Business ties

During Li's trip to India, the two countries signed eight agreements in areas such as the economy, trade, agriculture and environmental protection to expand practical cooperation.

"Due to different development modes in the last decades, the two countries' economies are broadly complementary to each other. Thus, there is large space for economic cooperation," said Lou. "If the two big markets are well connected, they will give a strong impetus to the world economy."

China is strong in manufacturing and India excels in the IT industry, minerals, biomedicine, banking and outsourcing. China is now India's second largest trade partner, while India is China's biggest partner in South Asia. India's exports to China are mainly cotton and minerals, while China offers manufactured goods such as industrial equipment. Statistics from China's Ministry of Commerce show that two-way trade amounted to $66.5 billion last year, but both sides believe the potential is much greater. The two countries are aiming for a trade volume of $100 billion by 2015.

Sun said that to expand bilateral economic engagement, the huge potential of cooperation on Indian infrastructure construction and mutual investment must be further tapped.

It is widely acknowledged that the backward infrastructure of India has become a bottleneck for the country's pursuit of rapid development. The two big blackouts last year in India, affecting the lives of 360 million and 680 million people respectively, caused awkward moments for the country on a global scale.

Lou said China's wealth of funds, experience and technology in infrastructure construction offers it big advantages to India in terms of cooperation. China has become the largest overseas project contractor of India. Even so, much room is still left for additional projects.

China, which has advantages in manufacturing, is now faced with pressing problems as material and labor costs continue to rise in the domestic market. But in the meantime, a research report released by Kunming-based Yunnan University shows 51 percent of the Indian population are younger than 25 and in 2025 India will have about 130 million extra workers available to the world.

Sun claims that it would be a good choice for China's manufacturing sector, troubled by surging labor prices at home, to transfer business to India. At the same time, it would provide an opportunity for India to improve its manufacturing industry and create more jobs. Some economists also noted that only when India develops a more mature manufacturing base, can it achieve trade parity with China.