India's PM urges China to address trade imbalance

BEIJING, Jan 14, 2008 (AFP) - Indian Prime Minister Manmohan Singh, on a rare visit to China, called Monday on Beijing to expand market access for his nation's goods to reduce a growing trade imbalance between the two emerging giants.

Singh also told an investment seminar in Beijing that Indian companies had to be more vigorous in pursuing opportunities in order to to help reduce the trade deficit with China, which more than doubled last year.

"The challenge before us is to diversify our export basket to China," Singh said in a speech before talks scheduled later in the day with Chinese Premier Wen Jiabao.

"I would urge Indian business to vigorously pursue opportunities for expanding non-traditional items of export.

"Such efforts, when matched by greater market access for Indian goods in China, will help to bridge the rising trade deficit between us," he added, according to the text of his speech.

New Delhi is looking to rein in a trade gap with China which it says has jumped to about nine billion dollars in 2007 from four billion dollars a year earlier.

Singh's three-day visit here, accompanied by Commerce Minister Kamal Nath, is the first by an Indian prime minister to China in five years as the world's two most populous nations look to deepen their ties and overcome decades of mistrust.

He has said he wants to discuss a wide range of questions including UN reforms, regional dialogue and global issues such as climate change, energy security, international trade and counter-terrorism.

Nevertheless, local state-run media here have played down the likelihood of any major breakthrough.

"It is a belated visit by Singh," the China Daily newspaper said Monday in an editorial, noting that an earlier visit planned in 2006 had been cancelled at the last minute.

The paper also cautioned that it would be "unrealistic" to expect a solution on a long-standing territorial dispute between China and India which led to a brief war in 1962.

That dispute will likely be on the agenda when Singh meets Wen at the Great Hall of the People later Monday, officials said.

Much of the early focus, however, is on questions arising from the growing economic interaction between the two.

In 2006, as a sign of growing ties, they agreed to double annual trade to 40 billion dollars by 2010.

That objective is moving closer, with import and export volume growing to 34.2 billion dollars from January to November last year, according to Chinese statistics.

"We would like to sell much more to China," Indian Foreign Secretary Shiv Shankar Menon told journalists before leaving New Delhi.

"In the last few years trade shifted in China's favour, and we are hoping to change that."

China and India also want to expand two-way investment, which currently stands at less than 300 million dollars, according to India's ambassador to China Nirupama Rao.

"Indian multinational companies have proved their ability in foreign acquisitions," Rao told the China Daily. "It is a matter of time before they start investing in China."

During the visit, five agreements are to be signed including pacts covering railways, housing and traditional medicine, officials said.