With US President Donald Trump announcing a slew of protectionist measures to ring fence the world's largest market USA, there is an increasing focus on the two biggest emerging economies -- China and India -- and their role in energising the global economy. In an exclusive interview with Business Today, on the sidelines of a China-India Business Meeting for Investment and Trade at industry body Ficci, Lyu Xinhua, Chairman of the Council for Promoting South-South Cooperation of China talks about the fallout of US protectionism, global trade trends and India-China investment and trade relations. Xinhua is the Vice Chairman of the CPPCC Foreign Affairs Committee and former vice foreign minister of the Peoples Republic of China. Excerpts from an interview with Joe Mathew.
How do you see US President Trump's anti-globalisation postures?
The crux of the issue is whether we should continue to uphold globalisation for trade and investment. The answer is obvious. China and its close neighbour India, have both benefited from globalisation. The question we are facing now is how to face the consequences (of the protectionist policies). Since globalisation is something beneficial to the whole world, we should try to prevent such consequences from taking place.
Will China be interested in a mega trade deal like Trans Pacific Partership (TPP), now that US is out?
Ever since US has announced its decision to get out of the TPP, many countries have lost interest in it. But Japan and few other countries are still interested in continuing that process of developing the TPP. I personally believe that my country has its own considerations. So China will not nesessarily or hastily go to join the TPP. We are more for regional cooperation.
What about Regional Comprehensive Economic Partnership (RCEP)?
The RCEP is something which is work in progress. As our President had said in Davos recently, China will continue to work towards RCEP. China supports RCEP programme within the ASEAN framework.
What should be India's and China's response to a global environment that is becoming more inward looking?
It is important that we speak in one voice. It is important to show the rest of the world that we stand together. You might be aware that this year, there is going to be a BRICS summit in China. India and China are both developing countries and we believe India as a BRICS member will also touch upon such issues on those occasions.
China's Premier had promised investments to India. What is its status?
Numbers will speak louder on this aspect. Your government has already taken steps to attract more investments. The size of Chinese investments to India has increased. In fact this is a general trend. Our current outbound investments surpasses inbound ones. That also includes our investments to India. Currently, China's outbound investments is about $ 100 billion. Our organisation Council for Promoting South South Cooperation (CPSSC) has led this delegation to encourage Chinese companies to come to India.
Have major state-owned Chinese corporations shown interest in investment in India?
Our delegation is composed of mainly private companies, but of course we have seen interest on the part of many of our state owned enterprises. After all they are stronger than private firms.
Which are the sectors that you consider attractive?
Infrastructure is a major sector where India has huge demand. Energy and power generation. Other sector is probably household appliances and mobile phones and electric products where China enjoys a great advantage. Of course, India has its own priorities for attracting foreign investment and many of those have to undergo tendering processes. In those cases, Chinese companies will have to work with Indian counterpart, which itself is a long process. We hope India will do more to enhance its investment environment to attract more FDI in sectors like infrastructure development where China has a comparative advantage. India is a politically stable economy, though sometimes procedures are a bit long.
Which are the potential areas for Indian investment in China?
The investment between the two countries is complimentary. It is not like our investment to African countries or other developing countries. The investment opportunities between us is two way. If China is world's factory, India's is world's office. In terms of IT capabilities, China can learn a lot from India. I have heard about the recent satellite launch by India. It is a great achievement. We welcome Indian sectors like that to come to China and invest in China's IT technology.
How to narrow India's huge trade deficit with China? Is there any proposal from China's side to make it more balanced?
Huge imbalances in bilateral trade between any given countries is a fact. In recent years, due to the better quality of Chinese products, we do see huge surpluses on the part of China and huge deficits on the part of recipient countries. On the part of China, we have been following best practices. I dont think we need to do anything to contain this. In fact, we should encourage more investment and more trade between countries. The trade itself will find a balance.