By WILL DAVIES
NEW DELHI—Chinese Premier Li Keqiang said Tuesday he was aware of India's concerns over a bilateral trade deficit and expressed a willingness to help Indian companies access China's market.
"I am confident we have the ability to mitigate the trade imbalance between our two countries. China never has any intention to seek a trade surplus, only a dynamic trade balance is sustainable to our nations," Mr. Li told businesspeople at an event in New Delhi, on the penultimate day of an official visit to India.
Chinese Premier Li Keqiang, here at the right during a video conference in Mumbai with Chinese employees of India's Tata Group, talked trade Tuesday.
India's trade deficit with China stands at $40 billion, up from just $1 billion in 2002, according to data from India's Ministry of Commerce. In that period, trade has risen from around $2 billion to $68 billion, as Indians have bought more Chinese goods such as telecom and power equipment.
The trade imbalance with China is a major contributor to the widening of India's current account deficit, which the government forecasts to be about 5% of gross domestic product for the last fiscal year. The deficit was a major factor that pushed the rupee currency to record lows against the U.S. dollar last year and has put huge pressure on India to attract investment.
India and China are targeting bilateral trade to reach $100 billion by 2015, and India is eager to get a larger share of the increased activity.
Summitry
India, China Play Down Border Tensions
"We understand Indian concerns on trade imbalance," Mr. Li said Tuesday, the third day of his visit to India. "The Chinese side is also willing to provide facilitation to more Indian products to access Chinese markets." He added that China is willing to start negotiations on a regional trading agreement with India, but gave no details.
On Monday, Prime Minister Manmohan Singh said India is seeking better access to China for its exports, which include pharmaceutical products and information technology firms. At the moment, India's exports to China are largely low-margin, unprocessed commodities like iron ore and copper.
Last year, India imposed tariffs on the import of equipment for power projects, a move aimed at protecting local manufacturers from an influx of Chinese-made products. Some observers say India's manufacturing sector is too weak to compete with China on cost.
"It is impossible for Indian manufacturers making things like ceiling fans or toys to compete with Chinese goods," said Brahma Chellaney, professor of strategic studies at the Centre for Policy Research, a New Delhi-based think tank.
"In areas where India is strong—pharmaceuticals, IT—the Chinese have all sorts of visible and invisible barriers which limit Indian access. Also the Chinese are buying primary goods from India, such as iron-ore, and selling finished goods back," Mr. Chellaney said.
India and China also have other areas of disagreement, especially over their disputed Himalayan border. The countries fought a 1962 war over the frontier, which Beijing won, and until today have failed to agree on the formal demarcation of the border.
On Monday, the countries' prime ministers tried to ease lingering tension over India's claim last month that Chinese troops had crossed the border in the northwest Himalayas and set up camp. India responded by building up troop levels in the area. Both sides agreed to scale back troops in early May.
Mr. Li was set to talk to another business event in Mumbai, India's financial capital, later Tuesday. He will depart for Pakistan, China's regional ally, on Wednesday morning, and later will visit Germany and Switzerland. This is the Chinese premier's first overseas trip since he took office in March.
At an event in Mumbai on Tuesday evening, Gao Hucheng, China's minister of commerce, said India and China had signed agreements for 20 procurement projects and two other projects worth a total $1.5 billion. He didn't provide any more details.
—Sudeep Jain in Mumbai contributed to this article.
China's Li Promises to Reduce Indian Trade Surplus - WSJ.com
NEW DELHI—Chinese Premier Li Keqiang said Tuesday he was aware of India's concerns over a bilateral trade deficit and expressed a willingness to help Indian companies access China's market.
"I am confident we have the ability to mitigate the trade imbalance between our two countries. China never has any intention to seek a trade surplus, only a dynamic trade balance is sustainable to our nations," Mr. Li told businesspeople at an event in New Delhi, on the penultimate day of an official visit to India.
Chinese Premier Li Keqiang, here at the right during a video conference in Mumbai with Chinese employees of India's Tata Group, talked trade Tuesday.
India's trade deficit with China stands at $40 billion, up from just $1 billion in 2002, according to data from India's Ministry of Commerce. In that period, trade has risen from around $2 billion to $68 billion, as Indians have bought more Chinese goods such as telecom and power equipment.
The trade imbalance with China is a major contributor to the widening of India's current account deficit, which the government forecasts to be about 5% of gross domestic product for the last fiscal year. The deficit was a major factor that pushed the rupee currency to record lows against the U.S. dollar last year and has put huge pressure on India to attract investment.
India and China are targeting bilateral trade to reach $100 billion by 2015, and India is eager to get a larger share of the increased activity.
Summitry
India, China Play Down Border Tensions
"We understand Indian concerns on trade imbalance," Mr. Li said Tuesday, the third day of his visit to India. "The Chinese side is also willing to provide facilitation to more Indian products to access Chinese markets." He added that China is willing to start negotiations on a regional trading agreement with India, but gave no details.
On Monday, Prime Minister Manmohan Singh said India is seeking better access to China for its exports, which include pharmaceutical products and information technology firms. At the moment, India's exports to China are largely low-margin, unprocessed commodities like iron ore and copper.
Last year, India imposed tariffs on the import of equipment for power projects, a move aimed at protecting local manufacturers from an influx of Chinese-made products. Some observers say India's manufacturing sector is too weak to compete with China on cost.
"It is impossible for Indian manufacturers making things like ceiling fans or toys to compete with Chinese goods," said Brahma Chellaney, professor of strategic studies at the Centre for Policy Research, a New Delhi-based think tank.
"In areas where India is strong—pharmaceuticals, IT—the Chinese have all sorts of visible and invisible barriers which limit Indian access. Also the Chinese are buying primary goods from India, such as iron-ore, and selling finished goods back," Mr. Chellaney said.
India and China also have other areas of disagreement, especially over their disputed Himalayan border. The countries fought a 1962 war over the frontier, which Beijing won, and until today have failed to agree on the formal demarcation of the border.
On Monday, the countries' prime ministers tried to ease lingering tension over India's claim last month that Chinese troops had crossed the border in the northwest Himalayas and set up camp. India responded by building up troop levels in the area. Both sides agreed to scale back troops in early May.
Mr. Li was set to talk to another business event in Mumbai, India's financial capital, later Tuesday. He will depart for Pakistan, China's regional ally, on Wednesday morning, and later will visit Germany and Switzerland. This is the Chinese premier's first overseas trip since he took office in March.
At an event in Mumbai on Tuesday evening, Gao Hucheng, China's minister of commerce, said India and China had signed agreements for 20 procurement projects and two other projects worth a total $1.5 billion. He didn't provide any more details.
—Sudeep Jain in Mumbai contributed to this article.
China's Li Promises to Reduce Indian Trade Surplus - WSJ.com
