Promoting Common Development of China and India by G20
As we know, China will host the G20 Summit for the first time in 2016. In the background of globalization, how China and India could cooperate and forge consensus through the G20 mechanism means a lot to global economic recovery, as well as peace and development of the world. What kind of contribution can India, as a member of BRICS and a founding member of the Asian Infrastructure Investment Bank (AIIB), make in G20? And, how can China and India learn from each other and work together to increase the influence of emerging countries in the international arena? We interviewed experts and scholars on these questions.
G20 Helps India Attract Investments
Professor Alan Alexandroff from the Munk School of Global Affairs at the University of Toronto, Canada, believes that the 2016 G20 Summit will inspire new ideas, develop a new order and promote multilateral cooperation, so as to facilitate the emergence of new international political concepts and rules. Besides, it will pay more attention to the interests and voices of developing countries.
On July 12, 2016, the Research Institute for Indian Ocean Economies (RIIO) of Yunnan University of Finance, the CASS Institute of Asia-Pacific and Global Strategy, South Asian Studies and the Social Sciences Documentation Publishing House jointly released the Blue Book of Indian Ocean Region: Annual Report on the Development of the Indian Ocean Region (2016) (hereinafter, the “Blue Book”). It mentions that since China and India are increasingly facing similar challenges, working together would exert a positive and deep influence on the world’s geopolitical pattern as well as the economic development of the two countries.
The Blue Book points out that because of the challenges from home and abroad, it may not be easy for India to achieve its expected high economic growth rate of 7 percent in the short or medium term. Given the domestic factors, the growth of the Indian economy largely relies on bulk commodity and energy imports. Considering the weak global recovery, lowering of the prices can reduce the deficit ratio and strengthen the purchasing power of the Indian people. So in a short time, it may be good for the Indian economy as a whole. In the long run, however, once the prices are raised again, the Indian economy would find it even harder to grow. As for the international factors, India readjusted its development strategy towards strengthening its connection with the global economy. But with the slowdown of global economic growth, especially among the major economic powers, it may exert a negative influence on the future of the Indian economy.
Parthasarathi Shome, adviser to the Indian Finance Minister, thinks that by mobilizing global savings, G20 could boost infrastructure construction, enhance global governance in fields such as energy, food and water security and climate change, and tackle problems such as the increasing financialization of bulk commodities and its impact on prices. In addition, he pointed out that with the G20 mechanism, India could attract more foreign direct investments and improve its competitiveness worldwide. Therefore, the Indian government hopes to enhance mutual trust with China and other G20 countries and consistently attract more sustainable external investments. So far, the Indian government has launched many preferential policies on foreign investments, tariff and taxes, especially to encourage sustainable and job-creating investments, such as infrastructure-building projects.
Joint Effort to Enhance Overall Influence of Developing Countries
Sanjeev Kumar, a research fellow focusing on China-related issues at the Indian Council of World Affairs, told us in an interview that as the two largest developing countries, as well as the two most populous nations with rapid economic growth, China and India are playing an increasingly important role in the world. By hosting the G20 Summit, initiating the AIIB and playing a leading role in the BRICS’ New Development Bank (NDB), China will probably make a greater contribution to the international community in the future. In the meantime, it has also increased the overall influence of emerging economies. India is going to work with China to safeguard the interests of developing countries and drive the economic growth of the emerging countries, which is one of the key areas of China-India cooperation.
Kumar also mentioned that in the backdrop of a sluggish global recovery, G20 provides good opportunities for its member countries to achieve common development and maintain a steady global financial market. Therefore, the G20 should encourage infrastructure investments worldwide to boost sustainable economic growth. Beyond that, it should also push its member countries to launch preferential tax policies to realize mutual benefits, and focus on 2030 sustainable development goals to promote the development of “green finance.” China is expected to facilitate the establishment of an efficient global economic architecture, and build a unified and harmonious working mechanism among the Bretton Woods system, AIIB and NDB. However, because of the bad infrastructure construction situation in Asia, a joint effort of the AIIB, World Bank and other multi-lateral organizations is necessary to break through the development bottleneck and reduce poverty and inequality.
By contrasting the development paths of China and India, Kumar remarks that India expects China’s supply-side reform to work well and solve many of the problems witnessed in the past. But, in its 13th Five-Year Plan, there are many new ideas that China has introduced. China and India have similarities in many fields, some of which have been mentioned by Chinese Premier Li Keqiang during Indian President Pranab Mukherjee’s visit to China, such as China’s “Internet +” and India’s “Digital India,” Made in China 2025 and Make in India. Within the platform of G20, different countries could quickly get connected and learn from each other. In the future, China and India have great potential for cooperation in trade, investment, manufacturing, information technology, smart cities and so on. As the second largest shareholder of the AIIB, India still needs to improve its domestic infrastructure construction. Hopefully, within the platform of AIIB, India can strengthen cooperation with China in railway construction and other areas.