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China to press for FTA during Hu's India visit

india Updated: Nov 13, 2006 12:27 IST

Ahead of Chinese President Hu Jintao's visit, Beijing is vigorously pushing New Delhi to sign a bilateral free trade agreement and grant "market economy" status to the Communist trading giant.

Signalling this, Chinese Assistant Minister of Commerce Fu Ziying said that Beijing was considering FTA talks with India.

"Following the reopening of the trade post on the Indian-Chinese border (at Nathu la), our government is considering FTA talks with India," Fu said last week.

An FTA between China and India, the world's most and second most populous nations, would benefit as many as 2.4 billion people, the official Chinese media commented soon after Fu's statement.

Fu's surprise statement came even as India and China are studying the possibility of establishing a Regional Trading Arrangement (RTA) instead of a Free Trade Area (FTA), which could possibly harm Indian interests.

Hu is reportedly keen to raise the FTA issue with Indian leadership during the parleys planned during the November 20-23 state visit, the first by a Chinese President since 1996.

China is also pressuring India to grant "market economy" status, which most developed nations and some developing nations have not accorded to Beijing in view of its highly opaque pricing system and high-level of subsidies offered to exporters.

Chinese industry circles are also backing Beijing's increased push for FTA with India and the granting of and "market economy" status.

The Secretary General of China's Council for the Promotion of International Trade (CCPIT) Wang Jinzhen said that there are some problems, which have hindered the normal development of bilateral economic and trade relations between China and India, which must be resolved as soon as possible.

India has not yet recognised China's status as a market economy, which has hindered the normal development of bilateral economic and trade relations, Wang noted. Bilateral trade between the two countries, though booming at nearly 20 billion US dollars this year, is lacking in variety, he said.

Wang also said that India has barred Chinese investment in sensitive areas citing threats to national security.

"This is unfair to Chinese businesses, who are only asking for level-playing field with their counterparts from other foreign bidders" he said.

Wang said this showed that the level of mutual trust was still lacking between the two neighbouring nations and called for enhanced efforts to build mutual confidence and understanding as China is poised to replace the United States as India's largest trading partner.

At the same time, he noted that along with the improvement of political relations between the two countries, Sino-Indian economic cooperation has been gradually extended from trade in general merchandise trade to cooperation in fields such as technical cooperation, project contracting, and investment.

However, this cooperation has really only just begun and the market potential of the two countries is still to be fully tapped, he said.