Japanese Prime Minister’s India Visit: Tokyo-New Delhi Hold Annual Summit

Japanese Prime Minister Yoshihiko Noda has paid a visit to India. During his stay he met his Indian counterpart Manmohan Singh. After the meeting he said that Japan could contribute to India’s rapidly growing manufacturing sector. A total of 421 Japanese companies have established their presence in India and created 150,000 jobs.
India and Japan need to establish firm partnerships and enter a new era of economic cooperation to capitalize on mutual complementarities, Noda said while addressing the joint business forum organized by industry chambers Associated Chambers of Commerce and Industry of India (ASSOCHAM), Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (FICCI).
Commerce and Industry Minister Anand Sharma said both countries need to work closely to address current global challenges and have a defining influence in Asia and beyond. The two-way trade can reach a level of US $25 billion by 2014, up from $13.82 billion in 2010-11.
Sharma said Japanese firms have a major opportunity in India’s infrastructure and manufacturing. The country plans to invest $1 trillion in the 12th Five-Year Plan (2012-17) to build infrastructure.
The Delhi-Mumbai industrial corridor and dedicated freight corridor are the most ambitious infrastructure projects conceived so far which will have integrated townships. At the same time, the national manufacturing policy aims to boost production in sectors like electronics hardware, information technology, agro food processing and green power technologies. The Japanese government is committing $4.5 billion for implementation of this project.
Steady Progress in Relations
The meeting between Prime Minister Manmohan Singh and his Japanese counterpart Yoshihiko Noda, the sixth of the annual India-Japan summits, is a marker of the steady progress. It yielded the first official confirmation since Japan's devastating tsunami-earthquake-Fukushima meltdown that the country has not shut the door on a civilian nuclear deal with India. While Noda stressed the importance of learning the right lessons from Japan's nuclear accident, it appears that negotiations on a deal to assist India develop peaceful nuclear energy will continue.
The Japanese prime minister’s pledge of $4.5 billion over the next five years for the development of the Delhi-Mumbai Industrial Corridor, a commitment of financial assistance for two more infrastructure projects — Phase 3 of the Delhi Metro and a biodiversity conservation project in West Bengal — and his interest in sharing high-speed railway technology with India are significant.
Currency Swap Arrangement
During the Japanese prime minister’s stay, New Delhi and Tokyo have agreed to a $15 billion currency swap line, in a positive move for the troubled Indian rupee, Asia's worst performing currency this year.
India and Japan previously had a $3 billion swap arrangement that expired in June, said the official, speaking on condition of anonymity.
The currency swaps are expected to support the Indian rupee as it continues to weaken against the greenback and Europe's sovereign debt crisis hits India's exports. The dollar-swap arrangement with India follows a similar agreement with South Korea in October.
New Beginning Intensified
Noda's India visit started a year of intense bilateral activity. The foreign ministers of the two countries held a strategic dialogue in October, followed by talks between the defense ministers. In February, the two countries signed the Comprehensive Economic Partnership Agreement covering trade in goods as well as services; it came into effect in August.
Earlier in December 2011, India, Japan, and the United States held their first trilateral strategic dialogue. It is creditable that despite the political instability in Japan, and the scandal-induced paralysis in India, both countries managed to fit in these high-level exchanges. It is crucial that growing India-Japan ties are viewed independently of each country's relations with China.
Civil Nuclear Cooperation Agreement
The 10-page India-Japan joint statement has no doubt called for concluding the agreement with “due regard to each side’s relevant interests, including nuclear safety.” But this will hardly lessen the fears in the minds of millions of people who live in the vicinity of the areas where nuclear power plants are located or planned.
It is not surprising that Noda has been making a strong plea for the resumption of negotiations on a civil nuclear cooperation agreement between his country and India. He was a man on a mission, reiterating this whenever he got an opportunity during his stay in New Delhi as part of the annual summit between the two nations’ prime ministers.
The stakes are high as India expects to have 20,000 MWe of nuclear capacity on line by 2020 and Japan would like a share in this. India has already signed civil nuclear agreements with the United States, Russia, France, Britain, Canada, South Korea, Argentina, Kazakhstan, Mongolia and Namibia. Negotiations with Japan were brought to a halt after three meetings held last year after the March 2011 disaster that hit one of Japan’s oldest nuclear power plants — Fukushima Daichi Nuclear Power Station — which saw a meltdown after being crippled by a tsunami.

China's Response to Downgraded US Credit Rating

The announcement by the international rating agency Standard & Poor's to downgrade the US sovereignty credit rating from AAA to AA+ has caused the highest AAA sovereign credit rating that the United States has maintained for close to a century to be rewritten for the first time. The action taken by the Standard &Poor's has not only added to the difficulty for economic recovery in the United States, but also that the impact of it will trigger a wide range of complex effects on world economy and financial market.
However, the reason for the Standard & Poor's to downgrade the US sovereign credit rating is exactly the same as China's Grand China International Credit Rating Company. This shows that not only China's credit rating company cannot stand the US style of politics; for even now; the long standing US credit rating company such as the Standard & Poor's has also lost confidence in the US political system.
Foreign Bond Investment Standard
After the US Congress passed the debt limit increase bill, the Grand China International Credit Rating Company became the first rating company in China to announce that it would downgrade the US foreign currency sovereign credit rating from ‘A +’ to ‘A’; with the outlook rated as ‘Negative’. The reason it gave was that the political party dispute in the United States has exposed the shortcomings of the US political system; it has become difficult for the US Government to govern the fundamental sovereign debt crisis. It said that as a result, the security and benefit of US debt creditors lack the needed protection from the US political and economic mechanism.
However, since the Grand China International Credit Rating Company does not belong to the authoritative group of the international credit rating agencies; and since this Chinese company has the tradition to rate other countries' sovereignty credit rating from a political approach, the Chinese authority has not used the credit rating of Grand China International Credit Rating Company as a criteria to make decision for its foreign bond investment standard.
Drop in US Stock Market
However, this time the reason given by the Standard & Poor to downgrade the US sovereign credit rating is actually consistent with the Grand China International Credit Rating Company's rationale. In Standard & Poor's public statement, it said that that although Standard &Poor's has acknowledged the US debt ceiling limit bill passed by the US Congress, but the Standard &Poor's was ‘pessimistic’ of the ability of the US Government and US Congress to resolve the US financial problems. Standard &Poor's has severely criticized the paralyzed US political system. It believed that the US Government and the US Congress are unable to implement the bill that has just been passed with the goal to implement long-term stability of the pending debt issue in the United States.
In other words, the US Democratic and Republican politicians have played with fire by raising the US federal debt limit issue. Yet between the two political parties, there indeed has no winner. At this moment, what is being questioned is the ability of US President Barack Obama to rule the nation and the credibility of the US political system itself. When the US stocks plummeted on Thursday [ 4 August], the sharp fall in the US stock market price has also pointed to the allegation that global investors have lost confidence in the performance of the US Government. The sharp drop in US stock market has also reflected the reality that the share market has already given Washington a vote of no confidence.
US Treasury Bond Issue
What followed was that the Chinese Foreign Minister Yang Jiechi and the Japanese Finance Minister Yoshihiko Noda have, on separate occasion, called for global cooperation in response to the US debt crisis. The reactions coming from China and Japan have reflected the reality that as the respective first and second largest creditor countries of the United States, China and Japan are indeed quite concern about the future of US debt issue.
Now, with the Standard & Poor's confirmation of the downgrading of the US sovereignty credit rating, such development will force China and Japan to take non-rival approach and action to handle the US Treasury bond issue.