Beijing, May 5: China should be ready to push for a regional economic pact without India, which is worried about the flow of cheap Chinese goods into the country, a Beijing-based think-tank has said.
The think-tank, Abound, said the Regional Comprehensive Economic Partnership (RCEP) had more strategic global significance after the US exited the Trans-Pacific Partnership (TPP).
The RCEP is a 16-nation trade pact that includes the Association of Southeast Asian Nations (ASEAN) along with China, Australia, India, Japan, South Korea and New Zealand.
“An optimal choice for China would be to reach a deal that includes India as that would allow Chinese-made products to enter the Indian market with tariff concessions after the RCEP starts running,” said a report quoting the think-tank.
“However, given India’s free trade history and the concerns expressed about its own national interests, there is only a very slim possibility that India would agree to the deal under the existing framework and mechanisms. So China should set a sub-optimal goal of reaching an RCEP deal without India.
“Although this would diminish the value of the agreement, China should continue speeding up the RCEP negotiations, because enhanced cooperation with ASEAN, Japan, South Korea and Australia is of strategic importance for China,” said the report quoted by the state-run Global Times.
The strategic institute said India was reluctant to promote the RCEP because it was worried over cheap Chinese goods affecting its manufacturing industry.
“First, India is worried that after signing the agreement, it would not be able to prevent cheap Chinese commodities from flowing into the country, which would endanger its domestic manufacturing industry.”
It said India’s varying degree of trade deficit with other RCEP members was another reason.
It said India was worried that domestic companies would be less competitive than foreign enterprises after opening the market, especially in the pharmaceutical and textile sectors.
India was worried that the RCEP clauses on intellectual property and services would not be conducive for India, the think-tank said.
“India has unilaterally obstructed the normal process of WTO negotiations many times. In the final analysis, India is still worried about the lack of competitiveness of its local enterprises.
“However, the RCEP is of great significance for China because (it) has been excluded from the TPP. China needs to promote the conclusion of the RCEP negotiations and be prepared for India’s withdrawal from it.”
By Gaurav Sharma