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Growing Trade Links Drive Closer India-China Relationship

  • Anjana Pasricha

China's prime minister and Indian leaders have called for closer trade cooperation between two of the world's fastest-growing economies.

The Chinese prime minister, Wen Jiabao, speaking in New Delhi called for Indian business leaders to invest in China, particularly in the high-technology sector.

Mr. Wen told Indian businessmen that India has emerged as a front-runner in the software sector, while China has become the world's manufacturing hub. If the two countries joined forces, he said, they could achieve new milestones.

Mr. Wen said there was a huge potential for more trade and investment flows between the two rapidly growing economies, which account for 40 percent of the world's population.

The Chinese prime minister wraps up his four-day visit to India on Tuesday. The strong focus on trade was underlined by the Chinese leader's decision to make the information-technology hub of Bangalore his first stop.

Both the Chinese prime minister and Indian leaders had a simple message during the visit - working together, the two countries could become the twin engines of growth in Asia and launch what was termed the "Asian century."

Analysts say the two giants have worked hard to set aside their decades-old political differences so that they can reap the benefits of their expanding economies.

The policy has already yielded results and trade is booming. It jumped from $3 billion in 2000 to more than $13 billion in the past year, making China India's second-largest trading partner. Both countries expect trade to increase to $30 billion in another five years.

Indian Commerce and Trade Minister Kamal Nath says the story these figures tell is evident.

"The world tends to juxtapose India and China in a 'one versus the other' debate… I see our relationship in an 'India with China' context. India and China have no reason to be antagonistic," he said.

The eventual establishment of a free-trade zone between the two nations was discussed and they also agreed to step up cooperation in areas ranging from flood control to education and investment.

Analysts say the two countries are only in the first stages of building a robust economic relationship. But closer trade links could be the driving force for overcoming decades of mistrust.

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