Wang Jinzhen, the Secretary General of China's Council for the Promotion of International Trade (CCPIT), recently accepted an interview on Sino-Indian economic and trade development. According to Wang, there are some problems which have hindered the normal development of bilateral economic and trade relations between the two countries which must be resolved as soon as possible.

Cooperation is more than the wish of the government

Reporter: A report recently published by the World Economic Forum shows that in the 2006 global competitiveness rankings, China is 11 places behind India. Some people have therefore likened China and India to the tortoise and the hare in Aesop's famous fable. What do you think?

Wang: China and India are following two very different development models. Both are moving towards prosperity. Reform and opening up in China began in 1978 which prompted rapid economic growth. India's Congress Party also launched reform in 1991, which followed a policy of liberalization and globalization. Last year, China's GDP was the fourth largest in the world and India also ranked in the top ten. Both China and India are experiencing rapid economic development and expect a bright future. This has attracted worldwide attention.

It doesn't matter whether China surpasses India. The key issue is how to keep China on a path of sound development, with long-term, rapid and sustainable growth. There is a prevailing belief in the international community that India will overtake China by 2020. This statement lacks statistical evidence.

To use the analogy of the race between the tortoise and the hare for the competition between China and India is fantastic. Only when the hare naps does the tortoise overtake the hare. China will never 'nap' in the process of its economic development.

Reporter: There is a belief that Sino-Indian cooperation is the wish of the government rather than the people. What do you think about that?

Wang: In my opinion, Sino-Indian economic and technological cooperation is very promising and the two countries are moving towards economic, trade and sci-tech exchange.

The rapidly developing markets of China and India have been a rich source of imports and exports for them both

The economies of India and China are highly complementary, which will allow space for the two to further expand economic, trade, scientific and technological cooperation.

One of the most important reasons for the significant improvement in Sino-Indian relations is that China and India have now had some successful experiences in international cooperation.

According to a research report from the Federation of Indian Chambers of Commerce and Industry, China may replace the United States as India's largest trading partner. Since the start of this century, trade between China and India has grown rapidly, increasing from $2.914 billion in 2000 to $18.7 billion in 2005. Indian companies have also accelerated the rate of investment in China. Indian software giants TCS, Infosys, Satyam and NIIT have already entered the Chinese market. Sino-Indian economic and trade cooperation is not only the wish of the two governments, but also of the people. However, the views of some people overseas remind us to reflect seriously on how to better cooperate.

India and China need to cooperate better

Reporter: Can you explain in detail how India and China could cooperate better?

Wang: India has not yet recognized China's status as a market economy. Bilateral trade between the two countries is lacking in variety. The process for applying for a permit to run a business in India is not transparent. Chinese-invested enterprises are often treated unfairly at auction in India. All these problems have hindered the normal development of bilateral economic and trade relations and need to be resolved as soon as possible.

At present, the most important issue for the Chinese and Indian governments is to sign treaties that prevent double taxation and give investment protection in accordance with international practice. This will help trade and investment liberalization and promote economic, trade, scientific and technological cooperation.

India has adopted a fairly open foreign capital policy in recent years. However, it still has certain restrictions on Chinese investment in sensitive areas, areas which India say threaten national security. China and India will need to start cooperating in energy, technology and investment as well as expand technological and economic cooperation from government level to non-government and enterprise level.

Reporter: In what fields do you think China and India should strengthen cooperation?

Wang: Rapid Sino-Indian economic growth has occurred in accordance with increasing bilateral trade and is a very important prerequisite for the development of Sino-Indian trade as well as scientific and technological cooperation in the future.

China and India should accelerate mutual investment. India should further open up its investment market to China.

The two countries should also strengthen cooperation in the field of energy. A consequence of economic development is a demand for resources. China and India have already cooperated to purchase overseas energy supplies, and this partnership should be extended in the future.

China and India should also tap into the potential of further technological cooperation. They have made some important progress in the fields of science and technology. China has obvious potential and advantages in mechanical and electrical manufacturing industries; India is still at the initial stage of development of home electrical appliance manufacturing. They are the world's largest pharmaceutical manufacturers, but both conduct little pharmaceutical research of their own. There is a great opportunity for them to cooperate in this field. China and India already cooperate in the fields of iron and steel, but there is room for that to be expanded too.

"Twin engines" theory worthy of study

Reporter: There is another popular analogy for China and India; that China and India are like the twin engines of an aircraft. What are your thoughts on economic and trade cooperation between China and India at present?

Wang: Everyone is watching exchange and cooperation between the world's two fastest growing and most populous countries. In recent years, along with the improvement of political relations between the two countries, Sino-Indian economic cooperation has been gradually extended from trade in general merchandise trade to cooperation in fields such as technical cooperation, project contracting, and investment. However, this cooperation has really only just begun. The market potential of the two countries is still to be fully tapped. They should promote bilateral trade and put more emphasis on their complementary economies rather than competition. They should work together to expand their share of trade in the international market, rather than haggling over every dollar.

China and India are two great Asian economies, yet the volume of trade between them is not equal to the scale of overall foreign trade. China's trade with India accounted for only 0.8 percent of the entire volume of its gross foreign trade. India's accounted for approximately 5 percent.

Reporter: In your opinion, how can we take full advantage of the "twin engine" effect?

Wang: First of all, China and India should deepen mutual understanding and trust. Although in business circles there are frequent exchanges, there is still much to learn. Only by fully understanding each other can they build a solid foundation for creditable enterprises and develop trust between entrepreneurs.

They also need to make more convenient trade policies and create a better trade environment. Apart from the absence of an agreement on trade protection, as both China and India are developing countries undergoing economic reform, they still have a number of economic policies that hinder the development of bilateral trade. India's problem is more obvious. In addition to regular anti-dumping investigations into Chinese commodities, India's backward infrastructure is a major obstacle. For this reason, both countries need to devote themselves to trade facilitation to promote bilateral economic development.

Given the great potential for hardware and software cooperation between China and India, the two countries must work towards greater cooperation. The geo-economic advantages of Sino-Indian cooperation would enable the two countries to speed-up economic development. If they can help each other, learn from each other, and actively cooperate with each other, the results will be very positive. The twin engine effect of Sino-Indian economic and trade cooperation will not only benefit the people of both countries but also the entire Asian and world economy.

By People's Daily Online