Trade is a big component of the current India-China relationship. Even though it is hobbled by numerous problems, business is booming, growing from $2 billion in 2000 to $38 billion last year. At the Hu Jintao-Manmohan Singh summit in November 2006, trade was targeted at $40 billion by 2010. That mark was passed in less than a year, compelling a fresh calibration of economic ambition -- both Dr Singh and Chinese Premier Wen Jiabao believe that India-China trade can touch $60 billion by 2010.
The Chinese have long wanted a Regional Trade Agreement, which the Indian government, egged on by domestic business hurting under the onslaught of Chinese imports, has not been enthusiastic about. The issue will now be examined by a Joint Economic Committee headed by the two commerce ministers. Like the India-US CEOs Forum, set up after Dr Singh's July 2005 visit to Washington, India and China have proposed a Business Leaders Forum that will identify the potential and problems of the trade relationship.
India already has a $9.02 billion trade deficit with China, but that may not be the fundamental problem. As anyone who does business with China knows, it is a game of 'smoke and mirrors', to borrow from the title of The Hindu's Beijing correspondent Pallavi Aiyar's forthcoming book on China (HarperCollins, due in April). The Chinese State, in one form or the other, owns most enterprises, enabling these entities to manipulate prices and fiddle the formats, making doing business a complicated and troubling ritual.
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There is also the corruption. If India is seen as a corrupt society, China is reported to be many times worse. Though no Indian businessman would speak about it, the wheels of government or commerce in China only move when greased by the fluid of money. The Communist Party believes that if it does not crush corruption soon, the party could be consumed and perhaps destroyed by it one day.
At the business summit in Beijing on January 14, Indian businessmen led by FICCI President Habil Khorakiwala and CII President Sunil Mittal tackled the problems head on, unlikely the Chinese who preferred sweeping generalities and encomiums of doing business in India. Unlike the strategic relationship, which appears to have ascended to a comfort level, India and Chinese businesses view each other, not surprisingly, as competitors. India imposes the highest tariffs on Chinese goods, has registered the most number of anti-dumping cases against China -- 65 -- more than the United States and European Union combined.
'Non-tariff barriers' -- a phrase one heard whenever Indian businessmen were around in Beijing this week -- encompasses the obstacle race the Chinese have devised to make life tough for Indian businessmen. If China agreed to the import of 17 vegetables from India during the Hu visit, 14 months later, only three vegetables have been allowed to make their way to Chinese markets; there is no word when the other 14 will be granted entry.
China is not really interested in importing Indian goods. What the Chinese are interested in -- as they are in Africa, Central Asia and Latin America -- are India's minerals to power the world's manufacturing workshop. Chinese speaker after speaker at the business summit extolled India's rich mineral resources; in contrast, Indian business wanted the Chinese to look beyond iron ore, and widen the trade basket to include Indian products and services.
No big ticket deals were signed during the prime minister's visit. India granted Chinese television, CCTV, to beam its programmes into India; Zee, which looked for similar sanction, did not get the go ahead. A big talking point during the visit was Jet Airways not securing official permission to operate flights from Mumbai to Shanghai and San Francisco. Jet's energetic Chairman Naresh Goyal, who was in Beijing, was hopeful that the Chinese would grant him the landing rights after India allowed China's Great Wall Airline to fly to Mumbai and Chennai. When it comes about, it will be the first time an Indian airline has been accorded such a privilege.
Every Indian acquisition worldwide rattles the confidence of Chinese businessmen. India's IT power makes them nervous. Commerce Minister Kamal Nath revealed how the Chinese were eager to know about the Nano. India and China are also competitors for trading influence in Africa, though Beijing, with its speculated $100 billion investment in that continent, is far, far ahead. China has vigorously protested ONGC Videsh Nigam's investment in oil exploration in Vietnam, a country where it has little influence. So, while India and China make strategic strides, both nations will remain competitors in the global marketplace.
Image: Prime Minister Manmohan Singh has earphones put before he delivers a speech at the Chinese Academy of Social Sciences in Beijing, January 15. During his visit, Dr Singh called for expanding business opportunities with China in construction, education, financial services and tourism. Photograph: Ng Han Guan-Pool/Getty Images
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