Pragmatic approach can help India learn from China’s economic development path

By Hu Weijia Source:Global Times Published: 2017/8/29 23:48:39

At a sensitive moment during the just-concluded military border stand-off in Doklam, an agenda released by Indian Finance Minister Arun Jaitley hailed China's economic muscle, according to the Hindustan Times. The agenda, prepared by Indian government think tank Niti Aayog, underscored the need to replicate China's special economic zones (SEZs) as a shortcut to catch up with China.

Amid the military stand-off and the emergence of nationalistic sentiment in India, it took courage to praise China's economic achievements and draw up a plan to learn from its "rival." It is the pragmatic approach of Indian elites that deserves China's attention.

The agenda hinted that India may want to give top priority to development instead of complicated strategic games that will drain its energy. It should take into consideration the radical reforms undertaken by New Delhi late last year and the first half of this year that aim to break the shackles on business. India's determination to pursue leapfrog economic development will increase the competitiveness of its economy.

Neither China nor India can ignore their increasingly intense competition, but benign competition should be welcomed. If India wants to replicate China's SEZs, China will most likely be willing to offer help.

China is witnessing a boom in outbound investment, with its direct investment to India in 2016 six times higher than the year before.

Although the just-concluded military border stand-off in Doklam raised some tensions, bilateral economic cooperation never stopped, reflecting the flexibility of economic ties induced by political and military pressure. Chinese companies may become a potential target for India's efforts to attract investment into its SEZs.

However, it would be unwise to simply blindly copy the experience of China's SEZs. Three decades ago when Chinese people had little buying power, transnational enterprises could profit after they invested in China's export-oriented SEZs by relying on sales in mature markets like the US and the EU.

Given India's rapid growth in private consumption, it is worth considering the establishment of SEZs that will focus on both exports and domestic consumption. SEZs should suit India's national conditions and be integrated into the new round of Indian reforms.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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