BEIJING - Trade
between China and India is growing so quickly that
China is expected to supplant the US as India's
single largest trading partner within just a few
years, analysts say. But areas of conflict within
the growing relationship remain, including a
demand from China that India grant it "market
economy" status, and recently failed negotiations
between the two states over a new long-term
contract for iron ore.
China to
overtake US as top Indian trade
partner China will likely emerge as India's
largest trading partner, overtaking the United
States within a few years, with two-way
trade hitting US$100 billion
in the near future, predicts a senior Indian
businessman.
Saroj Kumar Poddar, president
of the Federation of Indian Chambers of Commerce
and Industry (FICCI), said on Monday in Beijing that "tremendous
potential" exists with regard to trade between the
world's two fastest-growing economies. Trade
between China and India last year hit a record of
$18.7 billion, jumping 38% year-on-year.
If the growth is sustained, the bilateral
trade could soon overtake Indo-US trade, which is
hovering around $30 billion, said Poddar, who is
leading a FICCI delegation of Indian executives in
China this week.
But Poddar said that to
carry on the robust growth, it is crucial to
diversify the Indian export basket from primary
products to manufactured items and processed
products. India's exports to China now are largely
restricted to primary and resource-based products,
such as iron-ore exports, which constitute more
than half of India's total exports to China.
"One of my tasks this time in China is
trying to find ways to diversify the export
basket, especially [by] increasing the proportion
of high-value-added products," Poddar told China
Daily. This week's visit by the FICCI
delegation, which is composed of a dozen
representatives from modern Indian industries, is
regarded as a crucial step for the sustainable
long-term growth of Sino-Indian trade. Poddar said
the delegation members come from a wide range of
industries, including fertilizer, energy,
food-processing, petrochemicals, textile and
tobacco sectors.
"We have diversified
interests and are looking for opportunities in
different fields," Poddar said, adding that the
delegation would visit Xian, capital of
northwestern China's Shaanxi province, and Shanghai, exchanging
views with local business people on the Chinese
economy.
Poddar said India and China,
dubbed the "double engines" of economic
development in Asia, would further benefit if they
had a closer relationship with each other.
"The two countries have many complementary
aspects and we can learn from each other," he
said. "China's development depends highly on
foreign trade and investment, while India mainly
lies on the growth of domestic enterprises. Each
of us can draw experience from the other."
Poddar called it "very natural" for the
two populous countries to be rivals in the world's
economic arena. "Even Indian companies themselves
are competing [against] one another. Competition
makes us have the best Chinese enterprises and the
best Indian enterprises."
When talking
about the feasibility of reaching a free-trade
agreement (FTA) between India and China, Poddar
said it would happen in the future, but the idea
is still premature for now. "We need to understand
each other better before such an agreement is
reached. It takes time."
China demands
'market economy' status from India China's
leading trade body on Monday demanded early Indian
action to grant "market economy" status to the
communist giant, the world's third-largest trading
nation, and additionally called for the opening up
of India's retail sector, according to the Press
Trust of India (PTI) news agency.
"India
should [seriously consider recognizing] the
market-economy status of China to further the
business relationship between the two countries,"
said Wang Jinzhen, the assistant chairman of the
China Council for the Promotion of International
Trade (CCPIT).
"I can tell you that 95% of
the commodities in China are regulated by ...
market forces without any intervention by the
government," Wang said while addressing a chief
executive officers' business summit in Beijing,
organized jointly by the FICCI and CCPIT.
"Chinese enterprises are responsible for
their gains and losses themselves without
financial support from the government. Normally,
they cannot buy or even export lower than their
cost. This is the fact in China right now," he
said.
India has not yet granted
market-economy status to China, which became a
full-fledged member of the World Trade
Organization (WTO) in 2001, he said, while noting
that nearly 50 countries, including members of the
Association of Southeast Asian Nations (ASEAN)
have recognized China as a market economy. Other
countries and regions, such as the United States
and the European Union, also have not granted
market-economy status to China.
Qingdao
iron ore talks fail China and India failed
to reach a long-term agreement on the supply of
iron ore at the Sino-India Iron Ore Summit held
recently in Qingdao, a coastal city in eastern
China's Shandong province.
At the summit, Luo Bingsheng, deputy
director and secretary general of the China Iron
and Steel Association, said the iron-ore trade
between China and India should be established on
the basis of long-term and stable cooperation,
taking long-term contracts as the major trade
mode.
Luo said that the two sides should
make common efforts to strive for a globally
unified open price and long-term contract. As a
first step, he suggested, mining firms,
steelmakers and middlemen could sign long-term
contracts.
