02/20/2009, 00.00
CHINA - INDIA
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India announces tariffs on Chinese aluminum: trade war fears on the rise

In January, New Delhi banned Chinese toys for six months, for safety reasons. Annual trade between the two countries amounts to 51.8 billion dollars, but is increasing rapidly.

Hong Kong (AsiaNews/Agencies) - India is announcing new import tariffs on Chinese aluminum, and says that it is studying similar measures for other products. There is a growing risk of a trade war between the two Asian giants.

G. K. Pillai, India's commerce secretary, explained yesterday his concern over the sharp rise in imports of cheap Chinese goods, saying that "you can't export to an extent, which can kill my domestic industry . . . China is a non-market economy," with an elevated production capacity.

The new tax will go into effect within one or two weeks. According to the Indian media, Chinese aluminum imports more than doubled in the fiscal year 2007-2008, reaching 252.89 million dollars, while in the first quarter of this fiscal year, they totaled 82.74 million.

The measure comes after, on January 23, India instituted a six-month ban on the importing of Chinese toys, saying that they contain chemical substances that are dangerous for children (like lead and cadmium in the paint). Chinese toys account for about 70% of the Indian market, for an annual value of about 400 million dollars. Beijing has threatened to appeal to the World Trade Organization, and last week Indian trade minister Kamal Nath said he was ready "to talk" with the Chinese about the toys.

China's trade ministry charges that India is considering similar measures for 17 Chinese products, and has warned that this could have "serious consequences" on mutual trade relations. Economic trade between the two countries rose sharply recently, after years of hostility following the border war in 1962. In 2008, trade amounted to 51.8 billion dollars, with a surplus of 11.2 billion dollars in China's favor. It is a modest volume in comparison, for example, with the 450 billion dollars in trade with Europe. But in the current crisis, it is of great importance, in part because the two countries expect to increase their trade as commerce with the West passes through a period of difficulty.

More than 100 Indian companies have opened stores in China since 2000, and Chinese businesses invested about 10.5 billion dollars in India between January and October of 2008. For years, Beijing has insisted on establishing regional free-trade agreements with India, but India is hesitant because it is afraid of being swamped with cheap Chinese goods. Today, India mainly exports basic materials to China, with little value added, while it buys electrical and other manufactured products from China. India also believes that there would be a strong market in China for its agricultural products, but for now these are blocked by customs duties imposed by Beijing.

Meanwhile, as a consequence of the crisis, India's Jet Airways has suspended its route from Shanghai to Mumbai, just six months after its triumphant beginning. And the Chinese are requesting fewer visas for India, in spite of an aggressive campaign to attract tourists.

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