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India and China ties are likely to enter into a "new age of cooperation" especially in trade in view of Prime Minister Narendra Modi's knowledge of Chinese investment promotion and his plans for economic reforms, according to an official think-tank in Beijing.
"The two countries can be optimistic about the future, because Narendra Modi has promised to focus on reform and economic development," said an article titled 'Trade binds China and India' written by Xu Changwen, a researcher at the Chinese Academy of International Trade and Economic Cooperation, affiliated to the ministry of commerce.
"Moreover, since Modi is said to have studied the Chinese economic model and visited Shanghai, and Guangdong and Sichuan provinces to get first-hand knowledge of China's investment promotion, it is likely that the two countries will enter a new age of cooperation," said the article published in the state-run China Daily.
Modi visited China four times as the chief minister of Gujarat scouting for Chinese investments. Much of China's $900 million Chinese investments were made in Gujarat.
About addressing the India's growing trade deficit with China, it said India could further open up its domestic market to China, making it possible for more Chinese companies to invest there which in turn could redirected to the Chinese market.
Indian officials say the trade deficit is averaging around $ billion in the bilateral trade. The India-China trade totalled to around $65.47 billion last year and the deficit in the first four months of this year already mounted to $8.84 billion with the total 1trade around the same time totalling to $21.98 billion.
Emphasising the importance of trade in the improving relations between the two countries, the article said India has been a strategic trading partner of China for the past nine years, and China is now India's largest trading partner.
Trade grew between the two countries from $7.6 billion in 2003 to $166.47 billion in 2012, an average annual increase of 30 per cent. There is still plenty of room for deeper cooperation between the two sides, it said.
Until 2004, China had trade deficit with India as imported huge amounts minerals, and base metals like steel and cotton from India, and exported only small quantities of electromechanical devices and chemical products.
“But a sharp increase in the export of China-made optical instruments, automobile parts, furniture and textile products to India because of the latter's booming economy dramatically tilted the trade surplus in China's favour," the article said.
However, the bilateral trade which the leadership wants to push to $100 billion by next year is slowing down from the peak of $73.92 billion fell by 10.1 per cent in 2012 and another 1.5 per cent last year due to slowing down of Indian economy, it said.
"As a result, exports of Chinese products such as chemicals and steel to India also dropped significantly. China, however, has managed to maintain a respectable trade volume with India by continuing to import jewellery, noble metals and copper products from India," it said.Trade was expected to get better as the investment and trade environment in each other's countries as they agreed during the third India-China Strategic Economic Dialogue in Beijing this year.
"On its part, China can provide adequate supply of products for export to and a bigger market for imports from India if its economy can grow at the rate of 7.5 per cent a year, and thus facilitate mutually beneficial cooperation in the long term," it said.
By 2015, the two countries are expected to conclude their negotiations as members of the Regional Comprehensive Economic Partnership and thus lay the foundation for building a better trading environment and realizing balanced development in the long run, it said.