India and China have a deep and old connect which can be revived with greater exchange of businessmen, tourists and scholars with easy liberal availability of visas for people-to-people engagement.
For the past two decades, China and India, the ancient two civilisations, have been trying to add a new contemporary economic dimension to their relationship. Indian imports from China have been over $60 billion per year for the last three years, while the exports have been around $10 billion per year. The trade deficit of last year was around $50 billion, many times higher than what it was earlier — $142 million in 1996-97 and $9 billion in 2006-07. Widening trade deficit is a challenge that needs to be addressed as 44.39% of India’s total global trade deficit in 2015-16 was with China.
Many initiatives in India, like ‘Make in India’, ‘Digital India’, new bankruptcy law, formation of the Monetary Policy Committee by the Reserve Bank of India to fix interest rates and now the rollout of the Good and Service Tax (GST) provide good opportunities and environment for China to invest in India.
To facilitate such information, ORF Kolkata, at the request of the Consul General of The People’s Republic of China in Kolkata, recently prepared a report in English and Mandarin titled “Sustainable Investment Opportunities in five eastern Indian states” — Bihar, West Bengal, Odisha, Jharkhand and Chattisgarh. This report is published on the website of the Chinese Consulate in Kolkata. It gives an overview of sectoral opportunities and existing policies to help familiarise prospective investors with relevant data and analysis.
I was also invited to China by some think thanks to further create awareness and familiarise prospective investors. During my ten day trip, I interacted with senior representatives of think tanks, chamber of commerce, department of commerce, leading industrial houses and universities in Kunming, Chengdu, Shanghai and Beijing. Interactions with such a wide cross section of the society, including young and bright students, common people, tourist guides and translators/interpreters made me more aware firsthand about the state of the Chinese economy, key drivers of success and the Chinese culture than on my previous visits. I had visited China in 2006 to deliver a talk at the Hart World Energy Conference and in 2012 to deliver the keynote address at Jacob’s Asia Petcoke Conference.
Let me summarise my understanding of key takeaways from my recent trip:
One | The Chinese economy has been strong in the first half of 2017, with an annualised growth projected to reach at least 6.7%. Considering the size of the economy — at around $11.8 trillion now — it is extremely challenging to hope for a double digital growth as in the past. Foreign exchange reserves of $3.056 trillion in June, up by 0.11 percent over the previous month, are a stabilising factor. Maintaining a high growth rate despite global uncertainties has been possible due to strong government investment in infrastructure projects, domestic consumption and continued focus on exports.
Two | Investment in infrastructure and modernisation is still the key to economic progress. A new big airport is coming up in south of Beijing, a T3 terminal is being built at the Shanghai Pudong International Airport while countless subways, bullet trains, housing projects, etc. give the feel of an unabated construction boom. At the same time, new and high technology sectors, e-commerce, financial services, tourism, healthcare and entertainment are adding gross value to the economy.
Three | While business remains highly optimistic, there is uncertainty around housing market. One can see rows and rows of unoccupied houses in the western, central and eastern regions. The government is trying to control home prices and avoid any bubble in the real estate sector. In some cities, the colonies of unoccupied multistoreyed buildings are referred by people as “Ghost Towns”! Hopefully, with rising incomes and success of efforts by the government, the supply overhang in this sector may get reduced over time.
Four | All across cities, one can see the success of bike sharing Industry. More than 10 million shared bikes are on the streets of Chinese cities currently, operated by over 30 companies. The leading companies, Mobike and Ofo, have a market share of more than 90 percent. Dedicated tracts for plying bikes help provide safety and last mile connectivity, besides helping people stay fit. Use of technology for pick and drop and making payments has helped the number of people using shared bikes reach a level of about 19 million at the end of last year as compared to 2.45 million in the year before.
As the number of bike sharing population is increasing manifold, a set of Industry standards to regulate the sector are being formulated for the structured growth of the industry. It is a good initiative with multiple benefits and can form a template for Indian cities as well.
Five | A clear focus for aspiring stewardship in cutting edge technology areas exists. As an example, in the domain of Artificial Intelligence (AI), China wants to lead the world. It sees AI as an effective tool to boost industrial productivity and empower employees. As per reports, AI is likely to contribute $15.7 trillion to the global economy by 2030 and China is targeting to be its biggest beneficiary. Since China has around 700 million internet users, it can safely leverage the user base as a competitive leverage.
In the Internet of Things (IoT) connections, China expects 1.75 billion connections by 2020. China Mobile, the world’s largest telecom carrier by subscribers, has established an IoT alliance with nine partners, including Alibaba and Huawei, to establish an open and sharing IoT industry ecosystem.
While access to Facebook, Google, Twitter is not officially available in China, the country has developed its own Baidu.com and WeChat like offerings to meet the demand for such applications. One can see the impact of WeChat in China in all provinces. Old or young, poor or rich, male or female, east or west, everyone in hooked to WeChat for almost everything — booking tickets, making payments, entering parks and temples, chatting with people, transactional correspondence. In short, China moves on WeChat. It is a fit case for a case study to understand the process and marketing communications support if we are to increase digital footprint to reduce cash transactions in India. In return, surely India can help China in improving its on time performance of its airlines in the domestic sector!.
Six | China’s energy consumption and production is also undergoing a transformation. Coal output has dropped by around 8 percent. The number of working days at coal mines has dropped to 276 days from 330 days earlier. The consumption of solar energy has increased by 71.5 percent year on year in 2016, wind power has increased by 29.4 percent and nuclear by 24.5 percent. It has contributed to about 40 percent of renewable global growth and has surpassed the US to become the largest producer of renewable power.
