NEW DELHI: It is a growth story without parallel. New statistics show that India-China trade hit a high of $24.9 billion in 2006, the Shanghai Daily has reported, quoting the Chinese Commerce Ministry in Beijing.

According to the newspaper, India became China's 10th largest trading partner in 2006 while China was India's second largest trading partner. In 2005, trade between the two countries was worth $18.7 billion while the figures for 2004 and 2003 stood at $13.6 billion and $7.6 billion.

In 2000, it was just $2.91 billion. Two-way commercial activity showed an average annual increase of 45 per cent since 2000.

Goldman Sachs study

The newsapaper also quoted a Goldman Sachs study that India will become the second largest economy in the world, after China, by 2042.

According to Chandrashekhar Dasgupta, a former Indian Ambassador to China, an increase in trade would improve bilateral relationship.

"It contributes to bringing about improvement in relations, in the environment between the two countries," Mr. Dasgupta felt.

The former envoy told this correspondent that growth in trade created "inter-dependencies," similar to cultural contacts between the two countries.

He cautioned that an expansion of trade by itself would not lead to a solution to the problems that divided the two sides.

Alka Acharya, who teaches at the Jawaharlal Nehru University, pointed out that trade was the "fastest growing dimension" in the India-China relationship. According to her, the growth in trade would provide more ballast to bilateral ties.

Dr. Acharya, while welcoming the expansion of trade, however, pointed to the need for broadbasing the trade basket. For instance, India was a major exporter of raw materials, especially iron ore, to China. "We need to quantitatively change our trade relationship."

During the November 2006 visit of Chinese President Hu Jintao to India, the two countries agreed that "comprehensive economic and commercial engagement between India and China is a core component of their strategic and cooperative partnership."

"They will endeavour to raise the volume of their trade to $ 40 billion by 2010. They shall make joint efforts to diversify their trade basket, remove existing impediments, and optimally utilise the present and potential complementarities in their economies, in order to sustain and further strengthen bilateral commercial and economic cooperation," a joint declaration issued during Mr. Hu's visit said.

"Towards this end, both sides will attach utmost priority to an early implementation of the decisions taken in March 2006 by the Ministerial-level Joint Economic Group, including the recommendations of the Joint Study Group, through mechanisms already created for this purpose. The Joint Task Force set up to study the feasibility and benefits of an India-China Regional Trading Arrangement shall complete its work by October 2007," the declaration added.

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