India, China meet today to discuss future of bilateral trade
May 19, 2010

On Tuesday, Ministers of commerce and industry of the world’s two fastest growing economies will meet to discuss a bilateral trade route forward.

Anand Sharma and his Chinese counterpart Chen Deming will meet in Beijing as part of the eighth Joint Economic Group between India and China, to discuss the balancing of trade, further opening up of markets to each other and easing restrictions on visa’s – issues that are hampering trade between the two nations. The talks will be resuming after a hiatus of four years.

Since the last dialogue in New Delhi, in March 2006, bilateral trade between India and China has ballooned by more than 50 percent up from US$25 billion in 2006 to US$38 billion spy one snapchat in November 2009, in spite of the unexpected economic slowdown. Trade reached a historic high of US$51.8 billion in 2008, and the two countries have set a target of US$60 billion for 2010.

During the talks, India is expected to bring up the issue of the widening trade imbalance in favor of China. Indian exports constitute just US$11 billion in the total trade of US$38 billion while Chinese exports make up for the rest. India’s trade imbalance with China peaked at US$14 billion last year up from US$4 billion in 2006.

China mainly imports iron ore, steel and other raw materials from India, while India imports finished goods from China. The trade imbalance is expected to widen further in next few years as Chinese infrastructure companies fulfill India’s US$500 billion investment need to build more roads and bridges.

To ease the trade gap India is expected to ask China for more market access especially for pharmaceutical and IT companies. Sharma is also expected to discuss difficulties Indian companies face in competing with local Chinese companies in terms of pricing and on account of some domestic policies. While pharmaceutical companies face obstacles in getting their drugs registered in China, manufacturing firms are confronted with high import tariffs.

The Chinese are expected to press for easing bureaucratic visa regulations for their workers on infrastructure projects in India which often take several months to process. Many infrastructure projects are being stalled in India as contracted Chinese companies want their workers to be present at the project site, but short duration visa’s and difficulties in procuring longer term visa’s mean many projects are kept on hold.

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