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Friday, January 22, 2010

Will India, China break business barriers?

Beijing, January 21, 2010

It is easier for Chinese companies to do business in India than for Indian companies to do business in China, a CEO with a decade’s experience in China told HT a day after the two nations inked a trade agreement.

“India is more open and competitive, while in China almost everybody you deal with is the government,’’ he said. “As for visa issues, we face them in China as well.’’

This month, Beijing began to acknowledge that China could make it easier for India Inc. The MoU signed this week after the Indian and Chinese joint economic group met after four years, doesn’t say how the promises will be put into practice.

But the big deal, said a diplomat, is that the Chinese have at least officially accepted that there is a ‘problem’ in bilateral trade. Three-fourth of Indian exports to China comprise just raw materials. Within China, foreign companies struggle to compete for major State-run projects that are usually bagged by domestic players. Several foreign companies in China tend to trail behind while the Chinese economy forges ahead.

Last week, Commerce Minister Chen Deming showed keenness to make amends with a glowing speech in the Communist Party mouthpiece, People’s Daily: “We have to jointly let one-third of the world population enter modernisation...we’ll be faced with common difficulties and we need to learn from each other and draw from each other’s experiences even more today than any other time.”

In a 50-minute meeting, Premier Wen Jiabao was quoted telling Commerce and Industry Minister Anand Sharma that “only if China and India achieve common development and prosperity can we have a real Asia century”.

Almost the entire MoU lists issues of trade imbalance India has raised for several years, and more forcefully last year, when the trade deficit ballooned to $14.39 billion and bilateral trade sank by 21 per cent.

After the meeting, the Chinese commerce ministry hosted a rare joint media conference. Sharma looked askance at the Indian diplomats in the hall, as the first question broached the alleged Chinese hacking of the National Security Adviser’s computers. The big question this year will be whether India’s largest trade partner just talks shop or starts breaking business barriers.

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