Broader, yet narrower in focus?, could be the paradoxical description of the way in which cooperation is developing between the state of West Bengal and the Yunnan province of Southwest China. This is apropos of the deliberations of the fourth Kolkata-to-Kunming (K2K) International Conference held in Dali, in Yunnan, China over November 8-9, 2008.

Organised by the Development Research Centre of the People?s Government of Yunnan Province, in cooperation with Kolkata-based Maulana Abul Kalam Azad Institute of Asian Studies, participants had the intent of changing the six-year-old pitch and content of the K2K process. Thus, the K2K ?process? has been upgraded to the status of K2K ?forum?, which now institutionalises the old brief of synergy build-up between Yunnan and West Bengal.

Meanwhile, in an unexpected bonus for the K2K, the financial meltdown has underlined the oft-felt need for compartmentalisation in a globalised world. K2K could be a telling example of the potential, and attractiveness, of sub-regional cooperation amidst calls for ?disengagement?.

Chinese president Hu Jintao offered the clearest outline of the new direction being adopted by the process in October. He then advised Prime Mimister Manmohan Singh that India and China should deepen relations, keeping strategic development perspectives in view, and each treating the other?s concerns with empathy. That had been on the sidelines of the recent, October 2008, seventh Asia-Europe Meeting.

The president also reminded Singh about how the two Asian giants have already started promoting sound relations, economic cooperation and collaboration in international affairs. That includes a wide range of sectors including trade, industry, scientific & technological cooperation, plus education, health and tourism.

In fact, a recent official document from China sums up the entire perspective on sub-regionalism through the rubric of ?Fostering K2K Cooperation?. The text of the document takes the long view, and keeps the potential of K2K cooperation in mind. In it, Professors Yang Ye, Liu Xing, Yang Jiannong and Chen Guolan (of the Development Research Centre of the People?s Government Of Yunnan) assert that: ?Geographically, Yunnan and West Bengal, located in the same continent, belonging to different countries but having a common desire for development, can absolutely take the lead in erecting a bridge for interaction and cooperation between China and India by making use of respective advantages on the background of that the China-India relation is continuously developed to lay a foundation for broader cooperation between the two countries. We are very confident that the K2K cooperation, with the support from the governments of the two countries and the efforts of us all, will definitely yield positive results.?

The document also states that China?s southward strategy and India?s Look East policy promote latent complementarities between Yunnan and West Bengal. The letter add up to an aggregate of unique, locational advantages, to utilise which we need to boost cooperation in the fields of economics, education, culture, science and technology. Such actions would also yield a market size of $2.5 billion (between China and India).

The focus on West Bengal gains weight when viewed against the ratification, this year, of the key document on The Prospect of China-India Cooperation in the 21st Century. It was signed in Beijing by PM Manmohan Singh and China?s foreign minister, Yang Jiechi. That was followed up by Jiechi?s confirmation of China?s interest in this matter when he visited India; that was when he also met West Bengal governor Gopal Gandhi and CM Buddhadev Bhattacharya.

Meanwhile, the most striking aspect is the indication of just how eager is China to deepen and broaden economic cooperation. It is almost as if, right from 2004 (the year of the first K2K meet), the initiators of the series had harboured hopes of success along the axis of trade and investment. As for the intent to cooperate in other sectors, the most prominent ones are cooperation in science & technology, health, tourism, and education.

?Author is a fellow at the Maulana Abul Kalam Azad Institute of Asian Studies

Economic drivers

Trade

* The complementarities are plain, and the Chinese make no bones about their preferences. India, to them, is far more advanced in the field of services (read ?software?) while China is more concentrated on manufactures. Also, thanks to more ingrained language abilities and software skills, India and West Bengal differ from China and Yunnan.

* The difference is already plain from the numbers which say that, in 2007, the greatest part (54.6%) of India?s GDP arose from services?followed by industry (27.9%) and agriculture (17.5%). Comparable Chinese figures for 2007 were 39.1% for services, 49.2% for industry and 11.7% for agriculture. From that it is clear that India has as much to learn from China about industry and industrial collaboration, as the latter must, in language skills and software, from India.

* Also, observers can expect more action on the investment and R&D front than they should on commercial cooperation (that is,?trade?).

* That has been clear ever since talks re-opened, earlier this year, about the possibility of an Indo-China FTA. Indeed, April this year saw the government being constrained to admit that an India-China FTA was not a priority, and that there were ?deep divisions? in government, and opposition from within industry. New Delhi?s assurance has been that the fate of the FTA will be determined only after consultations with all stakeholders, including industry.

* But, while industry bodies like Ficci and Assocham urge the government to adopt caution before signing any FTA that would flood India with Chinese goods, Beijing has anyway become India?s number one trading partner.

* Even trade between the lone province of Yunnan and India attained the $330 million level in 2007?almost twice as much as its 2005 value of $124 million.

Software

* This is the sector from which China perceives it stands to gain the most?and it would willingly submit to India?s tutelage.

* The complementarities are obvious and were underlined by Zhang Xiaozhang, chairman and president of Kunming High & New Cyber Technology Development Co Ltd.

* His seminar address at the recent Dali K2K Meeting (the fourth such) on November 9 underlined the fact that while China engages in ?Hardware outsourcing?, India?s forte is ?software outsourcing?. India, however, must aim at greater employment and needs more manufacturing prowess?and in that way, according to Zhang, the ?two countries are easy to complement each other and to find many mutual experience and feelings.? But he also cautioned against the environmental minuses and energy intensities of traditional manufacturing.

* As for West Bengal, it is a good choice going by the evidence about investment inflows into the state?s IT sector, the low cost of skilled labour, and the numerous IT Parks that are planned. China is especially impressed by West Bengal?s rate of annual IT sector growth. That Yunnan is especially interested in software development can be gauged also from the development of the ?High Tech Industrial Base of Kunming National High & New Tech Industry Development Zone? covering 86.88 km. There is also a ?Cyber Ecological Park? on the cards.

* In sum, Yunnan could reap late-comer advantages in the IT sector, while West Bengal gets access to Yunnan?s (and China?s) mammoth domestic market for manufactures.

* The biggest advantage, of course, would be the proximity of the two regions: Yunnan is just a 2-hour flight from Kolkata, plus (as Zhang pointed out) ?the production of software can be divided and virtualised? to form a ?virtual software industry chain according to practices in Yunnan and West Bengal?.