Trade issues drive China, India apart

Raymond Thibodeaux Aug 26, 2009
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Trade issues drive China, India apart

Raymond Thibodeaux Aug 26, 2009
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Steve Chiotakis: India and China are increasingly influential in world trade. They’re both giant Asian nations with billion-plus populations. And both see themselves as the world’s factories. But having things in common doesn’t necessarily make them friends. Raymond Thibodeaux reports from New Delhi.


Raymond Thibodeaux: Just recently, Indian developers building large public works projects bought more than $8 billion worth of turbines and other heavy power equipment. They bought it from China. Local businesses were left out in the cold. Indian politicians and manufacturers asked: Why not buy from us?

DEEPAK MORADA: Promoters of projects have placed orders with Chinese manufacturers because they’re the cheapest.

One of India ‘s biggest engineering companies is Larsen & Toubro. Deepak Morada is an executive with the firm. He says China does not play fair. It artificially holds down the value of its currency so that overseas buyers need fewer dollars or euros to buy that Chinese product priced in yuan.

MORADA: If you talk about globalization and a level playing field, then the leveling must apply to every aspect of the transaction, including currency.

Business leaders here say Beijing’s trade policies protect Chinese markets from foreign competition and enable Chinese manufacturers to export goods cheaply. Two years ago, China edged out the U.S. to become India’s biggest trading partner. Many Indians say the balance of trade is not in their country’s favor. That’s feeding a growing resentment here of the Chinese.

VIKRAM SOOD: They don’t want to see the success of the Indian model as compared to theirs.

Vikram Sood is a security analyst and China specialist at Delhi’s Center for International Relations. He says China never took India’s growth story very seriously — until now.

SOOD: There’s competition between India and China in the context of commerce. There’s a disputed border between the two countries. There’s competition for energy and natural resources. And there’s competition in the context of growing Indo-U.S. relations, which the Chinese don’t seem to view very favorably.

He says India-China relations recently soured further when a prominent Chinese think-tank touched a raw nerve here by suggesting China instigate a break up of India by supporting separatist groups. Few Indians think that’s going to happen, but their swift and angry reaction shows how fraught things can be when two emerging economic giants wake from their slumbers at the same time in the same part of the world.

In New Delhi, I’m Raymond Thibodeaux for Marketplace.

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