‘Balanced trade is conducive to interests of both sides’
China is sending an investment promotion mission and one of the biggest ever business delegations to India next week to accompany Premier Li Keqiang on his State visit, top officials said on Thursday, to demonstrate that the government was taking ‘very seriously’ the widening trade imbalance.
China and India are, next week, expected to sign a number of business cooperation agreements, including investment and financing deals, as Mr. Li travels to New Delhi and Mumbai.
His visit takes place against the backdrop of fast-rising bilateral trade, which reached $66 billion last year as China became India’s second-largest trading partner. Bilateral trade stood at a few billion dollars a decade ago.
Despite the rapid increase in overall trade, the increasingly unbalanced nature of the relationship has emerged as a source of concern, with the deficit reaching a record $29 billion last year, in China’s favour. Indian imports of Chinese machinery and equipment, particularly in the power and telecom sectors, have emerged as a key driver of trade, while India continues to export raw materials such as iron ore.
While India is pushing for greater market access for information technology and pharmaceuticals companies, it has had limited success so far.
China was taking the issue of the imbalance ‘very seriously’ and had launched a number of initiatives to bridge the gap, Chinese Vice Commerce Minister Jiang Yaoping told reporters on Thursday. An investment promotion mission will travel to India next week, he said, to follow up on the work of three earlier missions sent in 2008, 2010 and 2012.
“We believe that balanced trade is conducive to interests of both sides,” he said. “The reason we have a trade imbalance is because of economic patterns and structures of the two countries.’’
Mr. Jiang said the nature of the trade relationship was changing, particularly with India emerging as the biggest destination for project contracts for Chinese companies. As of March, 2013, he said, Chinese companies had completed projects in India worth $35.1 billion. Both countries, he said, had signed purchase contracts worth $1.65 billion, financing agreements worth $11.64 billion, and engineering and construction products worth $3.5 billion.
Next week’s visit will see deals signed for business cooperation agreements, as well as the first meeting of the China-India CEOs forum and a China-India business cooperation summit.
Bilateral trade reached $73 billion in 2011, when China became India’s largest trade partner, but fell to $66 billion last year on account of the global downturn. As of April this year, trade was down 6.2 per cent. Mr. Jiang, however, said he was optimistic that the $100 billion target for 2015 would be ‘realised on schedule’.
Chinese Vice Foreign Minister Song Tao said, on Thursday, China would take steps to “facilitate Indian companies’ efforts to explore the China market,” pointing out that China will import $10 trillion worth of goods and invest $500 billion overseas in coming years.
“We hope that the Indian side will take a proportionate share of China’s imports and outward investment,” he said. “We are ready to work with India to tap into the potential of bilateral trade and better promote two-way investment, so that we can gradually resolve the issue of the trade deficit”.