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Emerging economies 'hold key' to global growth over next 20 years
A senior Indian planning official has called for closer economic cooperation between India and China for mutual benefit over the next 20 years.
Montek Singh Ahluwalia, vice-chairman of India's planning commission, said emerging economies are now the world's engine.
"Traditionally, probably both of us have seen industrialized countries as the world's growth pools and looked at how to deepen relations with the industrialized world," Ahluwalia told China Daily on the sidelines of the Boao Forum for Asia Annual Conference 2012.
Over the next 20 years, industrialized nations "will be very important sources of technology" but GDP growth will almost certainly come from emerging markets like China and India, he said.
Ahluwalia was the first director of the independent evaluation office at the International Monetary Fund. He also co-chaired the first India-China Strategic Economic Dialogue last year, a significant platform for bilateral ties as both countries previously only had such mechanisms with the United States.
Zhang Ping, minister of the National Development and Reform Commission, led China's delegation.
Given the world economic outlook for the next three to five years, it's not surprising that China and India will grow more slowly, Ahluwalia said. But the actual expansion rates don't matter so much as that both countries contribute to world growth.
"China is ahead of India in many dimensions. We look at what's happening in China with interest because we have many similar problems," he said.
The two countries' economies are also often complementary. India is undertaking a large expansion of its electricity generation sector and importing much equipment from China, he noted.
Similarly, China is a huge market for India's flourishing software industry. Most of India's major software producers already have subsidiaries in China, serving multinational and Chinese companies.
Ahluwalia said he asked the chairman of the Tata Consultancy Services, a leading India software exporter, to send him a note comparing projects and economic conditions in China and India.
"China is a higher income country than India," he said, and maybe what China is doing now, India will be doing in five years.
Energy efficiency is another area for sharing knowledge and technology, he noted, as both countries need to reduce energy intensity (energy consumption per unit of GDP).
"We are both increasingly market-led economies (so) we cannot say we want to engage with China in a particular area," he said. Instead, it's important to look at the Indian and Chinese markets to see what's needed, he added.
Bilateral trade rose 19.7 percent last year to $73.9 billion, according to the General Administration of Customs. The two countries have set a $100 billion bilateral trade target by 2015.
"Nobody would have predicted 10 years ago trade with China would be it is now. It is a big number by Indian standards," Ahluwalia said.
If China will be the world's largest economy in 20 years, "it makes sense for Indian businesspeople to look at the Chinese market". In 20 years, India will likely be the world's third-largest economy, so it also makes sense for China to look at the Indian market.
Ahluwalia said China has signaled further opening - for example, in internationalization of the yuan. That will make China a more predictable partner for long-term planning.