CII conducts session on 'What drives China?'

The first session at CII's Eighth Partnership Summit was --'What drives China?' and the learning for India from the people's Republic. The discussion highlighted the initiatives China undertook for its development and its reform plans for the future.

The highlights of the session were: China has witnessed growth and has significantly increased its share of the global exports over the past years. This has been attributed to its initiatives and developments in its infrastructure and education policies in the past decades. Sanjaya Baru, Editor of Financial Express, shared in his presentation, that, though India has made significant achievements in some areas like IT and other sectors, more time has been spent in solving secondary issues. The basic problem has been huge and hence has led India to look at much more.

China has benefited from its investment in the labor-intensive manufacturing and has in the past years increased its GDP growth. The
average annual GDP growth stands at 9 percent, capital stock contributing about 3 percent, labor force at 1 percent and 5 percent, a major contribution from productivity. To this adds its overall growth in world exports in the past years.

CV Ranganathan, Former Ambassador of India to China, pointed out that "We seem to be defensive to the membership of WTO, while China is using WTO as a tool to carry on lot of reforms."

TK Bhaumik, Senior Advisor Policy, CII, highlighted the main factors that is driving China's growth. Firstly, its entry into WTO along with other initiatives in spite of being a developing country. He added that China will now have to undertake more than 2000 legislative changes by 2005 post its entry into WTO and if it has to fulfil its obligations, its exports will grow by the current $250 billion to $600 billion. This would make China a good business destination and India should consider this business opportunity.

Bhaumik said that WTO entry of China would also lead to faster liberalization. But, this move, would also lead to a tough negotiation in the near future and India as well other countries need to be prepared for it. He also pointed out that China has no reason to go through a slowdown and will continue to flourish. Relocation of other country's manufacturing units to China will add to its increasing growth in this segment.

Chetan Ahya, VP, J M Morgan Stanley Securities Ltd., said that India needs to invest on its infrastructure, if it wants to even realize the full potential of the software services that is much spoken about. He adds that, China cannot churn out engineers in six months or so and it will be sometime before it can produce professionals to match our professionals. This is an advantage for us to enjoy the position and for India to continue enjoying it, it needs to invest wisely in infrastructure and reform its human resource policies.

As far as looking at China as a threat in the near future, Ahya points out that it is more important to look at utilization of our existing resources.