Zhang Lizhong, Consul General of People's Republic of China Kolkata, spoke to BE's Tripti Nagdeote about trade points, facilities and challenges of doing business with India.

Q) In what areas is trade between India and China growing stronger?

A) In the last decade, bilateral trade between India and China has grown by 20 times. According to statistics of Chinese Customs, the bilateral trade volume in 2010 reached USD 61.8 billion, with an increase of 42.4% than the previous year. China is now India's biggest trading partner and ranks third in India's export to foreign countries. India is China's largest trading partner in South Asia.

The economic and trade cooperation between China and India is mutually beneficial and complimentary to each other. They are drawing on each other's strengths and pursue mutual benefit in various areas like infrastructure, environment protection, information technology, telecommunications, investment and finance. India has become one of the largest overseas project-contracting markets for China. In 2010, the total operation amount of these projects was USD 5.26 billion. Mutual investment has been made with steady growth in areas such as telecommunication, software, pharmaceuticals and other emerging industries.

Main products India exports to China are mineral products, base metal and textiles. Main products China exports to India are mechanic and electronic products, chemical products and base metal.

Q) What is India doing to reduce its trade deficit against China?

A) India and China agree to take measures to promote greater Indian exports to China with a view to reduce India's trade deficit. This includes support for Indian participation in China's national and regional trade fairs, advancing of trade facilitation, enhancing exchange and cooperation of pharmaceutical supervision, stronger relationship between Chinese enterprises and Indian IT industry and speedier completion of phyto-sanitary negotiations on agro products.

For better trade cooperation between China and India, we need to jointly oppose protectionism in all forms, build a favourable investment environment, and relax restrictions on approval procedure, capital flow and entry/exit of foreigners. We also need to strengthen cooperation in the fields of finance, tourism, and energy and environment protection. We should encourage greater mutual investment and project contracting cooperation, appropriately handle economic and trade frictions and differences.

Q) Are Indian businesses increasing their presence in China? What incentives are provided by China in this regard?

A) China is one of the favourite countries of foreign investment. Its enormous market capacity, well-developed infrastructure, sufficient industry matching ability, and steady and fair market environment attract more and more multinational companies to invest in China. China promises to perfect laws and regulations concerning foreign trade, improve the environment for foreign investment and sincerely welcomes foreign companies to participate in China's opening-up and reform, including Indian companies.

During Chinese Premier Wen Jiabao's visit to India in 2010, the two sides agreed to constitute an Indian-China CEO's Forum to deliberate on business issues and make recommendations on expansion of trade and investment cooperation.

In the last three years, mutual investment of China and India has increased 10 times. By March 2010, the total investment India has made in China amounts to USD 300 million and the total investment China has made in India amounts to USD 260 million. The investment areas include telecommunication, software, pharmaceutics and other emerging industries. According to statistics of Ministry of Commerce of China, in 2010, Indian companies made investment in 77 projects in China with the amount of USD 4.9 million and China made a total investment of USD 2.7 million in India.

Q) What progress has tourism between the two countries made in the recent years?

A) Recent years have witnessed rapid increase of Chinese and Indian tourists as the two peoples have more interest in the other's country and trade and economic cooperation. In 2010, about 549, 300 Indians visited China and about 99,000 Chinese visited India, with an increase of 22% and 26% than the previous year, respectively.

Considering the large population of our two countries, the numbers of visitors are too small and unbalanced. To enhance Chinese tourists' visit to India and vice versa, we need to take more measures.

First, raise people's awareness about many scenic spots. Take eastern India for example. Kolkata has rich cultural heritages. Bodh Gaya and Nalanda are places of interest with Buddhist significance and quite attractive to Chinese. But most Chinese people, after arriving in Kolkata, go to visit Taj Mahal instead of Bodh Gaya and Nalanda, which are closer in distance.

Second, provide more alternative packages to tourists. Yunnan Province, China is one of the most famous tourist destinations for Chinese but few Indians visit it because they are more familiar with big cities like Beijing, Shanghai and Xi'an and there are few Yunnan tourist packages available.

Three, enhance bilateral exchanges of tourism industry. Chinese and Indian people have different eating habits, customs and tourist interests. Through such exchanges, tourist companies can know better about their customers from the other country and provide better service.

Q) Are political ties/differences affecting India- China business at present?

A) In recent years, China-India relationship has maintained a healthy, all-round momentum of development. With frequent visits of Chinese and Indian leaders, mutual trust has been deepened and a wide range of consensus has been reached. The two counties have intensified exchanges in various fields such as trade, tourism, education, culture and so on. China and India have common interests and similar concerns on major regional and international issues and have worked in concert to meet global challenges such as climate change, advance the reform of the international financial and economic systems and promote regional cooperation. Both are committed to resolving outstanding differences including the boundary question at an early date through peaceful negotiations.

In such circumstances, economic and trade cooperation between China and India have made unprecedented progress and entered into the most dynamic and fruitful period. Mutual investment has just started and is on the rise, bringing ample rewards to both countries.

Q) If the small business organisations start business in China, what will be the effect on the two countries' economic development?

A) China welcomes foreign investment and these companies are treated the same way as domestic companies. Indian Small and Medium Enterprises (SME) are quite active in making investment abroad and account for a large portion of India's investment abroad. Greater participation by Indian companies in China, including SMEs, will facilitate the development of the bilateral trade and economic cooperation in a larger scale, expand the range of the cooperation and push forward the cooperation to a higher level.

(Courtesy: Business Economics)