China to displace US as India''s largest trading partner

If the last five year''s trend of over 30 per cent annual growth in bilateral trade between India and China, China will displace the US as India''s largest trading partner in one year.

This was stated by union commerce minister Kamal Nath in New Delhi, while addressing the Confederation of Indian Industry''s India-China Joint Business Forum. in New Delhi.

Nath said the annual bilateral trade between the two Asian neighbours, currently estimated at around $18 billion, is expected to reach $20 billion a year ahead of target by 2007.

"If the present annual growth of over 30 per cent, which in the last five years has even crossed 60 per cent, continues, China may be our largest trading partner in one year overtaking the US, with which our trade is around $21 billion," said Kamal Nath.

Nath''s Chinese counterpart Bo Xilai said, "If the present trend of trade flow is maintained by 2010, the bilateral trade could reach $50 billion."

Inviting Indian companies to invest in China, Chian''s minister said, "There is a huge demand in the Chinese market. Last year, there was 95 per cent increase in input (raw materials) from India." Indian investments currently constituted barely one per cent of the foreign direct investment flow into China.

Stating that by 2010, the domestic market in China would be one of the biggest with the savings of residents expected to soar from current levels of $1.7 trillion to over $4 trillion, Bo said Indian companies should look more closely at the Chinese market for supply of luxury and consumer goods.

To boost investment flow, India and China today signed a draft agreement on investment protection and promotion, which would provide the legal basis to encourage the flow of investments. Bo Xiao is leading a 82-strong delegation to India comprising 40 officials and 42 business representatives to attend the India-China Joint Economic Group meeting being held after six years.

"We are keen that developing countries have a bigger share of the Chinese market," he said. He said the Canton Trade Fair, which completes a century this year, would provide a good platform for Indian companies to showcase their products and services.

Setting up the mechanism to remove trade and investment hurdles, the two countries have decided to constitute six task forces to study issues like harmonisation of standards for products, non-tariff trade barriers, rules of origin of products and raw materials and consultations on WTO negotiations.