Sitharaman in talks with Chinese counterpart as trade deficit hits $53 bn

Commerce Minister Nirmala Sitharaman has held "candid" talks with her Chinese counterpart Zhong Shan over the ballooning trade deficit in favour of China which has crossed over $52 billion and sought a level playing field for Indian IT and agro products.

India's trade deficit with China in 2015-16 swelled to $52.68 billion, which Indian officials say has become unsustainable. Besides pressing for access to IT and pharma products, the main stay of India's global exports, India has been insisting that China should compensate by stepping up investments.

"The two Ministers exchanged views, in a candid manner, on further development of a strong, balanced and sustainable trade and investment partnership between India and China," Indian Consulate in Shanghai said in a statement today.

"In particular, Minister Sitharaman sought the assistance of Chinese Ministry of Commerce in reducing the trade deficit, facilitating greater market access and for providing a level playing field for Indian IT, pharmaceuticals and agro products in China," it said.

The meeting between the Minister of State for Commerce and Industry and Zhong was the second after their meeting on the sidelines of the Regional Comprehensive Economic Partnership (RCEP) Ministerial meeting in Hanoi, Vietnam in May 2017.

The ministers also agreed to further intensify India- China cooperation in the multilateral frameworks such as WTO, BRICS and Shanghai Cooperation Organisation (SCO), the statement said.

They decided to hold the 11th Joint Economic Group (JEG) in New Delhi at the earliest.

A host of BRICS ministerial and officials meeting on various fields were being held in China ahead of the five- nation grouping's summit to be held in September this year in the Chinese city of Xiamen.

The meetings were taking place as per schedule despite the India-China tensions over the standoff at Doklam in the Sikkim section.

Ahead of Sitharaman's visit, China's Commerce Ministry said India should avoid abusing trade remedy measures and called for settling trade disputes through consultation.

Reacting to India's move to launch an anti-dumping investigation over photovoltaic cells and units imported from China, Taiwan and Malaysia, Wang Hejun, head of the Commerce Ministry's trade remedy and investigation bureau said China was paying close attention to the probe and hopes India will conduct it in a prudent manner and as per relevant rules.

Wang said adopting restrictive measures for the trade of photovoltaic products would not only harm photovoltaic sector development in India, but also dampen the sector's long-term development worldwide as well as economic and trade cooperation between China and India.

Meanwhile, coinciding with Sitharamans's visit, an article in today's state-run 'Global Times' said protectionism against Chinese manufactured products will only boomerang on the Indian industry.

The list of Chinese products covered by India's trade remedy investigations is getting ever longer, expanding from garments, glass, minerals and other low-end items to advanced products such as new materials and machinery, it said.

It seems that the Indian government is trying to protect domestic industries from overseas competition through trade remedy measures, but although this strategy offers certain short-term benefits, it will eventually hinder India's industrial development, the article said.

India has initiated 12 investigations against Chinese products in the first half of this year, becoming the country with the most trade remedy probes against China, it said.

During the period, 11 investigations were launched by the US, it said, quoting China's Ministry of Commerce (MOFCOM).

"There are other explanations behind the intensified trade conflicts between India and China. After years of development, India's industries have made progress, and many companies in India now produce items that could compete with those from China," it said.

"Chinese producers still have the upper hand, but it seems understandable for the Indian government to be eager to protect local industries," the write-up claimed.

But it is wrong to resort to trade remedy measures to drive Chinese products out of the local market, it added.

"At the same time that it is making great efforts in liberalising foreign investment rules, India should also open up to foreign competition to facilitate the development of domestic manufacturing," it said.