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China, India Move to Increase Economic Cooperation


Trade officials from India and China have met in New Delhi to explore ways to strengthen commercial cooperation. The two Asian economic powerhouses have been forging business ties in recent years after setting aside decades of political hostility.

After a meeting in New Delhi last week, China's Commerce Minister Bo Xilai and his Indian counterpart Kamal Nath have set an ambitious new target - trebling bilateral trade to at least $50 billion by 2010.

The two countries say they will lower barriers to cross border investment, and develop uniform manufacturing standards to fuel further growth.

Indian Trade Minister Kamal Nath says these measures will help the two fast-growing economies, which together account for more than one-third of the world's population.

"If China and India are going to be the largest consumers, are going to be the largest manufacturers, it is important for us to harmonize our standards," Nath says.

Business analysts say if targets are met, China could overtake the United States as India's largest trading partner. China has already become India's second largest trading partner with two-way trade galloping from $2 billion in 2000 to more than $15 billion last year.

But although bilateral trade is booming, it is still restricted to a narrow range of goods. The bulk of Indian exports to China consist of primary commodities such as minerals and iron ore. China sends electronic goods such as computer hardware, manufactured goods and silk fabric to India.

And trade analysts fear that India's exports of primary commodities to China may dry up as its own growing economy guzzles more of its raw materials.

As a result, businesses on both sides are exploring ways in which the Asian giants can capitalize on the other's economic strengths - manufacturing and computer hardware in China, services and software in India.

Madhu Bhalla, an expert in East Asian Studies at Delhi University, says the two countries need to look at new ways to cooperate if they want to sustain the growth in trade.

"They have to change the nature of the relationship from merely trading to joint ventures, joint investments overseas… I think in areas where we have the skills, where we have the knowledge base, where we have people with good management techniques which the Chinese lack, I think we can get together with the Chinese who have entrepreneurial skills which are beyond us - and of course the capital to invest, which is also beyond us. I think we can go across the world together. But with each other I am not sure how far we can sustain the present level of trading," Bhallah says.

There are signs the two countries are learning that working together can be more effective than acting alone. In the energy sector, for example, China and India are exploring joint bids for overseas oil and gas fields, which both countries want to feed their energy-hungry economies. And in December, the strategy paid off when the oil companies of the two countries jointly won a bid to acquire Petro-Canada's stake in Syrian oil fields.

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