Future Trajectories of Economic Cooperation between China, India

Future Regional Integration:
Possible Trajectories
Economic Cooperation Between
China and South Asia
-Hari Roka
Consolidation of SAARC
• South Asian Association for Regional
Cooperation (SAARC) was established in 1985
to enhance economic- cooperation and intra
regional trade.
• There was a common purpose strengthening
economic, social, cultural and scientific
cooperation in the region.
• South Asia is a home to more than one-fifth of
the world population, there are possibility of
increase trade and enhance intra-regional
SAPTA (South-Asian Preferential
Trading Arrangements)
• SAPTA was signed on 11 April 1993 to
give a boost to regional integration, which
came in to operation in 1995.
• Four rounds of exchange of trade
concession have taken place.
• South Asian Nations have also signed
several trade agreements over the years.
• The intra-regional trade stands as low as 5
percent of the total trade.
Lack of trade complementarities
The prevalence of sizeable informal trade.
Weak governance
Hostile political climate
Limited effective concession
Low level of mutual trust and ethnic and
religious conflicts and bilateral disputes
• Lack of intra-investment climate
SAARC reality
• Bhutan and Nepal –which are contiguous with Indiaremain strongly dependent on the Indian economy, and
are much benefited having a bilateral trade agreement
with India and huge large market both in proportion of
the supply source and export destination.
• For Nepal and Bhutan India is the gateway to do
business with other SAARC Countries.
• India and Pakistan are the largest economy in the region
• If only India and Pakistan have the earnest desire to
exploit each other’s potentiality wholly and unreservedly.
China’s relation according to
South East Asia including Japan, US,
Russian Federation (number one
economic partner), Shanghai Cooperation
Organization (SCO) of central Asian
Countries, Africa, Latin America, EU and
South Asia
India’s relation
• US, Middle East, South East Asia,
European Union, Latin America then South
Asian Countries
China and Investment
• Multinational investment based on its vast supply of
Super exploitable labour but under strong state
• State regulates monetary and tax policy
• State integrating foreign capital to domestic capital
• The State Economic sector accounts for 35 percent of
the China’s economy and after immediate global
recession it is focusing and consolidating again in the
state sector.
• China’s State sector is investing in extractive industries
in their priority basis
India’s role
• Less focused on consolidating political
relationship within SAARC countries
• Less priority has given in investment in
South Asia, especially in infrastructure
• State role in economy is weakening
Expected future role of India and
• Confidence building within SAARC removing all
kind of disputes especially should focus on
settlement of the boundary issues
• No interference in internal matter, strengthening
mutual relationship
• Aid and Investment should focus in infrastructure
• Environment protection
• Tariff concession
Nepal’s expectation
• Nepal may be a transit /corridor point
between India and China, opening various
transit points in which India will have
access not only china but Central Asia
• Nepal can develop only after both nation
will have cordial relationship
• China and India can play a decisive role in
world’s economic and political
development if they move together