China's Wen Ends Visit to India With Accords on Borders, Trade

Chinese Premier Wen Jiabao ends a four-day visit to India today, having concluded agreements to resolve historic rivalries and boost commercial ties between the world's fastest-growing economies.

Wen will visit the Indian Institute of Technology, a state- run engineering college, in New Delhi at 11 a.m. before flying to Beijing, the Indian foreign ministry said in a statement.

Indian Prime Minister Manmohan Singh and Wen, 62, yesterday agreed on a road map to end their decades-old border dispute and said they would explore the possibility of creating the world's biggest free-trade zone encompassing 2.4 billion people.

``This will make Asia more attractive and investors will have to start paying more attention to this part of the world,'' said Teng Ngiek Lian, who helps manage $650 million of Asian equities as chief investment officer at Target Asset Management in Singapore.

India and China yesterday agreed to boost two-way trade to $20 billion by 2008. Wen said the figure could reach $30 billion by 2010.

Trade in 2004 was $13.6 billion, 79 percent more than in 2003, according to China's customs bureau. India had a $1.75 billion trade surplus with China, the second-largest overseas market for Indian goods after the U.S.

``The current trade figures are incompatible with the potential,'' Wen said in a speech to business leaders in New Delhi yesterday. ``In order to implement a long-term plan, we must remove trade barriers and create an enabling environment for trade.''

Free Trade

The two leaders yesterday agreed to set up a panel to look into the feasibility and benefits of a free-trade agreement.

China last year said it favors such an accord. India, wary of opening its doors to cheap Chinese toys, clothes and mobile phones, has import tariffs of 15 percent for most goods, compared with China's 10 percent.

``I think it will take some time for our Indian friends and counterparts to think about it,'' Sun Yuxi, China's ambassador to India, said in an interview in India's Businessworld magazine, published on April 4.

A dispute over their mountainous 3,500-kilometer (2,175- mile) border led to a short war in 1962 and has marred ties between countries that are home to two-fifths of the world's people.

The two leaders yesterday agreed to a set of ``guiding principles'' to help negotiators decide territorial claims and demarcate borders. Both governments appointed Special Representatives to resolve the dispute after former Indian Prime Minister Atal Bihari Vajpayee visited China in 2003.

Border Claims

India claims 38,000 square kilometers (15,000 square miles) of Chinese-controlled territory in Kashmir, an area the size of Switzerland. China claims 90,000 square kilometers of land in India's northeastern state of Arunachal Pradesh.

China has accepted the Himalayan region of Sikkim as part of India, instead of regarding it a separate country. China hadn't recognized India's 1975 annexation of the territory, once an independent princely kingdom.

Wen and Singh also discussed ways of cooperating rather than competing in the search for energy resources to feed their growing economies. The two countries should ``engage in the survey and exploration of petroleum and natural gas resources in third countries,'' the statement said.

China is the world's second-largest consumer of oil after the U.S. and India relies on imports to meet 70 percent of its energy requirements. China's economy expanded 9.5 percent in 2004. India's grew 6.9 percent in the year ended March 31, the government estimates.

Regional Ties

Wen's trip to India, the first by a Chinese premier in three years, wraps up a week-long tour of the region that included visits to Pakistan, Bangladesh and Sri Lanka. Analysts saw this as a response to U.S. efforts to boost ties with South Asia, possibly as a counterweight to China's growing influence.

``China clearly is concerned that its rise in some ways worries the U.S., and they worry there might be some containment policy and so China is making this huge reach out to its neighbors,'' said Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy in Singapore and the island-state's former ambassador to the United Nations.

Wen began the visit to India in Bangalore, India's technology hub, where he called for a closer cooperation between the Indian software and Chinese hardware industries to make the 21st century ``the Asian century of the IT industry.''

In New Delhi, Wen also met Sonia Gandhi, head of the Congress party that leads India's ruling coalition.

Yesterday's talks resulted in 12 cooperation agreements in areas as diverse as science, finance, education, tourism and transport. They included a proposal to increase passenger flights between the two countries.

China also signaled it is willing to back India's bid for permanent membership of an expanded United Nations Security Council. China is one of five members of the 15-nation group with veto power.



To contact the reporter for this story:
Andrew Atkinson in New Delhi at [email protected].

To contact the editor responsible for this story:
Chris Wellisz at [email protected].