New Delhi: Chinese Premier Wen Jiabao said on Wednesday there was enough space in the world for both China and India to grow and that the world’s fastest-growing major economies were not competitors, but partners.
“Some media have said India and China are competitors. I do not agree with that view,” Wen told business leaders at the India-China Business Cooperation Summit in New Delhi.
In remarks seen as an effort to soothe tensions between the Asian rivals, he said Chinese companies would sign deals with Indian firms worth more than $16 billion, and that China may open up some of its sectors to Indian firms.
Wen’s visit is the first by a Chinese premier in five years. The two countries, home to more than a third of the world’s population, fought a war in 1962 and relations remain uneasy despite their booming trade relationship and rising global clout.
Both have stood together to resist Western demands in world trade and climate change talks, but they have also clashed over China’s close relationship with Pakistan, fears of Chinese spying and a longstanding border dispute.
“Impressive business delegations have accompanied Barack Obama and David Cameron, but when the Wen circus rolls into town with 100 of China’s top tycoons, the red carpet needs to be a bit longer,” said a commentary in the Hindustan Times.
“Let trade do the talking, other issues that add to the trust deficit will hopefully get addressed on the way.”
Wen announced more Chinese investments in India to assuage the worries of Indian politicians, peeved that the Sino-Indian trade balance is heavily in China’s favour.
Wen also said he would discuss with his Indian counterpart Manmohan Singh ways to substantially increase trade volumes. India’s deficit with China could reach $24-25 billion this year, analysts said. The deficit rose to $16 billion in 2007-08, from $1 billion in 2001-02, according to Indian customs data.
India has sought to diversify its trade basket, but raw materials and other low-end commodities such as iron ore still make up about 60% of its exports to China.
In contrast, manufactured goods from trinkets to turbines form the bulk of Chinese exports.
China is now India’s largest trade partner and two-way trade reached $60 billion this year, up from $13.6 billion in 2004.
“Economic ties constitute literally the bedrock of our relations ... Both sides are keen to further enhance mutually beneficial trade and are looking at new initiatives,” said an Indian foreign ministry spokesman on Monday.
Still, total investment by China in India is small, amounting to only $221 million in 2009, representing only about 0.1% of China’s total outward foreign direct investment stock in that year.
That figure is seven times less than what China has invested in Pakistan, according to data from China’s Ministry of Commerce.
The Sino-Indian trade relationship is overlaid with political and strategic rifts.
Beijing’s longest running grudge against India is over its granting of asylum to Tibetan leader the Dalai Lama, who fled to India in the 1950s following a failed uprising, setting off a chain of events that led to the war between them.
Hundreds of demonstrators wearing orange T-shirts with slogans such as “Free Tibet Now” took to the streets of central Delhi, shouting “Wen Jiabao go back!” and “Tibet’s independence is India’s security”.
Six Tibetan protesters were arrested at the Taj Palace hotel, after attempting to enter the main gates waving flags and chanting slogans while the Chinese premier was attending a business event inside.
“Don’t pull me, India is a free country,” shouted Tenzin Deki as she was forced into the vehicle.
The Dalai Lama is due to visit Sikkim, an Indian state on the Chinese border, during Wen’s visit to Delhi, something that could inflame tensions.
The two nations have pursued divergent paths in their development: for India, a democracy, economic reforms began only in 1991; for China, a one-party state that implemented market reforms in 1979, catapulting the country’s economy.
Although both India and China have said they are exploring a possible free-trade agreement, no real progress is expected on that front as there is some scepticism in New Delhi that Beijing may only want to dump cheap manufactured goods on India’s booming $1.3 trillion economy.
While the two are often lumped together as emerging world powers, China’s GDP is four times bigger than India’s and its infrastructure outshines India’s dilapidated roads and ports, a factor that makes New Delhi wary of Beijing’s growing might.
“Relations are very fragile, very easy to be damaged and very difficult to repair. Therefore they need special care in the information age,” China’s envoy to India, Zhang Yan, told reporters in New Delhi.
India fears China wants to restrict its global reach by possibly opposing its bid for a permanent UN Security Council seat or encircling the Indian Ocean region with projects from Pakistan to Myanmar.
Long wary of Washington’s influence in South Asia, Beijing’s overtures toward New Delhi also come just a little over a month after US President Barack Obama’s trip to India, during which he endorsed India’s long-held demand for a permanent seat on the UN Security Council.
After Wen’s 15-17 Dec. visit he travels straight to Pakistan, India’s nuclear armed rival, for another two nights.
In the days leading up to Wen’s trip, China and India have agreed on a series of business deals.