Chinese and Indian trade officials will meet in Beijing next month to discuss the viability of initiating a regional trade arrangement, Ministry of Commerce spokesman Wang Xinpei said on Wednesday at a regular press conference.
According to Wang, both sides will discuss "cargo and service trade, investment and trade liberalization" during the two-day consultation beginning on June 4, the fourth of its kind since March 2006.
The two countries plan to complete a joint feasibility research on regional trade arrangement by October and then decide whether or not to start free trade agreement (FTA) negotiations.
"If China and India, the world's two largest countries whose economies are experiencing the fastest growth, can figure out a trade arrangement, the vast East and South Asian markets would receive a significant boost while Asian economic integration would be facilitated," said Vice Minister of Commerce Yi Xiaozhun.
The first four months have seen foreign trade between China and India surge by 56.8 percent year-on-year, the highest among all the major trade partners of the world's fourth largest economy, to 11.4 billion U.S. dollars, according to customs statistics.
The joint feasibility research was initiated in April, 2005 by Chinese Premier Wen Jiabao and Indian Prime Minister Manmohan Singh. New Delhi has held such consultations twice while Beijing only once.
Pakistan, another rapidly developing South Asian country whose economy is enjoying an annual growth of between 6 percent and 8 percent, arrived at a free trade agreement with China on Nov. 24, 2006.
"Regional trade cooperation is heating up across the world as many countries, pressured by economic globalization, have to seek ways to facilitate their trade," said Yi Xiaozhun.
China has already learned the importance of regional free trade agreements. During the first three years after the North American Free Trade Agreement was signed by the United States, Canada and Mexico in 1994, Mexico saw its exports of male shirts to the United States soar by 122.9 percent while those of China declined by 38.1 percent. For sports wear exports, Mexico gained 769.3 percent while China lost 33.8 percent.
"If you are not part of regional trade arrangements, you stand to lose," Yi said.
China is currently in talks with 28 countries and regions on regional trade arrangements and has already clinched a FTA with Chile and a cargo trade agreement with the Association of Southeast Asian Nations (ASEAN).
Spurred by such agreements which usually apply zero tariffs to members, China's imports and exports with ASEAN and Chile surged 23.4 percent and 82 percent respectively over the first three months.
Apart from India, China is also collaborating with the Republic of Korea and Peru on FTA feasibility research and is engaged in FTA negotiations with New Zealand, Australia, Singapore, Iceland and the Gulf Cooperation Council.
There are 216 regional trade arrangements in operation worldwide, about 80 percent of which have been established over the past 10 years. The World Bank estimates that every developing nation has participated in at least five regional trade arrangements on average.