Special Report: India and China: Shared Visions of a Greater Asia?

2003

Rana Ganguly

Following a ‘blueprint’ agreement for a Free Trade Area (FTA) with the 10-member ASEAN, on Wednesday 7 October, India’s Prime Minister A.B. Vajpayee laid the foundation of a much grander idea, that of a broader Asian Economic Community involving the ASEAN, India, China, Japan and Korea. The economic prospects of other communities like the EU and NAFTA pale in comparison to the promise held by a combined market of about half the world’s population that includes some of the most rapidly growing economies in the eastern hemisphere; if this community were to be formed, that is. Mr. Vajpayee has revived a vision of Asian unity originally conceived by India’s first Prime Minister, Jawaharlal Nehru, after over four decades.

India and China are drawing closer. It is interesting to note that the two neighbours, who fought a border war in 1962 and still have disagreements over the common border, have now agreed to work on their differences and to even hold joint exercises by their armed forces. Shared concerns over cross-border international terrorism being exported by other countries in the region and mutually beneficial symbiotic trade relations, have to an extent helped erase unpalatable memories. Increased bilateral trade and investment between the two giant neighbours, a marked improvement in political relations and greater cooperation in international forums have defined a turning point in Sino-Indian relations. Both neighbours share a cultural heritage and traditional trade relations with the ASEAN countries, and the common ASEAN umbrella provides a forum to address issues of mutual concern, including international terrorism and business interests. Both countries are speeding up efforts to set up a Free Trade Area (FTA) on the lines of similar pacts that they have concluded with ASEAN. They have already set a target to double the trade between them to US$10 billion by 2004.

Recently the two nations teamed up in Cancún along with Brazil, South Africa and several other members of the Cairns Group to drive home the message that developing countries cannot any longer be taken for granted by the developed world in multilateral trade agreements. Negotiations at the WTO meeting at Cancún failed because of non-reciprocity, as the developed world wanted emerging markets to open their markets, but were unwilling to reduce farm subsidies to their farmers in exchange.

China’s emergence as the world’s leading centre for production and trade has put it in a pre-eminent position in the global community. India’s service sector is growing in leaps and bounds, thanks to the might of a highly educated, English-speaking workforce that has managed to corner a lion’s share of the world’s Business Process Outsourcing (BPO) needs besides being the largest player in the global software market. Predictions of India’s GDP growth rate reaching seven to eight per cent in the current year due to good rainfall, crops, improvement in industrial and trade performance and increased government revenue collections have further buoyed the Indian economy.

China took an initiative two years ago in setting up the Asian Economic Forum in Boao, Hainan. Interestingly, this was done after the feasibility of this idea was established by a team led by noted Australian economist, Professor Ross Garnaut. This is further evidence that the two neighbours are in ‘sync’ on the need for Asia’s economic integration. However, it is difficult to predict how other Asian countries will respond to this clarion call for economic integration. If they do, developing a roadmap for economic integration will be the next challenge facing this group.

WATCHPOINT: Will the ASEAN and other Asian countries respond positively to the idea of forming an Asian Economic Community?

 

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