Even as China's manufacturing activity continues to slide, with its
purchasing managers index (PMI) falling below the 50% mark in August, the
country has completed a rail link between two of its provinces, as part of a
pan-Asian network that eventually stretches up to Singapore, with an eye on
improving exports to south-east Asia.
The rail line between Yuxi and
-Mengzi in Yunan province of China is part of the pan-Asian network that will
become operational by December, according to Chinese media, at a cost of $707
million, and has been completed ahead of schedule.
The line connecting China with
most countries of Association of South-East Asian Countries (ASEAN) would run
from Kunming Laos, Thailand and Malaysia, to Singapore with alternate routes
through Vietnam, Cambodia and Myanmar. This would mean easier transportation of
goods and services via rail instead of shipment over the South China sea.
However, Indian business and
trade officials are confident the new Chinese rail link will not significantly
impact Indian trade with south-east Asia.
Abhijit Das of Center for WTO
Studies says the new line will make India's trade with the ASEAN market
slightly more difficult. "China is faster in completing infrastructure
projects. But India and China can work together to come to a mutually
beneficial solution," says Das.
Sanjay Budhia, member of the CII
National Committee on Exports and Imports, says the new development in China
should not affect India-China relations. "Competition is always welcome
but not at the expense of one country having exclusive advantage over the
other," says Budhia.
The line now has a total length
of 141 km passing through 35 tunnels and 61 bridges, accounting for 55% of its
total length.
Daya Sharma, director of Super
Freight, opines that the new rail link will make insignificant difference to
India's exports to ASEAN. "The only difference will be in transportation
cost. India access will be through shipping while China will use the rail link.
Since manufacturing cost will stay the same, I do not see China's rail
affecting our exports," says Sharma.
A top official from the commerce
ministry says the upcoming Mekong-Ganga meeting with the ASEAN countries in
December might facilitate greater trade understanding. The Mekong-Ganga meeting
will mark the 20 th anniversary of India-China dialogue partnership. The
commerce ministry has planned an expedition by Indian Naval ship, Sudarshini,
from September 15 to trace the ancient trade routes which followed the monsoon
winds to highlight the maritime linkage between India and the south-east Asian
countries. India's exports to the ASEAN region for 2011-12 (April-December)
stood at $26,790 million.
The region is emerging as a trade
hotspot with even United States negotiating a free trade agreement, known as
the Trans Pacific Partnership (TPP), with ten other countries, including
Singapore: Malaysia, Singapore, Brunei and Vietnam.
China's new rail link has been
completed at a time when many firms in China's export hub Wenzhou are closing
down in face of the global economic meltdown. This wise move by China will
revive China's trade which was hit by cancellation of purchase contracts by
recession-hit West, thus not only facilitating movement of goods and people,
but also geopolitical stability. China is currently among the top ten exporters
in the world.
SHIVANGI SHUKLA
Business & Investment Opportunities
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