Trade in focus as Chinese Primier Wen Jiabao arrives in India

Mangalore Today News Network

New Delhi, December 15: Strengthening trade relations and the lingering disputes over territory will be in focus during Chinese Prime Minister Wen Jiabao’s three-day visit to India, which begins from Wednesday.

The Chinese premier, along with 400 strong delegation, who arrived here at the Indira Gandhi International airport shortly after 1 pm today was given a red carpet welcome. He was welcomed by Foreign Secretary Nirupama Rao and Minister-in-Waiting Jyotiraditya Scindia.

Prime Minister Manmohan Singh will be hosting a dinner in the honour of his Chinese counterpart today at 7 Race Course Road.

Official engagements will begin tomorrow with a ceremonial reception at the Rashtrapati Bhavan.

Following which, Wen will hold talks with his Manmohan Singh and oversee celebrations marking the 60th anniversary of diplomatic ties, an opportunity to highlight a historical relationship that has evolved into a sharpening competition over resources and global markets.

Trade in focus

The sides are expected to sign agreements in areas including energy and infrastructure development, although no major breakthroughs in ties are anticipated.

"The visit aims to improve mutual trust and development cooperation with India. People shouldn’t have too high expectations for the visit," said Hu Shisheng, an expert on China’s relations with South Asia at the Institute of Contemporary International Relations.

China’s ambassador to India said he was hopeful that free trade talks could start, but there is some scepticism in New Delhi that Beijing may only want to dump cheap manufactured goods on India’s booming USD 1.3 trillion economy.

China and India plan to sign a series of business deals, including one agreed in October for Shanghai Electric Group Co to sell power equipment and related services worth $8.3 billion to India’s Reliance Power.

India has sought to diversify its trade basket, but raw materials and other low-end commodities such as iron ore still make up about 60 percent of its exports to China.

In contrast, manufactured goods -- from trinkets to turbines -- form the bulk of Chinese exports

Indian businesses, meanwhile, complain about a gusher of cheap Chinese exports that account for about two-thirds of bilateral trade that is expected to hit $60 billion this year. Underscoring the lopsided economic relationship, India’s Reliance Power in October contracted with a Shanghai company to purchase equipment and services valued at $8.9 billion over 10 years. Indian exports to China, in contrast, remain largely limited to raw materials such as iron ore.

Partly in response to the imbalance, New Delhi this year blacklisted telecom equipment from Chinese vendors Huawei and ZTE, citing national security concerns. The eight-month ban, which was relaxed in August, came less than a week after media reports that Chinese hackers had broken into the computer networks of India’s security, defense and diplomatic establishments.

Roadblocks

Wen’s visit to India follows one to China by Indian President Pratibha Patil in May — the first by an Indian head of state in a decade — and comes on the heels of a 14th round of discussions on their disputed border.

It marks the latest attempt to redefine relations long beset by mutual suspicion and a natural rivalry befitting the world’s first and second most populous nations.

India fears China wants to restrict its global reach by possibly opposing its bid for a permanent UN. Security Council seat or encircling the Indian Ocean region with projects from Pakistan to Myanmar.

But India knows it must engage China as both nations exert their global clout. Wen’s trip comes a month after US President Barack Obama’s visit. French President Nicolas Sarkozy and British Prime Minister David Cameron also visited India this year.

Assistant Chinese Foreign Minister Hu Zhengyue said on Monday that everything would be up for discussion during the December 15-17 visit to New Delhi.

Wen then travels straight to Pakistan, India’s nuclear armed rival, for another two nights.

"No issues are off the table," Hu told reporters in Beijing on Monday, adding the visit was to expand bilateral trade, increase cooperation and promote regional peace and stability.

"Leaders of our two countries have agreed that there is enough space in the world for China and India to develop together and there are enough areas for China and India to cooperate with each other," Chinese Assistant Foreign Minister Hu Zhengyue told a briefing Monday.

The most glaring disagreement remains the remote, mountainous China-India border, over which the two fought a brief but brutal war in 1962. The two lack even a commonly designated line of control and a resolution is not expected in the near future.

China has also aggravated Indian concerns by refusing to stamp visas in passports held by residents from Kashmir, in a move seen questioning New Delhi’s sovereignty over the region also claimed by Pakistan.

India is also deeply suspicious of China’s close ties with archrival Pakistan as well as the Chinese navy’s growing presence in the Indian Ocean and Beijing’s close ties to the Maoist parties now governing Nepal.

China for its part resents the presence in India of the self-declared Tibetan government-in-exile headed by the Himalayan region’s Buddhist leader, the Dalai Lama, who fled across the border amid an abortive rising against Chinese rule in 1959. Beijing last year angrily protested a weeklong visit by the Dalai Lama to the northeastern Indian state of Arunachal Pradesh, which it claims is Chinese territory. China, meanwhile, occupies a part of Kashmir claimed by India.

"This is not a relationship that is adversarial at this point, although it could become one in future," said Jasjit Singh, director of the Center for Strategic and International Studies in New Delhi.

Common interests

Despite such disputes, the sides have striven to find common ground on international issues of concern to the bloc of large developing nations known as the BRICs.

Both have pushed for a greater say in global finance following the global economic crisis that wreaked havoc on advanced economies while leaving their own largely unscathed. They also briefly found common cause at last year’s climate change talks in Copenhagen where they united to resist a push by industrialized nations to reach a new legally binding treaty.

"We shouldn’t forget that the relationship was far worse in the past," said TCA Rangachari, a retired Indian diplomat.

In Pakistan, Wen is expected to focus on energy cooperation and pushing ahead China’s pledge of USD 200 million in aid to help the country rebuild after devastating summer floods.

China has agreed to sell Pakistan two 300 megawatt nuclear reactors to join two already in place, and is believed to be in talks about adding a much larger 1 gigawatt reactor.