Economy

India, China agree to set up new mechanism for issues relating to trade and investment

TE Raja Simhan Mamallapuram | Updated on October 12, 2019 Published on October 12, 2019

Vijay Gokhale, Foreign Secretary (left), with Naveen Srivastava, Joint Secretary EA, at a press conference in Chennai on Saturday.

China is ready to take sincere action and to discuss in a very concrete way how to reduce the trade deficit, said Vijay Gokhale, Foreign Secretary.

 India and China plan to set up a new mechanism to discuss ways and means to reduce trade deficit ($53 billion), enhance mutual trade, investment and services. This was one of the important understandings reached out by Indian Prime Minister Narendra Modi and Chinese President Xi Jinping at the end of the two-day informal summit between the two leaders on Friday and today.

The new mechanism will be at an elevated level. From the Chinese side it would be represented by Vice Premier Hu Chunhua and the Indian side will be represented by Finance Minister of India - Nirmala Sitharaman. The decision on when and how this mechanism will be activated will be done now through diplomatic channels, said Vijay Gokhale, Foreign Secretary.

Trade deficit

There was a good conversation on trade, which is an issue of concern in India. Jinping after hearing Modi - at a bilateral delegation level meeting at Kovalam - on trade deficit said that China is ready to take sincere action in this regard, and to discuss in a very concrete way how to reduce the trade deficit, Gokhale told newspersons at the end of the summit between. On the first day, both the leaders visited Mamallapuram and today had a private meeting followed by by the bilateral delegation talk.

When queried on the escalating trade war between the US-China, and the likely impact on the Indio-China trade, Gokhale said that there was no direct bearing on India-China trade on what is happening between the US and China. "They are in the midst of an agreement, and we are awaiting the details. As far we are concerned, there is a significant market in China, and the Chinese say there is a significant market in India. We need to find ways in which we enhance exports and China can increase imports from India. This is the objective of the mechanism," he said.

 

Also read: Narendra Modi, Xi Jinping meet to reset India-China ties

Gokhale said that President Jinping also welcomed investment from India to China in sectors like information technology and pharmaceuticals. The two leaders also agreed to explore of establishing manufacturing partnerships. Modi suggested that both the sides identify certain specific sectors where investment could come in and where manufacturing could bring investment and create jobs and enhance market for both sides.

One of the issues briefly touched up on was Regional Comprehensive Economic Partnership (RCEP) - a proposed free trade agreement between the ten member states of the Association of Southeast Asian Nations and its six FTA partners - on forming a regional trading agreement. Modi said that Indian looks forward to this and it is important that balanced is maintained in goods and services, and investments. Jinping said that both China and India will discuss this further, and India's concerns will be addressed.

Defence and security

Gokhale said Chinese President raised the issue of defence and security, and said there is a need to step up engagement in this area to enhance trusts between the two militaries and security forces. They have extended an invitation to Defence Minister to visit China. The date will be decided through diplomatic channels, he said.

After the summit, a press release issued by Ministry of External Affairs said that both the leaders had an in-depth exchange of views in a friendly atmosphere on overarching, long-term and strategic issues of global and regional importance. They also shared their respective approaches towards national development.

The two leaders evaluated the direction of bilateral relations in a positive light and discussed how India-China bilateral interaction can be deepened to reflect the growing role of both countries on the global stage. They shared the view that the international situation is witnessing significant readjustment. They were of the view that India and China share the common objective of working for a peaceful, secure and prosperous world in which all countries can pursue their development within a rules-based international order.

Also read: Modi-Xi meet marked by bonhomie, lays foundation for stronger ties

The leaders reiterated the consensus reached during the first Informal Summit in Wuhan, China, in April 2018, that India and China are factors for stability in the current international landscape and that both side will prudently manage their differences and not allow differences on any issue to become disputes. They also recognised that India and China have a common interest in preserving and advancing a rules-based and inclusive international order, including through reforms that reflect the new realities of the 21st Century.

Both agreed that it is important to support and strengthen the rules-based multilateral trading system at a time when globally agreed trade practices and norms are being selectively questioned. India and China will continue to work together for open and inclusive trade arrangements that will benefit all countries.

Terrorism a common threat

Both leaders are concerned that terrorism continues to pose a common threat. As countries that are large and diverse, they recognised the importance of continuing to make joint efforts to ensure that the international community strengthens the framework against training, financing and supporting terrorist groups throughout the world and on a non-discriminatory basis.

They shared the view that an open, inclusive, prosperous and stable environment in the region is important to ensure the prosperity and stability of the region. They also agreed on the importance of concluding negotiations for a mutually-beneficial and balanced RCEP.

Tamil Nadu link

The two leaders exchanged views on the age-old commercial linkages and people-to-people contacts between India and China in the past two millennia, including significant maritime contacts. In this regard the two leaders agreed on establishment of sister-state relations between Tamil Nadu and Fujian Province, exploring the possibility of establishing an academy to study links between Mahabalipuram and Fujian province on the lines of the experience between Ajanta and Dunhuang and conducting research on maritime links between China and India in view of our extensive contacts over the centuries.

In pursuit of their efforts to further deepen economic cooperation and to enhance their closer development partnership, the two leaders have decided to establish a High-Level Economic and Trade Dialogue mechanism with the objective of achieving enhanced trade and commercial relations, as well as to better balance the trade between the two countries. They have also agreed to encourage mutual investments in identified sectors through the development of a manufacturing partnership and tasked their officials to develop this idea at the first meeting of the High-Level Economic and Trade Dialogue.

Modi and Jinping also appraised the practice of Informal Summits in a positive light as providing an important opportunity to deepen dialogue and to promote mutual understanding at the Leaders’ level in line with the ‘Wuhan Spirit’ and the ‘Chennai Connect”. They agreed to continue this practice in the future. President Xi invited Prime Minister Modi to visit China for the 3rd Informal Summit. Prime Minister Modi has accepted the invitation, said the release.

On the issue of Kashmir, Gokhale said that Jinping categorically stated that Kashmir was not discussed between the two leaders. However, Jinping updated Modi on the recent visit of Pakistan Prime Minister Imran Khan to China.

Published on October 12, 2019
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