Visiting Premier Li Keqiang promised Tuesday to open China's vast domestic market wider to India and forge a "dynamic trade balance" to deepen economic ties and ease tensions between the Asian giants. The trade push, which the countries say will supply "new engines" to lift the stumbling global economy, came amid efforts by the nuclear-armed powers to put a military dispute along their contested Himalayan border behind them.
"We have the ability to mitigate the trade imbalance between our two countries," Li told business leaders in New Delhi, responding to Indian worries over trade that is heavily skewed in China's favour. "The Chinese side is willing to provide facilitation for more Indian products to access the Chinese market," added Li, who chose to make India his first foreign stop after taking office two months ago.
He also said China was willing to "launch negotiations on a China-India regional trading arrangement" but did not elaborate. China is India's biggest trading partner, with two-way commerce totalling $67.83 billion in the last fiscal year to March 2013, up from $2.1 billion in 2001-02.
But India's trade deficit with its neighbour soared to $40.77 billion last year from just $1.08 billion in 2001-02, Indian figures show, as Indians bought increasing amounts of goods from mobile phones to TVs to industrial equipment. Li said he wants a "dynamic trade balance" as the neighbours aim to raise two-way trade to $100 billion by 2015, and said they had "huge markets with huge potential". But previous Chinese commitments have failed to narrow the imbalance.
"The two countries must now take corrective steps," B.G. Verghese, fellow at the Centre for Policy Research in New Delhi, told AFP. "There must be market access on the Chinese side and the Indians must produce the manufactured goods the Chinese need," he said, adding deeper trade involvement brings "deeper vested interest in all-round stability".
In his speech, Li reiterated China's desire to build trust with India after both sides agreed Monday to work towards settling the long-running dispute over their still formally undefined border. Ties have been dogged by mutual suspicion, a legacy of a brief 1962 border war. China also views the presence in India of Tibet's spiritual leader the Dalai Lama, who campaigns for "genuine autonomy" for his homeland, as a serious irritant.