Upcoming SCO summit an opportunity for India to repair economic ties with China

Source: Global Times Published: 2020/11/6 22:58:40

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The 20th Meeting of the Council of Heads of Member States of the Shanghai Cooperation Organization (SCO) will be held virtually on Tuesday, and is expected to solidify member states' consensus on coping with regional and global challenges amid the COVID-19 pandemic. It could also serve as a turning point for escalating China-India tensions due to border issue and deteriorating economic and trade relations soured by India's decoupling moves.

Driven by excessive reaction to irrational anti-China sentiment in India after the border conflict, India has been making moves to decouple its economic and trade relations with China this year.

This is in sharp contrast to the fact that trade between China and India has increased over the past months. Trade data shows that India's economy simply cannot decouple from China. First, India has rigid requirements for many of China's cost-effective goods, so it must increase imports from China. Meanwhile, demand for imports in foreign markets has declined this year. Currently only China has beaten back the epidemic, and realized economic recovery. Therefore, India's exports increasingly depend on Chinese market.

In terms of production, India can't become totally independent of the current industrial chain, which China serves as a key link. China is indispensable to India's manufacturing, equipment, raw materials, engineering technology, and capital. Indian industries such as pharmaceuticals and mobile phones will continue to rely on China in the short term.

As long as India still seeks economic development, especially the development of its manufacturing, it cannot do without economic ties with China. Until India develops its large-scale manufacturing industry, it will need closer ties with China in terms of trade, investment and other aspects, and during this process will become more dependent on China.

If India faces China with a positive and healthy mindset, its economic development will benefit. If India continues to let irrational anti-China sentiment take its toll, it will undoubtedly lose development opportunities.

Facing the new round of industrial globalization, the adjustment of industrial structure and the transfer of industries provide opportunities for India. If India does not seize these opportunities and refuses to improve cooperation, production capacity will be transferred to other countries, such as Bangladesh, Myanmar and Pakistan.

If India wants to develop manufacturing, it also needs to improve its infrastructure. India alone cannot efficiently make these improvements in a short period of time. China also has a very strong ability to improve infrastructure, so the two sides still have a lot of room for cooperation in the field of infrastructure. China can increase the development of India's manufacturing industry.

The upcoming SCO summit provides a good opportunity for India to show good will and repair the bilateral ties with China and improve economic cooperation. Once China and India reverse the downward spiraling of bilateral relationships, economic cooperation will pick up from its current low point.

During last week's virtual meeting between SCO economic and trade ministers, the member states reached consensus that they will strengthen solidarity and cooperation in response to fallout from the pandemic on socioeconomic development in the region, jointly uphold the stability of supply chains and the market and safeguard the multilateral trading system.

China continues to make open and positive gestures to increase economic cooperation with India, It's crucial for India to return to the rational and abandon extreme anti-China sentiments and catch opportunities for its virus-hit economy and overcome current difficulties.

China and India should establish more dialogue mechanisms for economic and trade cooperation. In addition to the macro-level strategic dialogue mechanism, China and India can establish corresponding dialogue mechanisms in investment, trade, and finance. Such efforts will create more opportunities for China-India economic cooperation. The growing room for industrial transfers and cooperation between China and India is vast. It depends on how the two sides promote it and make it a reality.

The article was compiled based on an interview with Long Xingchun, president of the Chengdu Institute of World Affairs. bizopinion@globaltimes.com.cn


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