New Delhi: India and China will on 26-27 September hold discussions on doubling bilateral trade to $100 billion by 2015 and ways to plug a yawning trade gap in China’s favour.
The countries will also seek ways to encourage mutual investment among businesses, apart from devising ways to handle frictions in trade so each other’s interests are protected, a government official said, requesting anonymity.
The Indian delegation, led by Planning Commission deputy chairman Montek Singh Ahluwalia, is slated to hold talks in Beijing on 26-27 September with Zhang Ping, head of China’s National Development and Reform Commission, the country’s apex planning body.
The decision to establish the dialogue, along the lines of a similar engagement between China and the US, was taken during talks between Prime Minister Manmohan Singh and his Chinese counterpart Wen Jiabao in December.
Both sides had agreed to establish a strategic economic dialogue to enhance macro-economic policy coordination, promote exchanges, and join hands to address issues and challenges in economic development and enhance cooperation.
India and China identified trade as a means to increase convergence and narrow the trust deficit between the Asian nations during a landmark visit by then Indian Prime Minister Rajiv Gandhi to Beijing in 1988.
Ties have been riddled by mutual suspicion since 1962 when the countries fought a brief but bitter border war, and slow-moving deliberations to find a solution to the dispute over the frontier have done little to remove the distrust.
Commerce has picked up only in the past decade, especially after a visit to India by then Chinese Premier Zhu Rongji in 2002.
Bilateral trade is expected to touch $70 billion in 2011-12. It was $60 billion in 2010-11, with trade worth $20 billion in Beijing’s favour. In 2009-10, the trade balance in China’s favour was $16 billion.
“There is great scope to increase India-China trade,” said Sujit Dutta, a professor of Chinese studies at Jamia Milia Islamia University. “Trade has been growing due to the opening up of the Indian economy to China.”
Indian exports to China consist of raw materials such as iron ore, while Chinese imports into India consist of finished goods such as power and telecom equipment, imported by corporate groups such as the Tatas and Reliance, Dutta said.
“For these companies, it is cost-cutting as Chinese equipment is available at cheaper rates,” said Dutta. “The import of such Chinese goods results in job creation in China.”
But in areas where India has an edge—including information technology and pharmaceuticals—there are many barriers inhibiting Indian imports into China, Dutta said.
“What the Indian delegation needs to impress on the Chinese is that China needs to bring in investment into India, into the manufacturing sector, for example, which will create jobs in India,” he said.
China was “not listening” to India’s repeated requests for addressing the bilateral trade imbalance, India’s commerce secretary Rahul Khullar told reporters earlier this month.
In view of this, the ministry was working on a specific strategy to discourage unrestricted Chinese imports, particularly of power and telecom equipment, Khullar had said.
The official cited earlier said a high-level meeting to discuss the subject took place on 6 August, where specific measures to correct the skewed trade balance were discussed.
Earlier this month, India allowed local companies to borrow up to $1 billion in the Chinese currency within the $30 billion ceiling on foreign borrowings for the fiscal year ending 31 March.
The move is aimed at providing some flexibility to Indian firms, especially those that import power equipment from China, as rising local borrowing costs have been forcing them to delay investment decisions.
This was the result of “a rethink in government following pressure from the private sector,” said Biswajit Dhar, director general at Research and Information System for Developing Countries. “Given the economic recession, Indian companies may not be able to borrow from Europe and America. The Chinese in contrast gave quite a good deal to Indian companies who borrowed from them in the recent past. The Chinese are also interested in diversifying as the US market is not doing well,” Dhar said. “It makes sense to lend to Indian companies but how this will play out in the long term is difficult to say.”
China's manufacturing costs have gone up and soon it will not be a lucrative area to trade with.
Why increase trade with China?
Let it wither away since less exports will create problems for China and they will learn which side of the bread is buttered. As it is, they are worried with the labour cost and aspirations going up in China and manufacturers moving out to Vietnam etc.
Therefore, it is ideal to put the heat on!
There is already a pressure to stop iron ore being exported to China, with which they are undertaking manufacture. Let them take it from Australia and deplete their resources.
What is the point of increasing the bi-lateral trade if it only increase China's trade surplus. And all we do is export raw ores. We need to put a full stop to this. We should also make them buy finished goods from India not just raw ores.
haha,nobody in India like to deal with China, ok, ask you government to stop trading with China, since you have a democratic system, your voice will be listened and your will fulfilled.
Also some body in China say, why export electric generator equipment to India, this will help to develop the infrastructure at low cost, and will result in competition with us, better leave them in darkness. you see, nothing is only one sided, better let what will happen to happen.
There are corrupt bureaucrats in India just the way there are in China who are executed on regular basis, if India does carry out the same punishment the number of dishonest officers will fall sharply. It is not happening in China though.
Since when have you noticed the European goods are not advanced? If that is the case why do you import most of the manufacturing machinery from Europe and Japan as well. When you do not have the facts straight, it will be much better not to comment otherwise you loose your credibility.
In business there is term production cost and most economically. That is the only reason countries from other nation's. No body is going to live in darkness just because you stop exporting the generators to India. Go ahead do it we will benefit from both end. More jobs for and save foreign exchange as well. At the same time reduce the carbon emission from transportation. You should take a course in business as well.
Didn't you read the news in the above? "imported by corporate groups such as the Tatas and Reliance, Dutta said."
So, you should go to shout some managers or directors in these groups because they didn't think of india's interest when they run their business.
Of course europe or japan goods are more better than chinese goods. Question is how much money do you have in your pocket!
Just as we all know Germany car is the best, but very few people can aford it.
I am into business. I know what comes to India from China. In my area of business it's fasteners only some special kinds, other normal fasteners are cheaper in India and the quality better, people import power tools, but only to make a fast buck in the booming market. They don't give any warranty on it. Electronic goods, again the cheap ones,.toys, again cheap ones. Welding machines, again cheap and no warranty. Similar welding products are made in india, comes with warranty and used in all construction activities. Chinese welding machines are bought by those who have a small budget and have to basically junk the machine after a project. Usually smal fabricators. Another field is plastics. Again cheap ones.
The Chinese advantage is capacity, govt support and manipulation of currency.