India Intelligence Report

 

 

   India, China Set up Hotline

  When Chinese Foreign Minister Li Zhaoxing visits India next week, India and China have decided to set up a hotline between their foreign ministers as part of a roadmap to implement the 10-point action plan to boost strategic cooperation.
     
 

When Chinese Foreign Minister Li Zhaoxing visits India next week, India and China have decided to set up a hotline between their foreign ministers as part of a roadmap to implement the 10-point action plan to boost strategic cooperation. Zhaoxing's visit is seen as a follow-up visit to Chinese President Hu Jintao's visit last November.

During this visit, the two sides are expected to also agree to enlarge the trade basket going through the Nathu La Pass as means to achieve the bilateral trade target of USD 40 billion by 2010. The two sides are also expected to discuss a Regional Trade Agreement format and agree on a time-table for exchanges between the two ministries and also to have the first structured meeting with India and Russia in a tri-lateral format.

Indo-Sino trade has jumped to USD 24 billion last year from a USD 2.7 billion trade volume in 2000. However, while Chinese exports have been valued added manufactured goods, Indian exports have been raw materials and lacks value. Expansion of trade basket of Nathu La is being portrayed as a means to achieve this USD 40 billion target but India should be careful with that idea. Beijing could easily use the border as means to transport goods cheaply to Bangladesh thereby achieving the USD 40 billion target with India but also robbing India's share of trade to Bangladesh.

Finally, in the ultimate analysis, India will end up the major loser with only a few traders who transfer goods from the Chinese border to Bangladesh border being the winners and large populations of Indian manufacturing houses and their laborers major losers. New Delhi needs to also identify manufactured and value added goods that may be of value to the Chinese and try moving away from the policy of exporting raw materials and taking short cuts to achieve artificial targets.

Some time ago, the Commerce and Industry Minister Kamal Nath had talked about investments and industries not only producing trade but also generating jobs. The concept of this comment is that the creation of jobs will accommodate millions of people in disguised unemployment in the agriculture sector in the industrial sector hereby spreading the wealth across the po

 
  pulation. However, the discussions around trade seem to have lost this basic objective that Nath seems to have set out.