Chinese Commerce Minister Chen Deming will travel to New Delhi on August 26 for talks with his counterpart Anand Sharma amid renewed concerns, on both sides of the border, about the future of a rapidly growing but increasingly skewed trade relationship.
Mr. Chen’s visit comes against the backdrop of growing anxieties in India about a widening trade deficit — set to expand further this year with exports to China falling by a record 8 per cent last month — and concerns in China about moves by New Delhi to impose import duties on power equipment and restrict imports of certain kinds of telecom hardware.
On August 27, Mr. Chen will lead the Chinese delegation in the ninth round of the Joint Economic Group (JEG) bilateral dialogue. At the previous round in January, 2010, in Beijing, Mr. Sharma had made a strong pitch for China to increase imports of Indian pharmaceutical products and IT to address the imbalance. He had said, following the last round, that both sides had discussed the trade deficit “very frankly” and agreed upon “measures required to ensure there is a balance in India and China’s economic engagement.”
Since then, however, the trade imbalance has only continued to widen: India’s deficit has almost doubled since the last trade talks were held, up from $14 billion at the end of 2009 to $27 billion last year.
Indian officials in New Delhi are likely to repeat their message for China to open its market to pharmaceuticals and IT. Chinese officials have appeared to reject Indian complaints that the domestic market was closed to Indian exports in both sectors, arguing that Indian companies had done far less than their foreign counterparts to make their presence felt here.
Chinese officials will voice their concerns on recent proposals in India which, if implemented, will curtail the rapid growth in imports of power and telecom equipment from China. Moves to impose an import duty on power equipment that may range from 14 to 21 per cent as well as to enforce local sourcing of a range of telecom hardware, citing security concerns, have worried officials here.
Bilateral trade reached a record $73.90 billion last year, when China once again became India’s biggest trading partner. Trade has expanded rapidly over the past decade, up from a few billion dollars ten years ago, driven by Indian imports of machinery, power equipment and telecom hardware and exports of iron ore.
Trade has been hit this year, largely on account of a sharp fall in iron ore exports following recent bans. Overall exports were down by 8 per cent in July — the biggest decline in Chinese imports from any of its major trading partners — to $12.9 billion, according to figures released here last week.
