In a rare display of bilateral strength, Asia’s two giants have issued a joint statement urging the developed world to act more responsibly in managing their debt to restore global financial stability, strengthening fiscal reform and bilateral financial cooperation as well as stabilizing commodity prices.

Issued two days after the leaders met at the G20 in Cannes, Beijing’s foreign ministry issued a joint statement as part of the Fifth India-China Financial Dialogue which was held on 8th November 2011, in New Delhi. During the dialogue, both sides exchanged views on the global macro economic situation and policy responses, with specific reference to current risks to the global economy and the role of India and China in the post crisis recovery phase. Both sides also had in-depth discussions on G20 issues including reforms in the International Monetary System and the Framework for Strong, Sustainable and Balanced Growth. The meeting was led by Alok Sheel, a joint secretary of India’s ministry of finance, and China’s assistant finance minister Wang Bao’an.

The joint statement, broadly enumerates the five points which President Hu Jintao has been reiterating even as European economies coax China into bailing them out. 

1. Speed up the adjustment of our respective economic structures and endeavor to achieve fairly balanced growth of the global economy. Basically to put prudent, practical policies in place domestically. Get your house in order before you can tell others what they should or should not be doing – a statement inspired from Confucius. To read more about China’s debt recovery plan click here.
2. Fiscal Reform in both Countries – Recognizing the fact that fiscal consolidation anchored on the process of reforms in tax and expenditure is key to sustaining  macroeconomic outcomes, India is focusing on  prudential expenditure management, measures to reallocate resources to priority development sectors, particularly infrastructure, rationalization of tax structure and re-engineering the business processes for providing an enabling environment for better tax compliance. Focusing on accelerating the transformation of economic growth model, China continues with proactive fiscal policy in 2011, and adjusts its intensity, pace and priorities to reasonable extent and at appropriate time  to properly handle the relationship between economic growth, structural adjustment and management of inflation expectation, give more emphasis to price stability and further expand domestic demand, in order to ensure the coordinated, sustainable and endogenous development.
3. India and China in the G20 – Two sides urged the developed economies to adopt responsible macroeconomic policies to handle the issues of debt and financial stability properly, promote investment and create demands. Both sides agreed to strengthen coordination and cooperation in the G20 for the stability and growth  of both the countries and the global community.
4.   Commodity Prices – Excessive volatility in commodity prices, particularly those for food and energy, poses risks and challenges for the ongoing recovery of the world economy. We support the international community in strengthening cooperation to ensure stability and strong development of physical market by reducing distortion and further regulate financial market. The international community should work together to increase production capacity, strengthen producer-consumer dialogue to balance supply and demand, and increase support to the developing countries in terms of funding and technologies. The regulation of the derivatives market for commodities should be accordingly strengthened to prevent activities capable of destabilizing markets.
5. Bilateral Financial Cooperation – Both sides reiterated their commitment to deepening financial cooperation between the two countries with an aim of promoting overall bilateral economic cooperation. Both sides welcomed the enhanced cooperation between regulatory agencies, and committed to creating an enabling environment to promote further cooperation of financial institutions between the two countries. The Chinese side shared its experiences in the area of regulatory oversight schemes for Financial Holding Companies. Two sides also discussed initiatives towards financial inclusion.