China promises steps to reduce India’s trade deficit

China today said it is paying "close attention" to India's concerns of its ballooning trade deficit and has promised corrective steps through increased market access for Indian products.

The assurances come ahead of Premier Li Keqiang's first visit to India and after a brief muscle-flexing on the border with Chinese troops intruding 19 km deep into India's Ladakh area.

Li will start a three-day visit to New Delhi and Mumbai from 19 May during which the two countries are expected to sign a number of agreements.

China's vice commerce minister Jiang Yaoping told a media briefing in Beijing today that China attached importance to expanding cooperation with India in all fields.

India is concerned over its widening trade deficit with China, which touched $28.87 billion even as bilateral trade rose to $66.47 billion last year.

India has asked China, the world's second-largest economy, to open up its markets in areas like IT and pharmaceuticals where India has an edge.

"The two sides will conclude a number of agreements on a wide range of areas. Of course, all these cooperation agreements are negotiated on the basis of mutual benefit," he said.

"China takes this issue seriously and we have already taken number of efforts to address the problem," Jiang said adding that China has sent three trade investment promotion missions to India since 2008.

"We have signed purchase contracts worth $1.65 billion and financial agreements worth $11.64 billion. We also signed engineering contracts worth $3.5 billion," he said.

"We will provide facilities to India to explore Chinese markets. In the coming five years China plans to import $10 trillion worth of products and make investment worth $500 billion. We hope Indian side will take proportion of its share in China's imports and outbound investment," Jiang said.

"China is ready to work with the Indian side to tap into the potential of our bilateral trade, better promote Indian products in China and encourage two-way investment so as to gradually resolve the issue of trade deficit in the course of development," he said.

"I want to emphasise that Chinese government never had the intention of seeking or pursuing trade surplus. We have never set any restrictions or barriers on bilateral trade," he said.

"In our bilateral trade with India we believe only balanced trade is conducive to the interests of both sides and reason we have trade imbalance between the two countries is economic patterns and structures between the two countries," he said.

He also said China is organising a South Asia Commodities Trade Fair from June 6 to 10 in Kunming city in which Indian firms will take part.

"We hope it will be boost Indian products. China and India have strong economic complementaries and Chinese side is interested in increasing trade with India and we hope the bilateral trade will enjoy even bigger progress while keeping its balance," he said.

Jiang said both India and China are confident of meeting the trade target of $100 billion by 2015.

A Chinese trade and investment promotion mission will accompany Li during his India visit, Jiang said.

During Li's visit the two countries will hold the China-India CEO forum meeting and the China-India cooperation summit, he said

Meanwhile, China's overall trade surplus has dropped from $300 billion before the financial crisis to $200 billion and its share in GDP stands at around 2.8 per cent, which is lower than the internationally accepted level of trade surplus, he added.

China also played down the recent border stand off in Ladakh ahead of Premier Li Keqiang's visit to India, saying that the two sides have the ability to prevent such issues from affecting overall growth of ties, while working ''very hard'' to find a solution at an ''early date''.

''There are some historical issues between India and China including the boundary question. The consensus of the two countries and leaders is that we have more overlapping interests than differences and we have more cooperation than competition,'' Chinese vice foreign minister Song Tao said.