Infrastructure and Its Ramifications for China and India

China and India have more reasons to expedite and deepen cooperation in urban infrastructure construction, says Dr Liu Youfa, Consul General of China in Mumbai
It is coincidental that both China and India have been attaching importance to infrastructure construction. And, both Governments have appropriated large portion of their annual budgets to upgrade or build nation-wide networks in line with their five-year economic guidelines or plans. It is now official that both countries have elected their new governments so that the relevant leaders could revisit and reschedule our bilateral relations. For that matter, further cooperation in the field of infrastructure would generate new steam for the strategic partnership relations between our two countries. In short, dynamic co-operation in infrastructure construction would provide the platform where more convergence of interests could be found, and thus would contribute significantly to the mutual trust and to the common development and common prosperity.

Firstly, it constitutes the foundation for sustainable economic and social development.

For all the countries around the world, infrastructure forms the bedrock for sustain¡able development against the backdrop of globalization. Consequently, the scale, speed and quality of infrastructure form the important indicators for many nations in terms of sustainable national development. To be specific, the nationwide ´hardware and software´ networks would allow governments at all levels to provide public service for the business communities in terms of social production, for the citizens in terms of living, working or traveling, which would sustain their efforts to climb up the ladder of economic development and social progress. The experience of the ´Asian Dragons and Tigers´ have demonstrated one simple truth that large scale project constructions in infrastructure would connect the regional markets across the country into a comprehensive whole, and thus provide steam for them to readjust or develop other industries in line with their natural or human endowments. From the input and output perspective, the above-said public service systems would generate a ´spillover effect´ both in terms of total social demand and national income, which is critically in short supply in both China and India.

Secondly, it serves as the initial steam for the national economy to take off.

In a certain sense, comprehensive national systems in infrastructure are just like the ´runway´ for any countries in the world in terms of sustainable economic development. Believe it or not, the stronger the said networks become, the safer it would be for the country to realise its economic take-off and join the world of nations on its own strength. In another word, large scale construction in infrastructure would prelude the economic take-off, as the constant and drastic improvement in railway, highway, airway, waterway, and post & telecommuni¡cation would facilitate conditions for the domestic and foreign capital to seek new investment opportunities, and expedite the process of industrialisation and urbanisation.

In this regard, China could be viewed as a test ground and partner on equal footing. Over the past thirty-odd years, successive governments have been bending backwards in remolding and upgrading national networks of infrastructure, encouraging the participation of both domestic and foreign capital, which has paved the way for sustained high economic growth, and drastically improved both the hardware and soft¡ware networks for the people to live, work and travel across the country and beyond their national border.

Thirdly, it facilitates conditions for urbanisation.

There is a saying that industrialisation and urbanisation are just like twin brothers, and one could not be sustainable without the other. It is equally true that the level of development of urban infrastructure composes the important material conditions for urban development, and reflects the scale and level of urban development in any country. Right at the moment, both China and India are caught up in an uphill battle in terms of industrialisation and urbanisation, which naturally evolves large scale capital input into infrastructure construction. It is in the above regard that the Modi Government has launched the ambitious Railway Budget which would not only upgrade the existing railway systems, but also launch the bullet train system starting from Mumbai. The Railway Budget also welcomes more participation by both domestic and foreign capital. There has been high expectation that more new government initiatives would come out of the pipeline in connection with infra¡structure construction that is long overdue. Therefore, our two countries have more reasons to expedite and deepen cooperation in urban infrastructure construction, taking stock from and outreach for cooperation in the above regard. Over the past two decades or so, China has basically gone through the pain of national construction in infrastructure, and has accumulated industrial technologies, mega project management know how as well as project finance, which would be the ready resources for India to tap into. As one saying goes, it takes two to tango. Now, China is ready and it is up for India to make some strategic dec¡sions, in order to produce concrete results. And for that matter, both sides should further coordinate the industrial policies and effectively address the net issues such as biased policy measures on Chinese companies in terms of visa application, security reviews and work permits, etc.

Fourthly, it helps to promote harmonisation of national economic and social development.

Without exception, developing countries are caught up in the scenario of increasing gap of urban and rural development, which has become a tall order for many governments in terms of macroeconomic governance, especially for China and India. For that matter, our two governments have to address this disparity by redirecting more resources toward rural construction and the development of agriculture in line with their national strategies.

In short, the focus of our national strategies in this regard, sooner or later, would have to extend our national infrastructure networks into the rural and remote areas, in order to effectively connect the asperate local markets with the urban consumption centers, facilitate conditions for the less developed areas with opportunities to improve their productivities and for the people in the rural areas to improve their living standards. The above process would in turn create new consuming power across the board, which is a must for our two coun¡tries to climb up the ladder of economic and social development.

Fifthly, it serves as an important policy tool for macroeconomic governance.

For long in the past, large scale project construction in infrastructure has remained a standby policy tool for many national governments in terms of macroeconomic regulation. When the economy looses steam or tilts to a slowdown, the relevant governments would inject more bud¡get or attract more private capital into the said area, which would in turn stimulate consumption in the related fields. When scenarios warrant, the relevant governments could effectively address the disparity between the rural and urban development by extending urban infrastructure networks as far as possible into the country. We all know that infrastructure is the best possible media to provide jobs for the young people who are flocking into the cities in the hope of making a better living. When some countries run into deflation, the national governments, in conjunction with the relevant authorities, would kick off a new round of project construction, in an effort to spur the total national consumption. Therefore, it pays for our two countries to deepen cooperation in the above field and enjoy the ´spillover effect´ for both sides.

Last but not least, it is the gateway for sustainable state relations. Interconnectivity has been playing a more important role in promoting state relations. China and India are neighbours. The interconnectivity between our two countries would serve as physical or mental media for our two countries to tap into the smooth flows of capital, goods, services, information and human resources, in an effort to realise common development and common prosperity. To be specific, interconnectivity covers three areas. The first is the direct connectivity of highways, railways, airlines, water¡ways, pipelines and power transmission net¡works between our two countries and those in the region. The second is the constructive soft environment within which industries of our two countries could form and maintain vertical or horizontal transfer.

The third is the institutions and mechanisms between our two countries and among those in the region to allow more people-to-people exchanges, co-operation in education and culture, cooperation of media and think tanks of the relevant countries, etc. As one saying goes, people-to-people friendship serves as the foundation for state relations, which would help further promote the understanding and cooperation among countries concerned. Take China for example, inter-connectivity has become the priority to promote the cooperation between China and countries on the subcontinent in South Asia, and it is a must for the countries in the region to realise sustainable economic and social development, and to meaningfully elevate their statuses in the global division chains. Meanwhile, the inter-connectivity would serve as a new engine for our two countries as well as those across the region to promote common development. Currently, both China and India are under pressure to sustain rapid economic development which is a must for our two countries in terms of poverty reduction and economic development, as large scale network construction would promote regional economic assimilation and growth. More importantly, inter-connectivity would make region integration more sustainable, cultivate the common values and understanding, which would, in turn, help promote the convergence of interest and facilitate conditions for the countries in the region to form the community of fate as well as the community of development.