China, India
set $40b trade target
NEW DELHI—Commercial ties between Asian powerhouses India and China are
set to surge as they focus on economic development and move to settle a
border row that has created decades of mutual distrust, analysts said.
During the first working day of a visit by China’s president Hu Jintao,
the first by a Chinese head of state in a decade, the world’s two most
populous nations pledged to double two-way trade to 40 billion dollars
by 2010 as well as to boost bilateral investment.
“Both sides understand there are huge opportunities in working together,
although talk of a free trade agreement is too early, said T.S.
Vishwanath, head of international trade policy at the Confederation of
Indian Industry (CII), India’s leading business lobby.
“Both economies are growing very well. Both can serve as markets for
each other, they realise it can be a win-win scenario for both of them,”
Vishwanath said, referring to the hundreds of millions increasingly
affluent consumers in the two countries.
Analysts believe trade between the world’s two fastest growing major
economies has its own momentum independent of political developments, in
particular the mistrust stemming from the border dispute that led to a
brief but bloody war in 1962 and suspicions about each other’s regional
strategic ambitions.
“Trade is going to be driven by globalisation and the way the market
sees the best opportunity,” said defence analyst Uday Bhaskar. China’s
economy has been growing by more than nine percent while India’s is on
track to expand by eight percent-plus for a record fourth straight year.
Along with boosting trade, the two sides agreed Tuesday to speed efforts
to settle the border row which hit Indian headlines last week when
China’s envoy to New Delhi restaked Beijing’s claim to the entire Indian
state of Arunachal Pradesh.
The envoy’s statement chilled the mood ahead of Hu’s visit with India
responding frostily that the state was an “integral part” of its
territory. However, on Tuesday, the Chinese president said settlement of
the border row served “the fundamental interest of our two countries,”
adding Beijing and New Delhi wanted to build a relationship of mutual
trust in which both prospered. “President Hu and I are in agreement that
the prospects are bright for the simultaneous development of India and
China,” Prime Minister Manmohan Singh told a joint news conference.
Two-way trade has already jumped from a paltry 1.5 billion dollars in
the 1998-99 financial year to 18.7 billion in 2005-06 and is expected to
pass 20 billion this fiscal year. Some analysts see trade hitting 50
billion dollars by 2010-11. The CII’s Vishwanath noted Hu, who will
travel to India’s financial hub Mumbai during his four-day visit, was
accompanied by a big business delegation.
“These high-level visits when accompanied by such a business delegation
are a statement at the highest level that there’s a need to move the
economic agenda forward,” Vishwanath said. But Bhaskar said keeping the
commercial momentum going in the face of “the contradictory tenor of
economic ties and security issues” will be a challenge.—Agencies |
