India asks China for market access to meet trade deficit

Aiming to bridge trade deficit gap, India has sought greater market access for exporting its products to China in sectors such as IT, pharmaceuticals and bovine meat, Parliament was informed on Friday. At present, India’s trade deficit with China has widened to $37 billion. “India has consistently sought greater market access for exports to China, especially in sectors such as IT services, pharmaceuticals and agriculture including bovine meat,” Commerce and Industry Minister Nirmala Sitharaman said in a written reply to the Lok Sabha.

With regard to imports from India, the country has also sought simplification and greater transparency in China’s procedures relating to registration, inspection and approvals, Sitharaman said. She said in order to boost export and maintain balance of trade with India’s trade partners, government has taken a number of measures. The steps include identification of specific products with export potential, actively taking up issues relating to tariff and non-tariff barriers in bilateral meetings and measures to support exports through various incentive schemes.

Ways to reduce trade deficit and increase Chinese investments in India are expected to be discussed during the visit of Prime Minister Narendra Modi to China this month. Replying to a separate question, the minister said India’s iron and steel imports from China increased to Rs 15,534.84 crore during April-February 2015 as against Rs 5,921.24 crore. The commerce minister has recommended anti-dumping duty on imports of Chinese hot rolled steel flat products. “The matter is under consideration of Department of Revenue,” she added. 

Meanwhile, China’s exports fell unexpectedly in April as imports posted their sixth straight monthly decrease, official data showed on Friday, with analysts calling for more stimulus to bolster the world’s second-largest economy. The country’s exports dropped 6.4 per cent year-on-year in April to $176.3 billion, the customs authority said -- well below the median forecast of a 0.9 per cent rise in a Bloomberg News poll of economists. The fall was accompanied by a 16.2 per cent drop in imports to $142.2 billion, the sixth monthly decline in a row, suggesting sustained weakness in domestic demand. The export and import figures for April showed a trade surplus of $34.1 billion, Customs said, compared with $18.5 billion a year ago. Analysts said the disappointing figures reflected persistent frailty in the Chinese economy and provided more evidence that further policy loosening is needed. 

“The trade data indicate that current growth momentum remains soft, calling for more monetary policy easing,” Nomura economist Zhao Yang said in a note. China’s gross domestic product (GDP) expanded by 7.4 per cent in 2014, the lowest rate in nearly 25 years. Growth slowed further to 7.0 per cent in the January-March period, the worst quarterly result in six years and down from 7.3 per cent in the final three months of 2014. More recent data showed the downturn may have extended into the second quarter. British bank HSBC’s purchasing managers’ index, which tracks activity in China’s factories and workshops, recorded its worst contraction in a year in April as subdued domestic demand continued to weigh on growth, it said this week. 

Chinese leaders have said they are ready to accept slower but more sustainable expansion, as they try to transform an investment-driven growth model to one in which consumers take centre stage. But authorities have stepped up stimulus efforts since late last year in a bid to ensure the 

slowdown does not get out of hand. The central People’s Bank of China has cut interest rates twice since November and reduced two times the amount of cash banks must keep in reserve, along with other measures to inject liquidity into the market. 

April’s trade figures followed a 15.0 percent year-on-year decrease in exports in March, and a 3.3 per cent drop in January. 

February overseas shipments increased by 48.3 per cent, mainly due to seasonal distortion around the Lunar New Year holiday. ANZ economists expected prolonged difficulties ahead for international commerce as other industry-related data remain weak.