China’s growing economic importance in the US and India

December 19, 2011 - 4 minutes read

Considering the reiteration of the strong US-China bonds to strengthen co-operation and develop economic stability, India and China are now in talks to launch their first strategic economic dialogue in end-September. The focus of this dialogue is to increase India’s investment in China and address a burgeoning trade deficit.

Montek Singh Ahluwalia, deputy chairman of the Planning Commission, will lead the strategic economic dialogue with China and Ahluwalia’s counterpart in the dialogue will be the head of China’s National Development and Reform Commission (NDRC).

Bank of china

Us-China relations to strengthen economic stability

According to Standard & Poor’s, US suffered a historic credit downgrade, and America’s biggest creditor, China could be of strong support to release US from the financial instability. Moreover, China holds $1tn (£608bn) of US debt, and has called on the country to do more to reduce its budget deficit.

Besides, the US economic meltdown has raised a lot of questions in China about the country’s investment in US. China’s anticipated next leader Mr Xi Jinping has made clear that the economic concerns were for now, dominating the relationship between these two nations. As for Joe Biden, US Vice-President, “The economic stability of the world rests on co-operation between the United States and China”.

Thus, the biggest economies, China and the United States have a responsibility to strengthen macro-economic policy co-ordination and together boost market confidence. Economic stability of the world rests in co-operation between the United States and China. These were some of the positive ramifications between US- China relations.

China- India Intensify Talks

India wishes to hold talks with China in order to find solutions to diverse concerns. Firstly, India is keen to extend and engage talk with Chinas next leader Xi Jinping and understand his mission and then make him aware of India’s interests and concerns.

China’s special representative for boundary talks, Dai Bingguo is scheduled to come to Delhi for the next round of border talks with national security adviser, Shivshankar Menon, sometime vaccine for herpes in October; sources said. This will be the 15th round of talks, and the two sides continue to be bogged down in working out a “framework” for mapping the border.

On the economic front, while the India-China bilateral trade is expected to hit $70 billion this year, New Delhi is hoping to get China into the Indian pharma sector, which remains off-limits to Chinese business houses. India also hopes to invite Chinese investment at home in some sectors. One of Ahluwalia’s main jobs as the India-China economic czar in UPA-II, will also be to coordinate engagement among the various ministries.

Chinese business is making its presence in India in a big way by supplying huge credits to Indian businesses like Reliance, Tatas, Adanis. China’s banks are seen to have a greater influence on these big Indian companies. Considering the suppliers credit, per se, there is a growing disquiet in the Indian system about these companies exposure to China and what that might mean in the future.

Also, Indians are interested to get a better view of China’s new frenzied buying up of sovereign debt in crisis-hit European economies like Portugal, Spain and Greece. India has started in its own way to bail out some European countries debt, but obviously it’s nowhere close to the kind of deep pockets that Beijing has.

Will the US-China relations pull US out of the economic crisis, and strengthen global stability?

Will the two rising Asian economies envisage a better future in wake of the upcoming India-China talk?