The Hindu : Front Page : President urges China to improve market access

Online edition of India's National Newspaper
Monday, May 31, 2010
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Front Page

President urges China to improve market access

Ananth Krishnan

India expresses concern over increasing trade imbalance

“Chinese firms will be encouraged to step up investments in India”
Trade relations have come under increasing strain in the past year

SHANGHAI: President Pratibha Patil on Sunday called on China to do more to improve market access for Indian pharmaceutical and engineering companies, amid growing concerns over a trade imbalance that grew to a record $16 billion in China's favour last year.

Officials in Shanghai, China's booming commercial capital, assured the President in talks on Sunday they would encourage more Chinese companies to step up investments in India to address the imbalance, Foreign Secretary Nirupama Rao said.

Almost 35 per cent of India's trade with China comes from Shanghai and the south-eastern Pearl River Delta region, the heartland of China's manufacturing industry.

In talks with the ruling Communist Party's Shanghai chief Yu Zhengsheng, Ms. Patil sent a strong message to the Chinese government that unless market access for Indian pharmaceutical, engineering and Information Technology companies improved, trade relations, recently under strain, would continue to worsen.

“The political message that we are sending to the Chinese side is, please pay attention to [the trade imbalance and market access issues],” Ms. Rao said. “This is important. If you want to address the adverse trade balance, you will need to tackle these issues.”

Chinese officials, for their part, acknowledged “it would be unviable to sustain such a trade imbalance in the medium-term and long-term,” Ms. Rao said.

The trade relationship between the two countries has, in recent years, been seen by officials in both countries as a crucial driver of overall bilateral relations, amid persisting political strains over the long-running border dispute. China became India's largest trading partner in 2008, with bilateral trade reaching $52 billion. Trade fell to $43 billion on account of the financial crisis, but has rebounded in the first two months of this year with Indian exports, mainly driven by iron ore, rising 75 per cent.

Trade relations had, however, come under increasing strain in the past year with India's trade deficit continuing to rapidly widen. India last year filed a record number of anti-dumping investigations against China at the World Trade Organisation, while India's efforts to diversify the trade basket, officials say, have stalled over long-pending market access issues and high import tariffs.

India's recent restrictions on the import of Chinese telecom equipment, in light of security concerns, have added to the list of strains. The telecom issue, however, was not raised by China during the President's ongoing visit, Ms. Rao said.

During her Shanghai visit, the President visited the Indian Pavilion at the Shanghai World Expo, the biggest and most expensive fair in history. Ms. Patil on Sunday also unveiled a statue of Rabindranath Tagore in the heart of old-town Shanghai, which the poet visited in the 1920s and left a strong influence on a whole generation of Chinese intellectuals and writers.

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