Economic reforms will create ripple effect in Asia: Report

BEIJING: The new Indian government's promise to deepen economic reforms will create ripple effect in Asia and may prompt China to open-up more to retain its advantages, a leading daily said.

"The rise of Asia is incomplete without the participation of India. As a regional power, India's openness will bring a ripple effect to the region. It will also stimulate China to put more efforts in its own opening up," the article in the state-run Global Times said today.

"Healthy competition between the two regional powers in Asia will promote the continuous integration among Asian economies and form a global economic engine with powerful driving forces," it said.

The "bringing in" and "going out" of the investment are complementary.

Whether India's foreign investment goes smoothly or not depends on how many countries can be allowed to participate in the economic development process of India, it said.

Citing ASEAN trade with China which crossed USD 400 billion last year compared to India's which is around USD 76. 4 billion, it said, "China's advantages in manufacturing have contributed to the large scale of trade between ASEAN and China. But the more important reason is that China's degree of openness to ASEAN is higher than India."

ASEAN countries will formally launch a unified common market in 2015.

By then, the integration of market will be enhanced, competitive strength and capability of attracting investment of ASEAN will also be increased, it said.

"However, if India wants to take advantage of the platform provided by ASEAN to develop its economy, it has to increase its degree of openness," it said.

"India is one step behind China in participating in the integration of regional trade and economy. This lagging step affects the capability of the Indian economy in sharing the fruits of development of the regional economy," it said.

"Currently, the Modi government wants to catch up by deepening reform. This behaviour is helpful to neighbouring countries including China," it said.

"If revolutionary changes can be carried out in India's policies of attracting investment, the economic integration of Asia as a whole will be benefited," it said, citing China's proposal for establishing a Bangladesh-China-India-Myanmar Economic Corridor.