Saturday, February 5, 2011


As Chinese Premier Wen Jiabao comes to India for the second summit meeting, he brings with him the largest-ever business delegation from China to India. This must bring some cheer to the Indian business community as the visit could yield major export orders for Indian manufactures and handicrafts.

With more than $2 trillion of foreign exchange reserves, Premier Wen could well have decided to use some of it to redress the growing and unsustainable trade imbalance that has emerged between the two countries. With a trade surplus of nearly $20 billion in the total bilateral trade, which is expected to reach $60 billion by the end of March 2011, China must begin to take effective and urgent steps to rectify the imbalance if economic relations between the countries are to achieve their true potential.

The true potential for trade and investment flows between two giant economies that are both growing at 8-9 per cent annually, is very large. But for this potential to be exploited fully, a much higher degree of trust and understanding of each other’s core interests is required. The implication is that we cannot continue to completely segregate political and economic aspects.

The economic relationship between the two countries cannot continue to grow while political relations remain in their present fragile state. When relations are fragile, it does not take much for mutual mistrust and apprehensions to come in the way of technology, investment and even trade flows. Therefore, it would be very useful if during this visit, the Chinese premier would convey his government’s recognition of India’s core interests like Kashmir, Arunachal Pradesh and protection against religious terrorism as India has done for decades with respect to Taiwan and Tibet.