Region

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with China but in India that is not the case. Economists often argue that India is an economy fuelled not by foreign trade but by domestic consumption, however, even on that parameter, such linkages are missing in case of India.

Japan, South Korea and Australiamajor economies of the Asia-Pacific region–are not only prominent stakeholders in the Chinese economy but are also in the list of top ten trading partners of China. The US also has huge stakes in the Chinese economy and is in the list of China’s top five major trading partners. On mutual investments Japan, South Korea and Australia show encouraging trends with China.

In case of India, however, while China is the biggest trading partner, more than three-fourth of the total trade comes from imports (thus, the balance of trade is in China’s favour), with abysmal Chinese investments in India. Surprisingly, both Japan and South Korea do not even figure in the list of top five trading partners of India.

Clearly, India has remained aloof from the rise of other Asian powers and has not greatly benefitted from their economic capabilities so far, a trend that needs immediate course correction. Nevertheless, recent advances in

India-China: Handshake for Regional Parity India-China growth story seems incomplete because of the regional disparity and also the fact that the two economies cannot rise without having substantial linkages with each other and other countries on the eastern flank.

Dr Rahul Mishra

T

he rise of India and China has been phenomenal in the last decade, contributing to the rise of Asia. Apart from India and China, Japan, South Korea and the ASEAN member countries, particularly Indonesia, have also contributed to the rise of Asia in the global system. Yet, being the two of the biggest countries in demographic, geographic and economic terms, with biggest armed forces in the world, these two giant Asian neighbours definitely have greater roles to play than the other countries.

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trade ties and investment agreements with Japan offer a score of opportunities. Visit by the Indian Prime Minister Modi to Japan in August-September 2014 was a good start in this regard.

Japan has promised to invest in India, especially in the infrastructure sector, which is a welcome move. Additionally, India has also become one of the largest recipients of Japanese ODA (Official Development Assistance).

In comparison to Japan and South Korea, India and China seem far behind in terms of comprehensive development. Though it can be said that due to huge geographic size, India and China have not achieved a uniformly developed state, but the fact remains that regional disparity has marred their success story.

BCIM-EC Is onE of thE Many InItIatIvEs takEn or supportEd By IndIa to addrEss thE ChallEngE of rEgIonal dIsparIty and ConnECtIvIty wIth thE nEIghBourIng CountrIEs InCludIng ChIna, MyanMar and BangladEsh

BCIM Economic Corridor (BCIM-EC) Substantial proofs of regional disparity in India and China are the Northeastern states of India and Southwestern regions of China respectively. For reasons more than one, the two respective regions of India and China could not achieve their desired potential in the past half-a-century.

Cognizant of the pressing need to develop these underdeveloped areas, India and China seem to be pinning their hopes on the BCIM-EC (Bangladesh, China, India, Myanmar Economic Corridor). The other virtue of the BCIM-EC is that it not only aims to connect the two underdeveloped regions of India and China, but also the two immediate neighbours, Bangladesh and Myanmar, which have been struggling with underdevelopment and poverty for the past several decades.

BCIM-EC is one of the many initiatives taken or supported by India to address the challenge of regional disparity. The other initiatives include BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral, Technological and Economic Cooperation) and MGC (Mekong Ganga Cooperation). However, BCIM-EC is the only initiative that includes both China and India as

Rise of India and China To a great extent, rise of India and China, at least in economic terms, has not been influenced by each other. So far, both India and China have realised their goals without much economic inter-linkages. While in the case of China, such linkages are provided by Japan, South Korea and Australia; in the case of India, such robust linkages are yet to evolve, primarily due to the fact that India is yet to achieve such strong trade, commerce and investment linkages with the global economic system. For instance, while in the case of China-eight of its top ten trading partners have 100 billion plus trade figure January–February 2015  India-China Chronicle |43|

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members at a sub-regional level.

BCIM-EC, initiated in 1999, a Track II dialogue process, was termed as the ‘Kunming Initiative’ in the beginning.

With the convening of the BCIM Car Rally in early 2013, the initiative got a major fillip. Subsequently, in May 2013, when the Chinese Premier Li Keqiang visited India, further discussions were held in terms of strengthening the BCIM initiative.

Subsequently, the Ministry of External Affairs, Government of India, established the Indian component of the Joint Study Group and involved the Indian Council of World Affairs (ICWA). ICWA convened a day-long seminar on BCIM-EC in early December 2013, to ‘deliberate on numerous issues pertaining to various facets of the BCIM-EC particularly the ‘3 Cs’

namely: ‘connectivity’, ‘commodity’ and ‘customs’, that have direct implications for India and the other partner countries of the BCIM-EC. Later, on December 18-19, 2013, the First JSG meeting was held in Kunming, China, which was attended by representatives from the four governments, a range of academicians and enterprises. The meeting was a milestone in the BCIM process as it marked the official launch of the intergovernmental process of BCIM-EC. During the meeting, it was agreed that “the proposed Corridor could run from Kunming (China) in the East to Kolkata (India) in the West, broadly spanning the region, including Mandalay (Myanmar), Dhaka and Chittagong (Bangladesh).” It was further stated in the meeting that, “With the linkages of

transport, energy and telecommunication networks, the Corridor will form a thriving economic belt that will promote common development of areas along the Corridor.”

