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China and India Sign Major Trade Pact January 17, 2008

Posted by davidzweig in economics.

This post from the Miami Herald views this development as having both real substance and profound impact, and it takes a Latin American perspective. However, the analysis applies to all nations and regions. For example, if this plays out as expected, it will reduce China’s need for dollar-denominated exports.

This week, Indian Prime Minister Manmohan Singh and China’s Premier Wen Jiabao said they would increase the bilateral trade target for 2010 from $40 billion to $60 billion, and that the two countries will start talks for a preferential trade agreement.

While international summits often produce ambitious joint declarations that never materialize, most experts take the China-India commitments seriously. Since China and India signed a ”strategic partnership” agreement in 2005, bilateral commerce has skyrocketed: their $20 billion trade target for 2008 was achieved in 2006.

”Records are tumbling when it comes to India-China trade,” The Times of India newspaper said Wednesday in an editorial. “China may soon become India’s largest trading partner.”

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