Secretary General, Krishan Kalra,

President Satish Bagrodia,

Ladies and Gentlemen,

It is in deed a great pleasure for me to attend this gathering organized by PHD Chamber and have the opportunity to interact with you. I would first like to seize this opportunity to thank the Chamber for what you have done over the years in promoting China-India economic and trade cooperation.

Today, I am expected to speak on the future prospects of China-India economic cooperation in the present global economic scenario.

Before taking on the future, I would like to dwell on the present for a few minutes.

The financial crisis originating from the United States has plunged the world economy into the most difficult situation since last century's Great Depression. Its ripple effects have extended from the financial sector into the real economy, from the developed countries into developing ones. It is a widely shared view that the downturn trend of the world economy has not reached its bottom yet. According to the IMF forecast, the global economy will increase only by 0.5% in 2009.

Like India, though the financial sector remains largely intact, China's real economy has been severely inflicted. China's export has notably shrunk, with about 670,000 small-scale export-oriented enterprises shut down and 6.7 million jobs "evaporated". According to information released by the Chinese Ministry of Agriculture, about 10 to 15 million migrant workers from rural areas are waiting for new jobs. Downward pressure on China's economy is still high.

While in India, five lakh jobs were lost during October-December 2008. Foreign demand is still going down. Companies suffered huge fall in their net profits.

As a result of above factors, China-India bilateral trade as of January 2009 fell by 37% over the same month of 2008.

In view of the glooming situation, I am still confident in China and India's economies. The reason as follows:

First, the fundamentals of China and India's economies are good. Both economies have the strength and resilience against the crisis. We have huge domestic markets, sufficient financial resources, plenty of investment opportunities and rich and cheap labor force. In spite of the crisis, last year, China and India performed relatively well, with 9% and 7.1% GDP growth respectively. Our bilateral trade volume still reached US$51.78 billion, a 34% increase over the previous year. As announced, China has set 8% and India more than 7% growth rate for this year, lower than previous years but still the highest among the world nations.

Second, the Chinese and Indian Governments have responded to the crisis with swiftly and decisively actions. Both countries promptly adjusted the direction of the macroeconomic policy, adopting a proactive fiscal policy, easing monetary policy, introducing measures to shore up domestic demand and putting in place a series of related policies to stimulate the national economy. The Chinese Government has rolled out a two-year program involving a total investment of RMB 4 trillion, equivalent to 16 percent of China's GDP in 2007, aiming at injecting incentive to its economy. So long as we respond the crisis appropriately and firmly, we will be able to minimize the downside of crisis and ensure a steady development of our economies.

Third, like any thing, while causing troubles to our economies, the crisis also gives us some advantages and opportunities. The falling price of raw materials, such as oil, precious materials, and iron and steel and others, the lowing cost of labor force, all of which substantively reduce the cost of economic activities. Furthermore, it also offers us an opportunity to restructure and upgrade our economy.

Fourth, in spite of the difficulties, the world still looks at China and India as engines for world economy recovery. It is believed that China and India will step out of the shadow of crisis earlier than others. In fact, our two economies have already shown some positive sign for recovery and it is my belief that both economies will continue to enjoy relatively higher growth this year.

With these said, I have a very good reason for being optimistic about our economic interaction of our two countries. But to achieve our objectives, China and India must remain confident in their economies. At present, confidence is crucial for fighting against the crisis and achieving early recovery. As Chinese Premier Wen Jiabao said at World Economic Forum Annual Meeting 2009, in the time of economic difficulty, confidence is the source of strength.

China and India should exchange experience and draw inspirations from each other in fighting against the crisis with a view to achieve better results. When two largest developing countries run their affairs well, it can contribute positively to global economy and curb the spread of the international financial crisis.

China and India must guard against the protectionism and work for a win-win situation. Trade protectionism hurts our national economy and is harmful to the recovery and growth of world economy. As a responsible member of World Trade Organization, China stands by the principle of free trade, opposes any form of trade protectionism and is ready to engage with other countries to resolve trade conflicts through cooperation and dialogue. We sincerely hope that two Governments will encourage their respective business sectors to engage in dialogue and resolve trade problems in an appropriate manner.

China and India should upgrade trade quality, broaden the scope and improve trade mix to achieve mutual complementarities. We should make utmost efforts to meet the target of trade set by our leaders for 2010, which is US $60 billion.

China and India should tap respective potentials and deepen their cooperation. India enjoys edges in IT, outsourcing service, pharmaceutical, financing sectors. For China, it has its strength in manufacturing, infrastructure development, and operating economic free zones, etc. How to make good use of these potentials and to complement each other's economy is an issue yet to be worked on.

China and India should launch negotiations on regional trading arrangement at an early date, and establish dialogue forums for the business communities of both countries to promote their cooperation. The two governments should also create favorable environment for two countries to trade and invest in each other.

It is my view that opportunities are great for the business communities of China and India to cooperate. What we need is a right mindset and approach. I sincerely believe, with the efforts of both sides, especially people like you who are directly involved in business, China-India economic cooperation will continue to thrive. Furthermore, we will be able to contribute to progress, harmony, and development of our two countries, as your Chamber's name PHD stands for.

Thanks!