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India, China should rejig diplomatic strategy to improve ties: Report

Via The Economic Time : BEIJING: India and China should rejig their diplomatic strategy to improve relations during the strategic dialogue next week, as economic ties which served as a buffer to alleviate frictions are getting weakened due to intense competition in markets, a report in the state-run media said.

“As competition grows the function of economic ties as a buffer to alleviate trade friction between the countries is weakened, which requires the two neighbours to deal with a complicated political situation more carefully,” an article in the state-run Global Times said today.

The article in the daily’s website said the first India- China strategic dialogue is expected to be held on February 22 in Beijing and it would serve as a prime opportunity for the two countries to make a change in its diplomatic strategy.

Foreign Secretary S Jaishankar would lead the Indian delegation at the talks during which the two sides are expected to discuss steps to address increasingly tense ties due to differences over a host of issues including China blocking listing of JeM leader Masood Azhar as a terrorist and India’s admission into Nuclear Suppliers Group.

“Sino-Indian relations are experiencing severe tests after a female ‘parliamentary’ delegation from Taiwan paid a visit to India. Such issues should be handled much more carefully in the future,” it said.

The report said that the economic ties no longer worked as a buffer as new study showed China has a relatively low industrial complementarity with India compared with other South Asian countries, resulting in intense competition in the global market for products made in the two countries.

Citing a new study by state-run think-tank – the Chinese Academy of Social Sciences (CASS) – the article said “as more economic competition is expected, greater uncertainty is likely to be present in future Sino-Indian relations”.

India-China trade and investments relations which made progress in the last two decades often regarded as a buffer to deal with complex issues like border and strategic competition between the two.

India-China bilateral trade progressed to over USD 70 billion while Chinese investments in India was USD 1.06 billion last year registering 7.5 per cent growth, as per Chinese official media.

The CASS report tends to challenge the idea that key elements for Sino-Indian ties are more complementary than competitive in economics and trade, the article said.

The idea that China and India are highly complementary should be abandoned in order to restore trust and promote economic cooperation, it said.

“The competitive trend underlined in the CASS report is expected to become more visible in the coming years as India pursues its Make in India strategy, which calls for a rethinking of bilateral economic ties,” the article said.

India has become the second-largest source of trade remedy probes against Chinese goods as an increasing homogeneity in the two countries’ economic structures creates friction, it said.

Additionally, the two countries are also engaged in a fierce competition in exploiting overseas markets in the South Asian region, it said.

“How mutual trust can be built and how sound interaction can be developed between the two countries deserve careful consideration and thought,” it said.

“Although it is not easy to put China and India out of contention in the economic and trade area, dissolving strategic mistrust between the two countries may be more difficult to do.

“As bilateral ties between the two emerging Asian powers grow increasingly complicated, economic complementarity should be enhanced by encouraging Chinese firms to invest more in India’s infrastructure. Shoring up cooperation is the most effective way to promote mutual trust,” it said.

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