Aug. 30 – In an unscheduled meeting on the sidelines of the ASEAN Economic Ministers’ Meeting in Danang, Vietnam last week, China’s Commerce Minister Chen Deming “assured” India’s Commerce and Industry Minister Anand Sharma that China will open up more sectors to Indian companies in the future.
Specifically, Sharma said that Indian companies will be given greater access to government contracts and the IT and pharmaceutical sectors in China.
“We have asked for more access. China has a huge program on procurement of pharmaceuticals and the Indian companies should get access to government contracts and IT sectors. It has enough space for the same. I have been assured this will happen,” Sharma told the Press Trust of India.
Trade between China and India is expected to reach US$60 billion this year, up from US$43 billion in 2009 and US$51 billion in 2008, but the trading surplus is consistently one-sided. Bilateral trade for the first six months of this year surpassed US$30 billion, with Indian exports to China of US$11.9 billion far weaker than Chinese exports to India of US$18.4 billion.
“The kind of trade deficit which we have with China is untenable and unsustainable,” Sharma said. He hopes that the opening up of more sectors in China will help bring the bilateral trade gap down to a more balanced level.
Sharma said that India’s concern over the issue has “registered well with the Chinese leadership at the highest level.”
I’ll believe it only when it actually takes place and when Indian companies get orders in China, execute them, make money AND are able to repatriate the proceeds out of China. Till them I’ll remain skeptical, even cynical.
The best way for India to balance trade is to export more iron ore to us. The problem is that structurally, there is very little that India offers and China wants apart from raw material.
To Kendrian,
There is another way. India stops importing CHEAP, LOW QUALITY toys and consumer goods from China. These goods are absolutely not essential and are being “dumped” by China. Banning these imports might affect a few importers from India, that’s all. There are plenty of manufacturers of the same/better products in India.
If China does not open its software sector to India, India should hit back immediately and massively. I am absolutely sure, that China needs to “dump” its low quality goods in India more than India needs to sell her raw materials to China. In other words, while neither side remotely needs each other, China needs India far more than India needs China.
@Carlos
You are out of date. Most of the large Indian IT consultancies have offices and businesses set up already in China to handle the Far Eastern markets.
As regards cheap Chinese consumer goods, if the Indians didn’t want them, they wouldn’t buy them. The Indian government has high tariffs on imported electronics so expensive European and American equipment are correspondingly higher. It’s okay for Mumbai financial types and Bangalore tecchies to buy the latest Beemers and Nokia phones but for the average middle class Indians they’ll make do with dual sim, quad band, dual camera, tv receiving phones from China at a fifth of the price of their western brands.
To Carlos
You have got to be kidding me…
1. China has far more talented software engineers than India. The software business is 5 times of India´s if you look at the figure. Even if the sector opens up Indian companies will not have much access. Your half baked English skills are useless in China. Unless your engineers learn some Chinese I don´t see their use.
2. I have tasted the “quality” Indian products so please spare me of your patriotic rants. It is your consumers that have chosen our products. No one forced you to buy our products. If India makes better products your consumer will buy them. Ban our products if you wish. India is like 1% of our export anyway, an insignificant market.
3. Keep dreaming that China needs India.
To both Four and Five,
And, of course, your great government banned the book 
I said China needs India more than India needs China.
If not, China would not be objecting so much about Indian anti-dumping duties. Literally crying about them
As regards software, India leads China by a big margin. Your Chinese figures are thrash and the whole world knows this. You are frankly the laughing stock of the entire world with your rigged/fraudulent figures in every which field. Even Wen has been recently dubbed “China’s Greatest Actor”
Ok Guys…
@Observer – yes, there are many Indian IT companies in China. Many are our clients in fact. Indian business in China is growing and becoming increasingly important in bilateral trade. Thats exactly why I positioned my firm in the middle of that.
@Carlos – you do have a point over the dumping of cheap products onto Indian markets, but really India should be making these things themselves if they want to stop that.
@Kendrian – Yes, India needs to improve its sales of products and services not just to China but also globally. It needs to boost its manufacturing sector somewhat, it has the opposite problem to China. While China is too dependent upon export manufacturing, India’s service sector is too large.
Thanks for your comments. – Chris
@Chris
I wouldn’t say that India’s service industry was too large in absolute terms. In fact the problem is that it hires only so many workers. It is however in a dangerous position should their biggest market, the USA, decide to penalize US companies using outsourcing services. You are right however to say that both China and India need to rebalance their economies especially if the US and Europe go into a double-dip recession. India could increase manufacturing to service it’s own market and others and China can increase domestic demand which would require services such as medical care, education, accounting and legal, IT, etc.
The world is about to enter interesting times!
To Chris,
Indian firms do manufacture a lot of the products that are currently being imported from China. The reason they are being imported is because of THE CHINA PRICE.
They sell at ridiculously low prices because of State support and huge subsidies bordering on virtual write-offs. India has a legitimate anti-dumping case against China and should go the whole hog. Unfortunately, India’s leaders tend to be diffident when it comes to China.
See a report on the FutureGov Summit in China. Even the German representative was impressed with China’s municipal IT implementation:
http://www.futuregov.asia/blog/2010/sep/3/chinese-e-government-spotlight/
To Chris:
Yes China does have a large dependence on exporting, but you need to realize that the export sector also generates a lot of imports of electronic parts from Japan, South Korea, etc (which then get assembled in China), Machinery (mostly from Germany), and raw material (from Brazil, Australia, Russia, India) etc. All these imports count as negative GDP. The net effect of trade on China’s economy is a bit over exaggerated, otherwise China would not have faired so well through the crisis.
As far as IT goes, Chinese software firms provide a wide range of quality and proprietary CRM/ERP, database, and other solutions. Chinese firm has proprietary operating systems(although limited use at present), proprietary chip designs, and a large supply of software engineers who graduate from universities. Indian firms excel at software system design execution, but not at design itself. Language advantage is what made companies like Infosys prosper in the outsourcing market for the United States. When it comes to China, combining the lack of language advantage and innovation, India just has nothing that really attracts Chinese clients.
*Post edited by webmaster.
Cool down guys! The China-India trade imbalance is nothing compared to us. We (and EU) happily exported tens of millions of manufacturing jobs which propelled China to triple their GDP in 20 years, starting around the same place as India.
Now a huge backlash is coming that spells disaster for China. Huge net importer India has not much to worry about since its growth has been mostly from domestic demand, export being only about 10% of GDP