prompt actions. Third, both sides need to drastically remove technical and non-technical barriers so that business communities are able to carry out normal trade and investment activities in line with the legal, industrial and market frameworks. Fourth, we should expedite the promotion of two-way investment and industrial cooperation that have fallen far behind political relations. Fifth and last, both sides should carry out more serious dialogues through which they can compare industrial policy stands and set out mutually agreed principles and guidelines for entrepreneurs from both countries. So far, both governments have demonstrated the political will to elevate our economic relations to a higher level while resolving some tough issues.
As a saying goes, when we have spotted the problems, we are naturally not far away from identifying the ways and means to tackle them.
Whats your message to Indian companies to leverage emerging opportunities with China?
From the economic perspective, sound infrastructure networks are preconditions for any sustainable economic and social development. The sooner we join hands for this, the better prospects we will have in our bilateral relations. Hence, we should expedite dialogues to identify feasible projects for immediate cooperation. We should readjust our relevant industrial policies, which will help remove the glass door effects so that relevant projects can be carried out smoothly. We should also encourage investors from both sides to form JV enterprises to take stock of their comparative advantages and strive for win-win cooperation. And the relevant government institutions and their missions to the other country should serve as the media for project information and policy advisers in the above regard.
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