<div>There is much debate about China as its Prime Minister Li Keqiang visits India. Much of the discussion, debate, anger and irritation are about border issues. <br />While much diplomatic effort will be deployed to resolve the pending problems, it is really the economic dynamic that will continue to shape the future.<br /><br />Already India is losing the trade balance with China. In the last six years Chinese exports to India have overwhelmed its imports. These figures are pretty stunning. Imports from China increased 210.81% to $54.30 billion in last six years. During this period India could manage to increase its exports to China only by about 62.50% to $13.52 billion. Effectively, China sells to India four times of what India sells to it. <br /><br />If China is arrogant about India, it is because perceived economic weakness. If China indulges India, it is only to maintain a lucrative market. <br />China respects nothing more than economic strength. It fears nothing more than economic strength. Border skirmishes are only an arrogant manifestation of its economic superiority. <br /><br />By next year bilateral trade is expected to cross $100 billion. India will have to improve its act to ensure that trade balance is maintained and not worsened. <br /><br />So what can India do? Fundamentally, it must improve its competitiveness. Manufacturing is still expensive and cumbersome. While the government has to focus on obvious solutions like lower credit and efficient infrastructure, Indian companies will have to focus on value added products that are tough to replicate. <br />Domestic units will have to increase their focus on quality to dull the price advantage of most Chinese products. While Chinese products are cheaper, they are also of lower quality. Indian companies must exploit this weakness. <br /><br />China is focusing on teaching English to its masses in a way that will erode India’s superiority on the language front. This will also impact India’s advantage in knowledge and services sector. Big players need to recognize that their days of advantage will not last long. These companies must come together and invest in education. Unless the gap between colleges and companies is reduced further, corporate India will continue to be hobbled by inadequate talent to fuel growth. <br />Regional trade is critical for India. Regional trade in South Asia is important to ensure that new markets open up for domestic players. Emphasis on regional trade will build cross border partnerships that can leverage competitive advantage to take on China. <br /><br />Regional trade groups in Africa are increasing local integration to counter the influence of global players. East African Community for instance is burying its differences to build regional infrastructure projects that rise above national boundaries. <br /><br />South Asian economic cooperation driven by private sector can build local giants that can push ahead in the Chinese market. All countries in the region are apprehensive about the invasion of Chinese products. A combined South Asian effort can strengthen regional companies. <br /><br />It is easy to carp about the dominance of China. But it is tougher to take steps to counter it. To end border and security issues with China, India needs to boost its economic strength. Without balance in business, India will not be able to achieve balance in diplomacy and security issues with China. <br /><br /><br />(<em>Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com</em>)</div>
