The Hindu Business Line : China factor

The optimism generated by the Prime Minister, Dr Manmohan Singh’s visit to Beijing appears to be justified in view of the welcome change in China’s stand on such important issues as civil nuclear cooperation and reform at the United Nations. The joint statement adopted at the end of the visit said the two sides had pledged to promote bilateral co-operation in civil nuclear energy “consistent with their respective international commitments”, which o bservers interpret as progress, given China’s earlier stance. On the UN, Beijing says that it “understands and supports” New Delhi’s aspirations to play a greater role in the body, “including in the Security Council”, although it avoids making a direct comment on Indian membership of the Security Council.

The statement covers a host of other subjects pertaining to international co-operation, such as working together at the WTO, climate change, and terrorism. On regional co-operation, the statement says that the goal is to explore together a “new architecture for closer regional co-operation in Asia, and to make joint efforts for further regional integration of Asia”. However, on economic co-operation, particularly trade, the joint statement contains little that is encouraging, apart from the reiteration of the well-known general principle, namely, that being major economies in the region, “the two sides believe that the strong growth in their trade and economic relations is mutually beneficial”. Admittedly, the two countries have agreed to begin discussions on a “high-quality Regional Trade Arrangement,” a feasibility study on which has been completed. But, to New Delhi, a greater official focus on bilateral trade would have been far more preferable given the galloping two-way trade which, according to latest figures, has touched $38.6 billion in calendar 2007, thereby not only nudging the 2010 bilateral trade target of $40 billion (now revised to $60 billion) but also dislodging the US from its position as India’s biggest trading partner. The problem, however, is that the sharp rise in trade has been marked by a steep increase in the Indian trade deficit (currently around $9.5 billion). In fact, since 2001-2002, Chinese goods have grown from around 4 per cent of India’s total imports to 9.4 per cent in 2006-2007, while Indian exports to China comprise just 1.3 per cent of total Chinese imports. The composition of the bilateral trade is worrying: iron ore still forms over 55 per cent of the Indian exports, and yet no strategic steps have been taken to redress this imbalance. .

During the visit, the Chinese Prime Minister, Mr Wen Jiabao, said: “We are partners, not rivals”. If the partnership has to be on equal terms, New Delhi will have to have to rework its targets on the trade front.

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