India’s ‘heart’ closer to US than China on trade, says New Delhi’s commerce chief at G20 meeting

India’s commerce chief has described the country’s “heart” as belonging to the US and not China as it relates to trade in remarks delivered before ministers from both countries in New Delhi on Friday.

The RCEP, a free-trade agreement focused on Asia-Pacific and led by Beijing, comprises Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam.

In response, Wang singled out the growing trade relationship between China and India. In 2022, their bilateral trade reached US$130 billion, he said, adding that New Delhi was welcome to join the RCEP in the future.

Had there been a free-trade agreement between China and India, either bilaterally or in the context of the RCEP, Wang continued, trade potential between the two countries would have been “much further tapped … to the benefit of our two peoples”.

“So, it is your decision to decide whether you will join RCEP,” he added. “The RCEP door will be always open for India.”

That prompted Goyal to state that although bilateral trade between the Asian neighbours was on the rise it was “largely skewed in favour of China”.

“Indian industry feels that if you had entered into this agreement with the RCEP this trade would have suddenly increased, but it would only have increased the trade deficit further,” he said.

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From 2022 to 2023, India’s trade deficit with China reached US$83 billion, according to data from the Indian commerce ministry.

And in questioning China’s policy on export pricing, Goyal asked the Chinese minister how Beijing could supply goods at a rate that was lower than the cost of raw materials.

Wang replied by noting that India had been “successful in maintaining a global trade balance overall for the country”.

“So it is natural that you will have trade deficits with countries like China, but you will also have a trade surplus with other countries,” Wang said. “It is very good that you are able to maintain your trade balance globally.”

Piyush Goyal, India’s commerce minister, presents a scarf to Wang Shouwen, China’s vice-minister of commerce, during a trade ministers’ meeting on the sidelines of a G20 gathering in New Delhi, India, on Friday. Photo: AP

Goyal then said with a grin: “My heart here is with Katherine Tai from the United States of America”, referring to the US trade representative, who chuckled as she sat beside the Indian minister.

India has a US$28 billion trade surplus with Washington.

After regarding the US with suspicion for decades, India in recent years has aligned more closely with Washington and its allies as China’s military stature and economic influence have grown.

Meanwhile, ties between India and China have been strained since a clash along their disputed Himalayan border in 2020 led to the deaths of at least 20 Indian and four Chinese soldiers. It was the deadliest border encounter between the two in decades.

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Both sides have continued to deploy a significant number of troops and advanced weaponry along their border areas.

Xi told Modi that improving China-India relations served the interests of both countries and was conducive to peace, stability, and development, according to the Chinese ministry of foreign affairs, which said the discussion came about at Modi’s request.

Some Indian media outlets later challenged China’s claim, citing sources in the Indian government saying there had been a pending request from the Chinese side for a bilateral meeting and that the leaders’ conversation had been informal.

South China Morning Post