Ambassador Nirupama Rao’s Interview with Economic Observer

1. We know that Ms Ambassador Rao was in India last week while Mr. President Hu Jintao of China was paying a State visit to India. We've read the <Joint Declaration>.Could you tell us more about this visiting? How do you evaluate this visiting? How was the India local media's impression of China's leader?

President Hu’s visit to India, being the first by a Chinese Head of State to India in the last ten years, was extremely significant in promoting our bilateral relationship. The Joint Declaration issued during the visit, and the ten-pronged strategy outlined therein, set out the parameters for further development in all spheres of our relations. There are a number of concrete suggestions in the Joint Declaration for improving commercial and cultural ties, for instance by way of a new target for trade by 2010, studies on Regional Trading Arrangements and establishment of an India-China Exchange Foundation. The new Consulates to be set up in Guangzhou and Kolkata will further facilitate exchanges between both sides. Science & technological cooperation, including nuclear energy and space cooperation, will add another facet to our ties. The two sides have also agreed to resolve outstanding issues through peaceful means in a fair, reasonable, mutually acceptable and proactive manner. A number of agreements and MOUs were signed during the visit and they add further value to this landmark visit.

The Indian media took keen note of the visit. The media in India was extremely interested in all facets relating to the state visit from India’s biggest neighbour and a strategic partner. That India and China are also the biggest developing countries and two of the fastest growing economies with huge potential for cooperation was also highlighted by the media.

2. The Joint Declaration says: India and China “will endeavour to raise the volume of their bilateral trade to $40 billion by 2010”. But there is a saying that trade volume between China and India is not commensurate with their economic scale and development. India - China trade is far from vigorous. What is your viewpoint about this?

The trade figures speak very effectively in this regard. In 1995, bilateral trade between our two countries was just over US$ 1 billion. Less than a decade later in 2004 trade crossed the US$10 billion mark to record US$13.6 billion. In 2005, bilateral trade stood at US$ 18.7 billion. In the first ten months of 2006, our trade crossed US$ 20 billion. India - China trade has over the last few years grown at over 30 percent a year. Let me also add here that the growth of bilateral trade has surpassed expectations. For instance, both sides had anticipated that the figure of US$ 20 billion would be achieved in 2008, but this has been achieved two years and two months earlier than expected. I would say that this rate of growth is vigorous.

I agree with your observation that our trade has the potential of growing even faster. For this we need to work on diversifying the India-China trade basket and facilitating greater interaction and information flow between the commercial sectors of both our countries.

3. You know the western countries are interested in comparing India with China, the biggest developing countries in the world. The Joint Declaration says: Both sides agree that the relationship between India and China is of global and strategic significance…they are not rivals or competitors but are partners… there is ENOUGH SPACE for them to grow together… “But there are some complex issues between China and India, such as some Chinese companies’ investments to India were refused. So in your opinion, as two biggest developing countries in Asia and as neighbours and all over the world, what’s the difference between the two countries? And in which “space” the two countries would grow together?

Let me answer all your questions together.

Rapidly growing economic and commercial relations between India and China are one of the positives of improving bilateral relations. Bilateral trade is today growing by over US $ 2 billion a month. Business travellers form the bulk of travellers between our two countries. It is true that certain restrictions apply to foreign companies operating in some sectors in India, but this is a sector-specific issue and is certainly not directed against any particular country or companies from that country. Chinese firms are currently executing projects worth more than US$ 6 billion in India. These projects include key areas like airports, gas pipelines, power plants etc.

India and China are different and similar at the same time. Our paths to achieve our socio-political and economic goals have been different and attuned to our specific historical and socio-economic experiences. Chinese economy today follows an export-led growth; India’s is more driven by domestic demand. China is way ahead in manufacturing; India has its own strength in the service sector.

Having said that, there are opportunities and challenges which are not very different for both countries. Both are large developing countries with ancient civilizations. We are transitional economies with huge populations. Our countries are agrarian, industrial and post-industrial all at the same time. We face similar nation building issues. Stable and sustainable growth with equity is a requirement for both our countries. We are yet to conquer poverty. Regional imbalances, environmental degradation, health and educational issues, energy, food and water security are all prime national and everyday concerns in both countries.

There is a lot we can learn from each other. We need to adopt each other’s best practices. We need to learn more about each other. For all this we first have to recognize that both countries are similarly placed on many issues. I am glad to say that this is slowly beginning to happen. You will notice that in the last few big visits between our two countries, including the recently concluded visit by President Hu Jintao, agreements were signed which spanned the areas of agriculture, public administration, forestry, education, culture, finance, trade and investments.

4. Ms Ambassador Rao formally took over as India's new Ambassador to China just for two weeks. Could you tell us your impression with China? And what's your expectation of the India-China relationship in your tenure?

I have visited China several times over the last over two decades, and have witnessed the profound changes that have taken place here during the period. China’s economic success has been truly impressive, and the living standards of people have improved significantly.

Progress of India-China relations is an irreversible long-term trend, and I wish to work concertedly to impart further the momentum to the process during my tenure. Our relations are stable and mature. My endeavour, on the basis of our existing good relations, will be to encourage contacts at all levels and in a multi-dimensional manner. There should be more and regular exchanges of high-level visits. Trade and commercial relations need to expand and diversify. There need to be more people-to-people exchanges between our two countries to enhance mutual understanding. These exchanges will add more substance and dynamism to our relations. I would like to work with our Chinese friends to realize this objective.