In order to sharpen the attempts to make the BCIM-EC more effective, four primary areas were earmarked: physical connectivity, trade in goods, services and investment including finance, environmentally sustainable development and people-to-people contacts.

When President Xi Jinping, paid a state visit to India on September 17-19, 2014, the issues pertaining to BCIMEC figured in the discussions between him and the Indian leaders.

The second meeting of the JSG was held at Cox’s Bazar in Bangladesh on December 17-18, 2014. One

Six Conditions for a Successful BCIM-EC In order to tap the full potential of the BCIM-EC, some steps need to be taken. It is in this context that six conditions may be listed: 1. Mutual investments: more economic linkages are needed to ensure that India and China grow together and shed the baggage of mutual distrust. During his India visit, the Chinese President Xi Jinping promised around US$ 20 billion investments in India, which needs to be converted into reality. Compared to the Chinese investments in other big economies of the Asia-Pacific– (Japan, South Korea and Australia) China’s investment in India is almost negligible. A massive trade imbalance, which is in favour of China, has posed further challenges for the bilateral ties.

2. More joint projects for infrastructure development: India and China’s recent initiative to establish the BRICS Bank (New Development Bank) and the Asian Infrastructure Investment Bank (AIIB) are two promising initiatives that have the potential to transform the underdeveloped patches lying in the territories of the member countries into growth zones.

AIIB can be of great help in realising the objectives of the BCIM-EC. 3. India should seek support from Japan, South Korea, Singapore and Australia: As mentioned above, India has to partner with other major stakeholders of the Asia-Pacific in strengthening trade and investment inter-linkages, particularly with regard to developing its Northeastern states. BCIM-EC offers an unprecedented opportunity in engaging the major

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Asia-Pacific economies such as Japan, South Korea, Australia and Singapore, which are also the key countries in infrastructure development and power generation projects.

4. Equitable outcomes: An essential requisite for making BCIM-EC a success is active participation and share of Bangladesh and Myanmar. The grouping must not be confined to the perspectives of India and China and attempts must be made to ensure that this sub-regional grouping remains equitable and a mutually beneficial project for all and involves Bangladesh and Myanmar in all respects.

5. More communications: Due to the lack of substantive people-to-people contacts, India-China relations have been mostly driven by their respective central governments. Unlike India’s border with Myanmar, Bangladesh and even Pakistan there are no ethnic communities (except Tibetans, which is a much complicated issue) along the two sides of the border that can effectively influence the relations. Therefore, there are no ‘bottom up’ pressures on the Government to bring more warmth into the border relations. More peopleto-people contacts at all levels are needed to improve bilateral communications.

6. Settling India-China border mistrust: Last but not the least, there needs to be mutually agreeable resolution to the boundary dispute otherwise it would be extremely difficult for BCIM-EC to realise its fullest potential. China should take the lead in resolving the boundary in a fashion that it is agreeable to both the parties.

of the key points of discussion during the meeting was on reviving the K2K (Kunming-Ruili-Bhamo-Lashio-Mandalay-Tamu-Imphal-Sylhet-DhakaKolkata) route. The route, which is more than 2500 km long, is part of the old Silk Route. During the meeting it was also agreed that each member country would provide their vision of the BCIM-EC during the next meeting, to be held in Kolkata, India in 2015. Clearly, regular interactions among the leaders and the academicians prove that both India and China are keen to promote the BCIM-EC and help realise the stated goals.

Scholars, who accuse India of being a reluctant partner in the BCIM-EC, argue that India is not keen to go ahead with the project, as it is nervous of China’s rise. One cannot deny that mutual distrust, at least on a few issues, does prevail between India and China. However, instead of shying away from it and overlooking the matter, both India and China need to work on troublesome issues including

whIlE IndIa nEEds to BalanCE Its tradE wIth ChIna, It also has to systEMatICally sEEk ChInEsE, JapanEsE and south korEan forEIgn dIrECt InvEstMEnts In kEy arEas suCh as InfrastruCturE dEvElopMEnt, powEr supply, sanItatIon, transport, EtC the boundary dispute and trade imbalance. One of the fundamental concerns for India has been prolonged India-China boundary dispute. During Xi Jinping’s India visit, Prime Minister Modi raised the issue and pointed out that such incidents affect cordial bilateral ties. The onus lies on China to ensure that the problem is resolved

with utmost urgency so as to allay Indian apprehensions. China, being the bigger partner, needs to ‘travel more than half’ to make BCIM-EC a reality. Taking such a step would not be a standalone and an exceptional move; in the 1990s China took such steps in materialising the GMS (Greater Mekong Subregional) initiative to improve ties with the Central Asian Republics.

China has resolved its land boundary disputes with almost all its neighbours including Vietnam, which is believed to be its old rival. Cooperation, trust and mutual respect are the two-way channels based on reciprocity. 

Dr. Rahul Mishra is Research Fellow at the Indian Council of World Affairs, New Delhi.

Views expressed are those of the author and do not reflect the views of the ICWA

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