Beijing Signals Trade Expansion with India Contingent on RCEP Participation

China is open to increasing imports from India if New Delhi decides to join the Regional Comprehensive Economic Partnership (RCEP) and adopts a more open trade policy with Beijing, according to Chinese economist Liqing Zhang. Zhang highlighted the potential of RCEP to enhance the competitiveness of Indian goods and boost bilateral trade between the two nations, urging India to reconsider its current position.

The RCEP is a free trade agreement among the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. It aims to reduce tariffs and streamline trade rules among member states, creating one of the world's largest trading blocs.

India had initially participated in RCEP negotiations but withdrew in 2019, citing concerns about the potential impact on its domestic industries, particularly in agriculture and manufacturing. New Delhi worried about a surge in imports, especially from China, that could harm local producers. Concerns over rules of origin, trade imbalances, and the lack of adequate safeguards were also factors in India's decision.

Economist Liqing Zhang's statement suggests a potential shift in China's approach to trade relations with India. By linking increased imports to RCEP participation, China is signaling its willingness to address India's trade concerns within a broader multilateral framework. Joining RCEP could provide India with greater access to regional markets, reduce trade barriers, and attract foreign investment.

However, the decision to join RCEP remains a complex one for India. Concerns about protecting domestic industries and ensuring a level playing field for local businesses persist. Some experts believe that India needs to enhance its competitiveness, improve infrastructure, and implement policy reforms to fully benefit from regional trade agreements.

Other recent economic developments involving India include:

• Free Trade Agreement Discussions: India and Qatar are scheduled to discuss a free trade agreement (FTA) and finalize terms for a Comprehensive Economic Partnership Agreement (CEPA) during Commerce Minister Piyush Goyal's visit to Doha. The initiative seeks to strengthen economic cooperation, address trade barriers, and enhance investment.
• Regional Ties: An official from the Asian Infrastructure Investment Bank (AIIB) suggested that India should deepen trade ties with Asian nations to offset tariffs. They also advised revisiting the CPTPP decision for economic benefits and focus on investments, especially in infrastructure.
• Maharashtra's GCC Policy: Maharashtra's new Global Capability Centers (GCC) policy is set to boost office markets and create jobs in Mumbai and Pune. The policy aims to attract multinational corporations, with the goal of creating 400,000 jobs by 2030.
• RBI Policy Changes: The Reserve Bank of India (RBI) is now allowing banks to finance domestic company mergers and acquisitions, a move that aligns Indian banking with global standards and opens new credit opportunities for banks.

These developments indicate India's active engagement in shaping its trade and economic policies to foster growth and enhance its position in the global economy.