PM likely to visit China from May 14-16

Economic ties to be on top of the agenda

Prime Minister Narendra Modi is likely to visit China from May 14-16 even as both sides are expected to discuss a wide range of issues concerning enhancement of bilateral trade and investment ties and an early resolution to the border dispute issue.

India had been much concerned with the visit of Chinese President Xi Jinping in Pakistan earlier this month which was heavy on economic commitments and greater connectivity between both countries that has made New Delhi all the more uncomfortable.

China is one of India’s leading trade partners. Bilateral trade between both countries has crossed $65 billion in 2013, resulting in a wide trade gap of $35 billion.

As a result, trade and investments will be one of the highlights of the visit. During Xi’s visit here last year both sides had signed 12 agreements, out of which one was on a five year trade and economic development plan. Under this agreement, both sides had agreed to narrow the trade gap while China committed to invest $20 billion over a span of five years.

“There has not been much progress in terms of concrete measures both sides will undertake on how to close the gap. Besides, the areas or sectors in which the investment of $20 billion will be made have not been clarified yet by them. So trade and investment will remain one of the underlying agendas besides strategic issues, although, the optics of the visit will be quite high,” said Rajrishi Singhal, senior fellow, Gateway House.

During his visit, Modi is expected to visit Beijing and Shanghai. However, as a reciprocal gesture Modi might also visit President Xi’s home province Shaanxi, a top official told Business Standard.

When President Xi visited India last year, he visited Ahmedabad apart from Delhi. Both leaders have already had three bilateral meetings.

Modi is also expected to raise the issue of India having some sort of access to China’s massive ‘One Belt One Road’ vision that is expected to pass through the Indian Ocean under its ‘Maritime Silk Road’ initiative.

India is also planning to ask China to remove the several non-tariff barriers it imposes on Chinese pharmaceuticals. Besides, officials said, Modi might also push for greater services trade.

Earlier in the day, commerce secretary Rajeev Kher made a case for increasing trade with China. He said in order for Indian exporters to penetrate deeper into the Chinese markets, the government is undertaking a three-pronged strategy.

According to a report – Accelerating Indo-China Economic Engagement – by CII, India’s trade deficit with China is expected to reach $58 billion by 2018.
China is also keen to have a free trade agreement with India, which the latter had been reluctant to talk about fearing an onslaught on India's industry. India and China are also part of the talks on Regional Comprehensive Economic Partnership (RCEP).

Xi has also invited India to be an observer in the 21-nation APEC (Asia Pacific Economic Cooperation) trade group. The APEC is seen as an alternative to the mega regional trade pact - TransPacific Partnership (TPP).

There has been little progress on the development of the industrial parks. The Chinese government had last stated that it will be setting up two such parks in Gujarat and Maharashtra. But it is yet to announce concrete investment proposals there.

Regarding strategic affairs, both sides are expected to seek an early settlement to the controversial boundary issue. This was one of the main talking points when external affairs minister Sushma Swaraj and foreign secretary S. Jaishankar visited China in February.

Swaraj had proposed a six-point action plan to enhance India-China bilateral relationship.