MAMALLAPURAM (Tamil Nadu) • India and China will set up a mechanism to tackle India's galloping trade deficit with the world's second-biggest economy, a top Indian diplomat said yesterday, following talks between Prime Minister Narendra Modi and China's President Xi Jinping.
Mr Xi, who is visiting India, and Mr Modi held several hours of one-on-one talks in the southern seaside Indian town of Mamallapuram, during which they discussed various economic issues, including India's US$53 billion (S$73 billion) trade deficit with China in 2018/19, and ways to tackle it.
Indian Foreign Secretary Vijay Gokhale said at a press briefing that the deficit was a concern for India and the Chinese side was willing to address it. Mr Xi welcomed Indian investment in pharmaceuticals and textiles, he added.
India also raised its concerns about the China-led Regional Comprehensive Economic Partnership (RCEP), Mr Gokhale said.
The contentious issues of China's Huawei 5G network and India's decision to revoke the special autonomous status of Kashmir were not discussed, he added.
Mr Modi told Mr Xi that "it is important that RCEP is balanced - that a balance is maintained in trade in goods, trade in services and investments", Mr Gokhale said. Mr Xi said China is ready to take sincere action on trade and to discuss in a very concrete way how to reduce India's trade deficit, Mr Gokhale said.
Chinese Vice-Premier Hu Chunhua and Indian Finance Minister Nirmala Sitharaman will lead the new mechanism which seeks to smooth concerns in the trade relationship that is skewed in China's favour.
The countries agreed on a partnership to create more jobs in manufacturing and will deepen defence communication, Mr Gokhale said.
Mr Xi had said earlier that he had a free and frank discussion with Mr Modi and would pursue proposals the two leaders discussed to improve bilateral ties. The discussions at their second annual summit, designed to break through decades of distrust between their countries over border disputes, also included China's close military ties with India's arch-rival, Pakistan.
"Yesterday and today we have engaged in candid discussions and as friends," Mr Xi said in opening remarks as the two leaders sat down for formal talks with their delegations. "I look forward to further discussions, I may follow up on proposals discussed yesterday," he said, without elaborating.
Ties were ruffled when India revoked the special status of the Himalayan territory of Kashmir in August, angering both Pakistan, which claims the region, and its all-weather ally China. Mr Modi noted in his opening remarks that he and Mr Xi had agreed to manage their differences prudently and not let them snowball into disputes.
After India, Mr Xi headed over to Nepal for talks with Prime Minister K.P. Sharma Oli.
The two countries are expected to sign a deal expanding a railway link between the Himalayan nation and Tibet, officials said.