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#3782, 31 December 2012
Second Sino- Indian Strategic Economic Dialogue: A SWOT Analysis
Teshu Singh
Research Officer, CRP, IPCS
E-mail: teshusinghdu@gmail.com

The second Sino- Indian Strategic Economic Dialogue (SED) took place during 26-27 November 2012. The Chairman of the National Development and Reform Commission (NDRC) of China, Zhang Ping and Vice Chairman of the Planning Commission of India, Montek Singh Ahluwalia attended the Dialogue along with their delegations. What has the Dialogue achieved so far? What are its strengths and weaknesses?

The strength of the Dialogue can be analysed by the success of the first SED held in September 2011 in Beijing (http://www.ipcs.org/pdf_file/issue/IB184-Teshu-IndiaChina.pdf). Following the success of the previous Dialogue, eleven agreements were signed entailing investment of over USD 5.2 billion. Major agreements signed at the government level were in four areas; the Planning Commission and NDRC signed an agreement to undertake joint studies, the Bureau of Energy Efficiency, Ministry of Power, India and NDRC on enhancing cooperation in the field of energy efficiency, the Ministry of Railways, India and Ministry of Railways of China on enhancing technical cooperation in the railway sector, between the National Association of Software and Services Companies (NASSCOM), India and the China Software Industry Association (CSIA) on Enhancing Cooperation in the IT/ITES Sector (http://www.indianembassy.org.cn/newsDetails.aspx?NewsId=383).

Secondly, the Dialogue was conducted by the apex institution of both countries. It was between the NDRC and Planning Commission, which are the policy formulation bodies of India and China, respectively. Zhang Ping was of the opinion, “this Dialogue is not only about speaking but is actually about doing”. The plan behind the Dialogue is to share experiences in economic development and broaden the bilateral relationship. Further, the Dialogue aims to foster greater cooperation and communication between the two countries. Thirdly, the sectors identified in the agreements are the areas in which both countries are facing serious problems and need cooperation.

No major initiatives were announced during the Dialogue except for the fact that it carried the momentum established during the “Beijing Round” forward.

According to the Economic Times, Indian exports to China totalled USD 16.3 billion, which accounts for a 13.3 per cent decline from last year. Neither side spelled out as to how the issue will be resolved. Further, how the agreements signed are going to be implemented without reducing the trade deficit was not explicitly mentioned.

The twenty first century is poised to be an Asian one. This Dialogue can provide a platform for both sides to work together. For example; the energy sector, which is quite a grave problem for both countries. India has the biggest railway network in the world and is interested in renovating it. Chinese assistance in this would be highly beneficial, especially in the High Speed Railways (HSR). Protecting the environment is yet another area where both countries are concerned about the impact of rapid economic growth on the environment.

Other than the US, India is the second country with which China has signed such an agreement. The bilateral trade between the two countries has risen from USD three billion in 2000 to USD seventy four billion in 2012 and is poised to reach USD hundred billion. Thus, the Dialogue is an acknowledgement of the fact that despite the looming trade deficit between the two countries, they have agreed to discuss macroeconomic issues. The bilateral relationship has moved beyond trade to include investments as well. As reviewed, the first Dialogue has made adequate progress. Thus, it can be an effective CBM to look at economic issues in the future.

In wake of the leadership change, this is particularly important as the new leadership is expected to bring new dynamism to the Sino-Indian relationship, building new windows of opportunities.

Moreover, India and China have stood the litmus test of the global financial crisis by maintaining a steady GDP of 5.5 per cent and 7.4 per cent respectively, in 2012. Hence, in the present economic order, it has become pertinent for both Asian giants to raise the level of their economic engagement with each other. The holding of the second Dialogue itself is a sign of enthusiasm from both sides. Essentially, it is a platform to exchange opinions held by the two engines of economic growth of the world. Thus, the Dialogue confirms the fact that economic linkages between the two countries can eventually create a friendly atmosphere for other impending issues.

Security issues have always been a primary concern for India vis-a-vis China. Optimistically, China has advocated for a Free Trade Area (FTA). However, New Delhi is sceptical to sign a FTA with China since this would continue to flood Indian markets with Chinese goods and further accentuate the trade imbalance. Hence, it is imperative to understand the nature of threats that could emanate from the Dialogue.

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