Can India And China Come Closer In Agro Trade

Updated: Mar 31 2003, 05:30am hrs
India and China are two big neighbours. Both countries together account for over 40 per cent of the worlds population. India is the largest democracy and China is the largest still-existing socialist society.

But China started loosening its shackles of state control, primarily beginning with farm sector from late 1970s, while India embarked upon economic liberalisation in early 1990s beginning with the industrial and trade sectors. India has yet to take the reform process to the farm sector. However, these reform processes led to an 8 to 9 per cent economic growth rate in China, and 5 to 6 per cent in India.

Well, the high growth rate being achieved in China may have been due to the process of reforms being achieved in that country much earlier, and the fact is that China initiated the reform process in agriculture and rural sector, which involves a larger part of the population.

Now, the issue is - can these two big neighbours forget their existing differences, come together to form a common economic market and exert pressure at the WTO platform to change the rules of unfair trade practices and benefit the developing world This thinking sounds wishful, but if this happens, it can be a miracle in world trade.

The Washington-based International Food Policy Research Institute (IFPRI) and the Delhi-based Jawaharlal Nehru University (JNU) has conducted a comparative study of the economics and agricultural reforms of two big neighbours - China and India - and has come to the conclusion that these two countries need to work together.

India already had some bitter experiences with China in the late 1950s and early 60s. The first prime minister of India, Pundit Jawaharlal Nehru was first to extend the hand of friendship to China. This friendship between the two countries did not last for long. The relationship got strained on the issue of the Chinese occupation of Tibet and India giving refuge to Tibetan leader Dalai Lama. Subsequently in 1962, there was Chinese aggression on Indian soil. There is still border disputes between India and China in the areas in northeastern India, and in some parts of the western Himalayan region. A part of the Jammu & Kashmir, (which Pakistan earlier occupied and gifted to China) is still under the control of China. China has not yet recognised Sikkims accession to India.

There is, therefore, a need for great efforts at the diplomatic level to make these two neighbours come together for a common cause. Of course, there is still hope for these neighbours coming closer. If the European countries can forget their past differences and form the European Union with a common currency, then why cant India and China break the dividing wall

Dr Ashok Gulati, IFPRIs director for markets, trade and institutions is hopeful that the two big neighbours can come close. He says that if India and China can stand united on major world issues including trade, they can jointly remove all unfair practices of global trade.

Jawaharlal Nehru University vice-chancellor Dr GK Chadha says that whatever may be the political differences between the two countries, academic relations should continue. He said that the Indian rural sector has to learn a lot from the Chinese experience. In China, the migration from rural to urban areas is not so extensive as in India. After the 1978 reform process, commune system of farming was replaced by small household farming and there has been an increase in non-farm rural activities. In fact, the entire rural economy in China has achieved a developed stage. The IFPRI director-general Joachim von Braun is also equally hopeful of the two big neighbours coming closer and says that they can learn much from each others experiences. He says that the next round of discussions on IFPRI-JNU study will be in Beijing. (A two-day seminar on IFPRI-JNU study was held in Delhi from March 25, 2003).

There, a number of Chinese and Indian scholars are involved in the study. There is really something to learn from the Chinese farm sector. Most of the farm lands are small holdings, but competitive. Since 1978, the Chinese government has gradually withdrawn from controlling production, input supply and procurement.

Farmers are allowed to sell their produces in the free market, provided they fulfil the government quota. But Chinese farmers cannot sell their land or mortgage for loans. In China, the crop diversification and rural non-farm sector has grown at a quicker pace. Non-grain crops account for more than 45 per cent of the total agricultural production value in China. The rural non-farm sector in China produces more than on-third of the national GDP. It is time to see how much India can learn from the Chinese experience and how much Indian experience can help China in farm sector.