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June, 2014

  • china-india-tradeAs China gains prominence over Japan in India’s foreign relations, the new government in New Delhi has approved an in principal memorandum of understanding relating to the establishment of five industrial parks in India. The proposed parks expected to be started in the Indian states of Uttar Pradesh, Andhra Pradesh, Gujarat, Maharashtra and Karnataka, also hold a caveat; the India is allowed to establish similar industrial parks for Information Technology and Pharmaceuticals in China. India’s commerce and industry minister, Nirmala Sitharaman who is accompanying Vice-President Hamid Ansari to China this week is expected to meet her counterpart Gao Hucheng in Beijing to further strengthen this proposal.

    By holding a reciprocal agreement, India might just have a good deal on her hands. According to experts, allowing China to set up industrial parks in India will not only ascertain New Delhi to increase exports, but will also allow her to give her IT and Pharmaceutical sectors access to the huge Chinese market. Kept protected, India has been trying relentlessly to penetrate into these sectors of the Chinese market, yet by keeping their chips close, India seems to have found the secret sauce to not only permit Chinese companies to help develop her markets but also strategically enter China’s fiercely protected IT and Pharmaceutical sectors. In order to balance her odds, China will not be the only country to be given permission for an industrial zone, but Japan and South Korea too will be given atleast a zone each.

    While the project for the proposed five industrial parks has been on the cards for a while now, the approval for an MOU paves the way for a big ticket agreement to be ratified between the neighbours for when Preisdent Xi Jinping comes calling in November. While firm ground work was clearly laid by his Prime Minister Li Keqiang and Foreign Minister Wang Yi, signing the MOU would mean a huge step forward for China India relations.

    Besides enabling India to grab a more even footing in her balance of trade with China, the proposed MOU will also allow for more stagnating Chinese companies to be fed with an increasing number of Indian consumers. Analysts expect China’s economy to remain flat for a while now as prices peak and disposable incomes shrink. Chinese B2C companies have been vying to enter the Indian market space owning to the work flag bearers Huawei and ZTE have put in to change Indian sentiments towards Chinese goods. With prices of raw materials in China rising, including salaries and logistic costs, Chinese companies are extremely keen to both manufacture and sell to the burgeoning Indian consumer. While Indian consumer spending is still on the rise, Chinese companies are keen to capture a market of a billion strong and are hoping that the second largest market after China will help them remain buoyant.

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  • nepal-mapChina is expanding her presence in Nepal, the mountainous region that’s North of India and home to some of the most spectacular landscapes on Earth.

    While India and Nepal have had a very close economic and political correlation owning to their geographic proximity, China until recently has remained a bit distant to the neighbour who shares a wall with both India and China. However, China is now getting cozy with Nepal leading India to keep a sharp eye out for warming relations.

    In October last year China put into effect her new strategy entitled zhoubian or Peripheral Diplomacy under which she has been expanding her influence around Lumbini, Buddha’s birthplace which lies inside Nepal and barely 25 km across the border from India. Further, the number of Chinese Learning Centres (CLCs) operating in schools in Nepal’s border villages have also grown as per a directive from the Shashastra Seema Bal (SSB), manning the sensitive 550-km India-Nepal Border in the two states of Uttar Pradesh and Uttarakhand. In addition to soft power, China is also keen to capture Khatmandu though her economic might. The Chinese central bank today allowed Nepal to double its investment in Chinese government securities upto RMB 2.4 billion, paving the way for Nepal Rastra Bank (NRB) to put more cash in secure debt instruments, like bonds, issued by the neighbouring country, enabling Chinese companies to make further in roads into Nepal through financial instruments.

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  • land reformA small yet highly significant Chinese delegation of six members led by Vice minister Xia Yong came to New Delhi last week to understand India’s rural reforms policy with special focus land reforms leading to greater land rights for farmers, the reform of the household registration system,  which is outlined in the governments 60-point reform agenda

    Land reforms which have been high on President Xi Jinping’s agenda are one of the major issues that Beijing has decided to focus on this year. With the number of rural migrants moving to cities on the rise, infrastructure and basic resources are being strained. It is estimated that every year, 20 million Chinese move into cities. That is 1.8 million a month, the equivalent of the cities of Hamburg or Vienna. As a result, sosts for basic amenities have already gone up and Beijing recognizes land reforms as a priority now.

    According to the Times of India, the Chinese delegation met with Additional secretary of the Legislative department Mr. Sanjay Singh to learn how land ownership rights are regulated in India, including compensation paid on land acquisition, and the Indian government’s rehabilitation and resettlement policies.

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  • Modi_WangOn a special mission sent by President Xi Jinping, Chinese Foreign Minister Wang Yi met newly sworn in Indian Prime Minister Narendra Modi to Inch Closer.

    One of the first strategic diplomatic meetings for Mr. Modi after taking office on the 26th of May, Beijing made sure that they made their mark on 7 Race Course Road, the official address of the Indian prime minister. At a time when Mr. Modi has already met SAARC leaders and expressed interest in meeting US president Obama and Japan’s Premier Shinzo Abe, Beijing is keeping a close eye on the man they have honed for so long.

    Chinese Premier Li Keqiang was the first foreign Head of Government to call Mr. Modi to convey his congratulations after he took over as Prime Minister. After the meeting Mr. Modi commented that China is always a “priority” in India’s foreign policy and welcomed greater economic engagement between the two countries.

    On a two day visit to New Delhi, Mr. Wang Yi, initially met with India’s first female External Affairs Minister Sushma Swaraj where he discussed finer points of the Border Defence Cooperation Agreement, India’s sinking trade deficit with China which is expected to be solved with the Middle Kingdom assisting in the establishment of SEZ’s which will prove to be manufacturing powerhouses and export gold mines as well as final chinks in the Chinese President’s impending trip proposed this November.  Nonetheless, before that Xi and Modi will have an opportunity to meet during the next BRICS (Brazil, Russia, India, China and South Africa) Summit to be held in Brazil this July.

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