Friendlier ties (2)

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(Global Times) 10:30, October 23, 2013

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Problems to be addressed

While few doubt the eagerness for growing trade and investment ties between the two countries, there are still some problems weighing on the bilateral economic partnership.

An increasing trade deficit with China has been a growing headache for India, whereas Chinese enterprises' limited access to the Indian market, especially in the technology sector, has long been an issue.

Data from the Indian authorities showed that India's trade deficit with China had risen to $40 billion in 2012 from just $1 billion in 2002.

China has never intended to pursue a trade surplus with India and only balanced trade will contribute to sustained development of bilateral trade ties, Premier Li stressed during his visit to India. Li promised there would be more efforts to open up domestic markets to Indian companies in order to help ease the trade imbalance situation.

China's greater strength in the manufacturing sector compared to India is seen as a significant factor leading to the trade imbalance.

The Indian business park initiative, if realized, could help soothe some of these trade concerns, experts said.

It would also make China the third country after Japan and South Korea for which India has set up special business parks, Jiang Jingkui, director of the Department of South Asian Languages at Peking University, was quoted as saying in an article published Friday by Guangzhou Daily.

One of the main motives behind the business park would be to offset India's trade deficit with China, Jiang said, who noted that increased investment from such initiatives could also help boost the Indian economy.

India, among other emerging economies, has in recent months been hit by financial market turmoil caused by concerns about the US pullback from its quantitative easing program.

In a report released on October 16, the World Bank sharply cut its forecast for India's economic growth in its current fiscal year from 6.1 percent to 4.7 percent, citing a decline in manufacturing and investment, as well as weak business confidence.

As for Chinese companies that have faced obstacles to expansion into the Indian market, a special business park would ensure a better investment environment, Jiang said.

Telecom giants Huawei and ZTE have long been seen as successful examples of Chinese companies operating in the Indian market, but there have been numerous media reports in recent years about local market restraints impeding their investment.

Unlike Western markets that have been fully exploited, the Indian market is undoubtedly much more promising for Chinese companies, Jiang said, expressing his optimism that enhanced mutual understanding and cooperation will offer more opportunities for Chinese companies in the future.