Prime Minister Manmohan Singh told visiting Chinese premier Li Keqiang on Sunday a recent military standoff in the Himalayas could affect relations between the two countries as they looked to boost bilateral trade. The latest incident distracted diplomats' attention from negotiations on investment and trade ahead of Li's trip and soured Indian public opinion toward China.
Here's a 10-point cheatsheet on Indo-China trade:
Bilateral trade between the two countries touched $73 billion in 2011, making China India's largest trade partner, but slipped to $66 billion last year.
Dr Singh said on Sunday it was important to find a way to balance out India's $29 billion trade deficit with China as the two countries aim for $100 billion in bilateral trade by 2015.
"While we are committed to the $100 billion by 2015 we will have to have a more balanced rate," said the official, who was briefed about the restricted meeting.
The official described the conversations as constructive and cordial but said he did not know Li's response to Singh's comments.
Ahead of another meeting with Dr Singh, the Chinese premier today said that India was an "important neighbor" and he hoped talks are "bountiful".
Up from next to nothing in the 1990s, trade has been heavily skewed in favour of China. It exports power and telecoms equipment to its neighbour, which as one of the world's fastest growing major economies could offer brighter opportunities for business than the stagnant West.
The growing deficit is a bone of contention though, and India is pressing for greater access for its pharmaceuticals and IT services.
China has never sought a trade surplus or blocked imports, its deputy trade minister Jiang Yaoping said on Thursday, blaming the imbalance on "differences in the two countries' economic structures".
Prior to the visit, Li said he chose his first destination on the four nation tour to show how important India is for China and also because he had fond memories of visiting as a Communist youth leader 27 years ago.
The two countries are expected to sign agreements on trade, agriculture, the environment and culture, Xinhua said after Li arrived on Sunday. Li is due to leave India on Wednesday to travel to Pakistan, then Switzerland and Germany.
