Chinese Oranges and Indian Apples: A tale of two trade statements

There is little in common between the official statements of India and China after recent trade talks

On the face of it, the eleventh session of the China-India joint group on economic relations, trade, and science and technology (JEG), co-chaired by India’s commerce minister Suresh Prabhu and his Chinese counterpart Zhong Shan, seems to have started and ended on a happy note. However, the official statements of both countries paints a contrary picture. The Indians claimed to have negotiated for things the Chinese seem to be blissfully unaware of. The Chinese seem to have put forth an agenda the Indians seem to be innocuously oblivious to (See Graphic).
 
The Chinese statement released by Xinhua on March 27 talks of an offer that is an attractive proposition for the Narendra Modi administration. According to Xinhua, one of the seven proposals put out by China includes “dovetailing the Belt and Road initiative with India’s 15-year vision plan, Make in India and Digital India programs.” Reports suggest China is looking to invest $800 billion over the next five years on the Belt & Road initiative, seeking to create a Eurasian trading contiguity with China as the nerve centre. India’s official statement, meanwhile, completely steers clear of the Belt & Road Initiative.

New Delhi's primary concern, according to its statement, was to “promote balanced and sustainable bilateral trade.” The statement further read, “The Chinese side noted India’s concern regarding the long existing trade imbalance and requests for market access of Indian products and services.” China meanwhile “hoped” that India could increase its exports to China by “participating in the China International Import Expo (CIIE).” The first ever CIIE will be held in November 2018 in Shanghai and is an exhibition of exporters from different countries for their respective products. India’s concern, which seems to have been lightly staved off in the Chinese statement, is based on glaring trade gap between the two nations since the Modi government came to power. India’s exports to China have declined by 14 per cent since 2014-15. Its imports, meanwhile, have increased by 5 per cent even as India has imported lesser and lesser from the world since 2014-15. As of February 2018, India’s trade deficit with China stands at $53 billion and has widened by 9 per cent since the Modi government came to power.

India has been lobbying hard for market access for some of its agricultural products in China to narrow down this burgeoning trade deficit. Among other products, India’s statement mentioned “non-basmati rice, soya meals, okra, banana and bovine meat” and said that the Chinese had “re-affirmed their commitment” to accelerating market access for these commodities. The Chinese statement does not mention any commitment to allowing access to Indian farm products to its market. In fact, the Chinese statement implies quite the opposite. It quotes Suresh Prabhu saying, “India welcomes Chinese businesses to increase investment and boost their market share in India.”

India’s concerns that failed to find a mention in the Chinese statement were driven by the fact that the country's buffalo meat exports have declined since the Modi government assumed power and China, which has banned Indian imports for hygiene reasons, represents a huge opportunity for India’s cara beef exporters. Despite the fact that Chinese cuisine makes generous use of soya products, the nation has clamped down on import of the commodity from India over the past few years. India’s soya meal exports to China have plummeted from $10 million in 2014-15 to a little more than $1 million in 2016-17. Similarly, China is also the world’s largest rice importer but barely procures any rice from India. While India’s basmati exports to China are negligible, none of the non-basmati parboiled rice worth almost $1.55 billion that it shipped abroad in 2017-18 reached Chinese shores.

Similarly, the Indian side mentioned that both nations “had re-affirmed their aim to promote bilateral trade in the field of pharmaceuticals, including resolution of issues of Indian pharma exports to Chinese markets.” But the release put out by Xinhua doesn’t even mention this concern as having being either discussed or under consideration for resolution by the Chinese. Things seem to have come a full circle for India, since it had made a similar push for its pharma products with China during the last Joint Group on Economic Relations, Trade Science and Technology meeting held in September 2014. Despite exporting billions of dollars’ worth of cheap generic medicines across the world, India’s exports to China have been negligible even as most of the active chemical compounds that go into manufacturing such drugs come from China. Former commerce minister Nirmala Sitharaman had informed Parliament that the reason for this was that it was taking anywhere from four to seven years for Indian pharmaceutical companies to register their products in China. And despite India’s request in 2014, things barely seemed to have improved since then, despite a memorandum of understanding being signed between the two nations on this particular issue during the much celebrated visit of the Chinese president to India in September 2014. Since 2014-15, India’s global pharma exports have grown from $11.5 billion to almost $13 billion in 2016-17. Exports to China meanwhile have declined from about $30 million to $27 million during the same period.

None of the other Chinese assertions in their seven-point agenda, such as improving business environment for Chinese products, cooperation in human resources and establishment of a trade facilitation joint working group, are acknowledged in the Indian statement.