India − China Third Strategic Economic Dialogue
Comments of Mr. Saumitra Chaudhuri, Member, Planning Commission
On Financial Issues, 18 March 2014
Beijing, 17-20 March 2014
1. There have been six India China Financial Dialogues so far, the last being recently on 24-27 September 2013.
2. There is a felt need for greater cooperation in multilateral institutions including G 20 and the Asian Development Bank.
3. We have had shared concerns about the present uncertain economic outlook globally and the even more uncertain conditions in the world’s financial markets.
4. Both of our countries face some challenges – partially on account of the development in the external environment and partially from domestic environment.
5. The dialogue so far has covered a large diversity of issues, including many specific initiatives that need to be taken forward, especially those that relate to bilateral cooperation in the financing of infrastructure investments. While the dialogue process so far has discussed many areas of regulation and taxation, we need to be able to facilitate the flow of investment from China in Indian market, by successfully addressing concerns on both sides in respect of regulations and regulatory processes.
6. Globally the most likely situation is that of slow, sporadic acceleration and deceleration in the developed markets, continuing difficulties in some emerging market countries and a very turbulent financial market that has become hypersensitive to any unexpected developments.
7. Greater uncertainty increases the difficulties that face investment decisions, making conditions more troubling for growth. Enhanced uncertainty raises the risk premium and thus the cost of finance. It acts as a further barrier to the ease of circulation of capital between capital scarce and capital surplus economies.
8. India and China need to try and help create conditions that can stabilize not only their own respective economies, but also other economies in the region.
9. The developing world especially that in Asia has the greatest stake in preserving the conditions for growth and increased commerce. In 2000 the share of developing Asia in global GDP was 7%; by 2012 it had more than doubled to 17%. By 2030 this could rise to 33% of global GDP. The Asian region is set to overtake Europe as the world’s largest regional market for merchandise.
10. The greatest gainer of the global growth process is Asia; and hence we will also be the biggest losers if growth conditions falter.
11. We need to have a better understanding of our respective thinking and closer co-ordination between India and China. This we must do for ourselves and try and prevent the powerful engine of growth that has been humming so steadily for decades to lose momentum.
12. Since instability in the conditions of the word’s financial markets have been having a disproportionately larger and adverse impact on the broader economy, our cooperation and cultivation of greater and better understanding can prove to have great value.