The Hindu Business Line : Trading with China

IT IS IN the fitness of things that there should be an increased interest in New Delhi in trading with China. Not just because Beijing has become a member of the WTO, but because of the potential of its vast market. While in the past trade relations between the two countries had never come anywhere near their potential because of extra-economic factors than any lack of economic complementarity, the two counties now find themselves in strenuous competition both in the international, and their own domestic markets. It is against this background that the current interest being shown by Beijing and New Delhi in strengthening trade ties should be seen.

The Chinese have shown their prowess in making competitive forays into the Indian market which have led New Delhi to slap anti-dumping levies. (In 2000-01, while Indian exports to China totalled $839.59 million, Chinese exports were of the order of $1470.37 million.) While New Delhi may take the same measures vis-à-vis any Chinese exports which continue to flout the rules, it may be better for India to rev up industry and trade to take the battle into the Chinese camp.This probablyis the better strategy as Beijing, now with access to the WTO dispute settlement body, may take specific cases to Geneva. Incidentally, the current efforts to set up a cooperation framework with China on WTO issues is a step in the right direction, and could possibly be used to reduce trade friction between the two economies. In this background, the spate of Indian delegations visiting China is a good sign, the clear inference being that Indian industry has seen the writing on the wall and is taking all steps to score well in the coming trade campaign with China. Certainly, the Government has a role to play in this effort but, given the proverbial official apathy and sluggishness, it would be sensible if New Delhi stepped back and donned the mantle of facilitator.

One area where the Government can play a positive role is to give concrete shape to the joint venture proposals suggested by the Chinese, who are now feeling the pinch of having to trade with a market as vast as India without any service back-up in the country. Indian business interests will also stand to gain from this because New Delhi's support for the Chinese plea can only be extended on the understanding that similar facilities would be offered to Indian companies operating in China. One specific field where this could come in handy (provided the Indian learning curve is appreciably high) is the computer software-hardware business in which the two economies now have a mutually exclusive comparative advantage. In fact, the fear has been expressed that unless India gears up for the competition ahead, the software advantage it enjoys may be lost to China.

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