Lt Gen S L Narasimhan, Director General of CCCS,
Ms. Manjeet Kripalani, CEO of Gateway House, Mumbai,
Distinguished guests, friends,
It is my pleasure to join the inauguration of the Seminar on the topic of "Leveraging China’s Economy”. At the outset, let me express my appreciation to CCCS and Gateway House for organizing this seminar.
2. Over the course of two days, I gather that there will be discussions on different facets of China’s economy. China is our largest neighbour. With its GDP reaching USD 14.7 trillion in 2020, China’s economy is the second largest in the world. Under the shadow of ongoing COVID-19 pandemic, China is the only major economy to have registered positive growth in 2020. Being the largest contributor to the world trade and our largest trading partner, it is imperative for us to have a better understanding of China’s economy.
3. Our relations generally followed a positive trajectory since 1988 when we reestablished contacts at the highest level. We were engaged in developing a broad-based bilateral relationship. The advancement of ties in this period was clearly predicated on ensuring that peace and tranquility were not disturbed. The areas of cooperation were not limited to bilateral but also had regional and global dimensions. It was also recognized that relations between India and China were in the interest of not only our two countries but also in the interest of peace, stability and security in the region and world at large.
4. It was against this backdrop that bilateral trade between India and China has grown exponentially since the turn of the century. Last year, the total trade volume between the two countries was around US$ 88 billion. In the first nine months of this year, our bilateral trade touched US$ 90 billion, an increase of 49% over last year. At this rate, we are likely to attain the highest ever bilateral trade between two countries. The trade, however, remains unbalanced with a large trade balance in favour of China.
5. Our trade deficit concerns are twofold – the first, is the actual size of the deficit. Trade deficit for the nine months period stood at US$ 47 billion. This is the largest trade deficit we have with any country. Second, is the fact that the imbalance has continuously been widening. There are a number of market access impediments including a whole host of non-tariff barriers, for most of our agricultural products and the sectors we are competitive in, such as pharmaceuticals, IT/ITES, etc.
6. We have highlighted that widening deficit and increase in trade barriers are issues of concern. These have been regularly flagged at the highest level, most recently at the 2nd Informal Summit between our Prime Minister and the Chinese President in Chennai in 2019. We also remain firm in our commitment of placing this trade relationship on a more sustainable footing and raising these issues at all appropriate occasions with the Chinese side. Developments since then, including COVID-19 pandemic, have not been helpful in our efforts to address these concerns. Furthermore, the developments along the LAC in Eastern Ladakh have seriously disturbed the peace and tranquility in border areas. This has obviously had an impact on the broader relationship too.
7. Even as we continue to pursue these issues with China, we also need to do work at home. That is why, Atmanirbhar Bharat – an India with greater capabilities not just helping itself but being a force for good in the international arena, becomes important.
8. The digital economy is now an integral part of India’s development story. In July 2015, Hon’ble Prime Minister Shri Narendra Modi launched the "Digital India” campaign, with the aim of transforming India into a digitally empowered society and knowledge economy. Initiatives like JAM (Jan Dhan-Aadhaar-Mobile) trinity, launch of UPI platform and increase in access to internet have led to a rapid digitization of our economy. According to ACI Worldwide’s report, India recorded 25.5 billion real time online transactions in year 2020, the highest for any country. It is expected that, by 2025, digital payments will account for around 71.7% of all the payments in India. This digital ecosystem has also spurred the rapid growth of Indian startups; India is now home to over 60 unicorns, many of which are based in the digital economy domain.
9. China is a comparable example which has also seen similar growth of its digital economy. China is also experimenting with concepts like digital currency. Therefore, understanding of "Digital China” can offer valuable insights to our policymakers as well as industry.
10. Restrictions imposed on the movement and gathering of people so as to control COVID-19 have impacted economies worldwide and recovery has been uneven. In our case, India’s GDP grew by 20.1% in the first quarter of FY 2021-22, indicating a V-shaped recovery. The IMF estimates that the Indian economy will grow by 9.5% in 2021 and by 8.5% in financial year 2022.
11. COVID-19 has also brought forth challenges in the current form of globalization where only profit considerations have led to a very high degree of concentration of supply chain and markets. The world today is looking at making supply chains resilient and also more trustworthy.
12. On the domestic front, our ongoing reforms and initiatives like Production Linked Incentives (PLI) scheme will also contribute to enhance the resilience of India’s manufacturing sector. We are regularly reviewing and reforming our investment regime to suit the current situation.
13. Our External Affairs Minister has said that the ability of India and China to work together will determine the Asian century. For this to materialise, peace and tranquility in the border areas is a sine qua non. He has also clearly articulated that development of our ties can only be based on mutuality – mutual respect, mutual sensitivity and mutual interests should guide this process. We hope that the Chinese side will work with us to bring a satisfactory resolution to the current issues so as to make progress on our bilateral relations keeping in view each other’s sensitivities, aspirations and interests.
14. Before I conclude, I would once again like to thank CCCS and Gateway House for inviting me for this inaugural session of this seminar.