China-India high-level meetings to meet to iron out issues
August 17, 2012

In the backdrop of increasing anti-dumping duties, rising tariffs and widening trade deficits, Commerce ministers from both China and India are expected to convene in New Delhi for two-day visit starting August 26 to hold the ninth round of talks under the framework of Joint Economic Group (JEG). A week later, on September 2nd, outgoing defence minister general Liang Guanglie is expected to lead a 20-member delegation of the People’s Liberation Army, the world’s largest army, for a three-to-four day trip to India. This will be the first time a Chinese defence minister visits India. Pranab Mukherjee in his capacity as India’s Defence minister had visited China in 2008.

The imminent high-level exchanges between both nations are expected to help resolve cursory issues between the two nations. Both China and India have been vying with each other to further open markets enabling a higher level of trade and exchange. However, trade barriers have remained high even as the distrust hasn’t melted away. While both nations keep their barriers high in order to protect their domestic economies, they expect the other to lower their guard and open markets. Until China and India both raise their quality and value of goods and services, develop and strengthen their domestic markets, and vitalize their economies, much isn’t going to change. The yawning trade deficit will continue to rise, as India demands more infrastructure goods and bans or barricades raw materials from leaving the country.

The JEG meeting is taking place against the backdrop of officials pointing to the seventh straight month of decline in bilateral trade volumes. According to half-yearly data for this year released by China’s General Administration of Customs, India’s exports reached US$12.91 billion, registering a decline of 8 percent compared to the same period last year. This was mainly due to 50 percent fall in Indian iron ore exports to China. Trade deficit for India stands at US$13.6 billion compared to US$13.4 billion around the same time last year. Also China’s exports to India were on decline and touched US$26.57 billion in July this year, a decline of 3.3 percent.

The talks by the defence ministers are also expected to touch on the sensitive issue of the South China Sea which China has been exploiting for natural resources and India is keen to grab its share too. A representative from China’s South Sea Fleet, which is geared up for security in the South China sea region, is also expected to be part of the delegation, according to the Hindustan Times. 

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