This has helped in the reduction of carbon dioxide emissions by 0.17 percent in 2016 from 2015. China has committed to work as per Paris Agreement.
Seven | Like the ‘Make in India’ focus to attract investors in manufacturing, China too has its own “Made in China 2025” programme. However, the government is promoting a province-to- province based approach for attracting investment. For example, in Shanghai, the eastern province, foreign capital is welcome in financial, Internet, cultural and few other sectors. In Sichuan, the south west province, and Henan, in central China, foreign investment is encouraged in high end manufacturing, green manufacturing and smart manufacturing.
However, rising labour costs in China are affecting competitiveness. The average white collar wages in the top three cities have already reached Yuan 8000 per month (Rs. 10 Lakh per year), indicating the likely pressure on blue collar labour costs in future.
Due to historical and legacy issues, lack of awareness about opportunities and absence of “success stories” by Chinese in the manufacturing sector in eastern India is a reality. A sustained and structured intervention is required to promote awareness about sectoral, state-wise opportunities along with focus on “ease of doing business”. Capacity building for creating a professional pool of translators/interpretators in India, a dedicated help desk at each state with nominated people to coordinate for approvals are some of the urgently required steps to address the need gaps. Every university or industry or organisation in China has a nominated person who coordinates for visits and interaction with foreign visitors, which is helpful for smooth transactions and successful meetings.
Tourism and education sectors can be our quick hit sectors for inward investment. At present, India does not attract even 0.5 percent of outward tourism from China and Buddhist shrines in India can provide an excellent asset. The work done by the provinces to revive heritage areas of their old cities, culture and market their potential for promoting domestic and foreign tourism is worth emulating. Over 10 million people visit the Great Wall in Beijing every year. The cleanliness of temples and places of tourist attractions is of high order leaving an excellent impression on visitors.
Eight | Society at large seems happy, safe and secure. One can see women workforce everywhere, during day and night, from frisking passengers at airports to manning toll collection centres to managing shops and establishments — jobs that are generally performed by men in India. People now are more transparent, free and frank in expressing their views unlike during my first visit in 2006. President Xi Jinping is respected all across for his drive against corruption and commitment to provide growth with employment. People are working hard to survive. Nothing is free. Entry fee is levied at temples, parks, places of tourist attraction, etc. for both domestic and foreign tourists. One can say, China is defining a new order of ‘Socialism with Chinese characteristics’.
Unlike in the past, media too is accommodating diverse views. An article on ‘Power and Responsibility’ published in the Global Times on July 6, 2017 described how Chinese public have divergent views on taking a global leadership role, as US turns inward. Chinese netizens are not in favaour of the country taking on any kind of international leadership role. They would like the country to focus on development.
Nine | The average Chinese citizens across all provinces I visited seem to have a better grasp of reading, writing and arithmetic. Perhaps, this may be explained by how we measure “literacy”.
As per the Census 2011, India has 74 percent of total population aged seven and above which is literate as compared to 65 percent in 2001. The figure of literates may be around 80 percent now. As per policy in vogue, for the purpose of Census, a person aged seven and above, who can both read and write with understanding in any language, is treated as literate. Hence, it has no relation to attainment of formal or minimum educational qualification.
However, literacy in China is measured by the number of recognised or known characters by an individual, normally 1500 characters for rural dwellers and 2000 characters for urban dwellers, thereby linking it to some educational attainment. Need for specifying such a deminis level is seen as key for economic development and has emerged as a key theme of reform. The overall literacy rate in China is 96.4% (2015) with 98.2% (male literates) and 94.5% (female literates). This is a significant achievement from the overall literacy of 65.5% in 1982, with 79.1% male literates and 51.1% female literates.
Need for greater exchange of research scholars and cooperation in education sector is widely emphasised by the academic community in China. Greater number of seats in the educational institutes of repute in India can open up a vast untapped opportunity.
Ten | It is common to see big banners and danglers at airports, hotels, public places, educational institutions, etc. in Mandarin, invoking people to embrace core civilisational values of the nation in future. All visionary leaders start with defining VISION, MISSION and CORE VALUES for a body corporate and some is true for building a nation state.
Going forward, China has chosen to create awareness and need for building core values — patriotism, dedication, integrity, friendship, freedom, equality, justice, rule of law, prosperity, democracy, civility and harmony. The objective is clearly laid, though its attainment is a challenge and results remain to be seen. “Confuciousism” is a dominant theme of discourse.
The recent standoff at the border with Bhutan and the non participation of official delegates from India in the Belt and Road Initiative conference in Beijing are also engaging the attention of the people and scholars. Some scholars do believe that China’s strengthening of axis with Pakistan is a natural response to the US pivot in Asia. However, there is emerging confidence that diplomats and defence security experts from both the sides can help resolve issues, sooner or later, with matured political guidance.
China and India indeed have a deep and old connect which can be revived with greater exchange of businessmen, tourists and scholars with easy liberal availability of visas for people-to-people engagement.
It is difficult for anyone to dislodge the first and the most dominant Ambassador and Diplomat of India to China and the far East. His control on psyche is so deep. Temples dedicated to all streams of His thinking are everywhere. Chinese people offer incense, candles and bow before Him unless they are the formal members of the Communist Party. And He is Lord Buddha — in Mandarin worshipped as “Amitabha”!
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