Trade binds China and India

Of course, the two countries have been trying to boost bilateral trade. In March, they held the third India-China Strategic Economic Dialogue in Beijing, where they agreed to improve the investment and trade environment in each other's countries, encourage mutual investment between/among companies, and deepen cooperation in the fields of infrastructure, finance, energy and energy conservation.

The two countries can be optimistic about the future, because Narendra Modi, India's new prime minister, has promised to focus on reform and economic development. Also, the country's central bank has predicted a 5-6 percent growth for this year, saying it could rise to 7-8 percent in a few years. Among the major measures the Indian government is expected to take is restoration of deferred equipment investment, which can increase employment and stimulate consumption, and thus boost economic growth.

On its part, China can provide adequate supply of products for export to and a bigger market for imports from India if its economy can grow at the rate of 7.5 percent a year, and thus facilitate mutually beneficial cooperation in the long term.

Moreover, since Modi is said to have studied the Chinese economic model and visited Shanghai, and Guangdong and Sichuan provinces to get first-hand knowledge of China's investment promotion, it is likely that the two countries will enter a new age of cooperation. India could further open up its domestic market to China, making it possible for more Chinese companies to invest in India and for products made in India by Chinese companies to be redirected to the Chinese market.

By 2015, the two countries are expected to conclude their negotiations as members of the Regional Comprehensive Economic Partnership and thus lay the foundation for building a better trading environment and realizing balanced development in the long run.

The author is a researcher at the Chinese Academy of International Trade and Economic Cooperation, affiliated to the Ministry of Commerce.

(China Daily 06/20/2014 page9)