Chinese analysts defend Sino-India trade imbalance

May 21, 2013 at 1:56 AM
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BEIJING, May 21 (UPI) -- China's growing surplus in trade with India, an issue of concern to New Delhi, is difficult to resolve and is likely to widen, Chinese experts said.

The trade imbalance has come up during the current India visit by Chinese Premier Li Keqiang.

Trade between India and China is one of the fastest growing, although the two Asian neighbors have longstanding border disputes that resulted in a brief war in 1962 and have since led to some tense situations. India, with its population of 1.2 billion, remains a lucrative market for China even as its exports to other countries have been hit because of the global slowdown.

Two-way trade between the two countries totaled more than $66 billion last year and is projected to rise to $100 billion by 2015.

Indian Prime Minister Manmohan Singh, however, has expressed concern about the growing trade imbalance, which resulted in a trade surplus of $28.87 billion for China last year. China's surplus in 2011 was $27.17 billion and $20.08 billion in 2010. The widening trade deficit with China now accounts for a third of India's overall trade deficit.

Indian critics of China-India trade say India's exports to China are mostly raw materials such as iron ore, while Chinese exports are finished products. India has called for greater access to Chinese markets for Indian products.

Chinese experts, speaking to the China Daily, however, said India's benefitting from Chinese imports.

"India's trade deficit with China is expanding. In the short term, that's hard to resolve. The imbalance is mainly because India has limited exports to China, while Chinese manufactured goods have a competitive advantage in the Indian market," Liu Xiaoxue, a researcher on South Asian studies at the Chinese Academy of Social Sciences, told the newspaper.

Liu, however, said the slower growth in China together with overcapacity in the steel and iron sectors and the Chinese government's tightening policies, which have reduced demand for Indian raw materials, are the main reasons behind India's increasing trade deficit with China.

Hu Shisheng at the China Institutes of Contemporary International Relations said the trade imbalance is rooted in India's trade structure.

"India's trade deficit with China will not be reversed in the foreseeable future. Any change depends on whether India can export products that meet the demand of the Chinese market," Hu said.

Hu also said India has trade deficits with major manufacturing countries due to the depreciation of the rupee in recent years, its poor export advantages and robust import demand amid its economic transformation.

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