China seeks talks with India to push Asia trade pact as Beijing seeks new markets to offset trade war impact

China has sought talks with India to allay concerns on a regional free trade pact it is spearheading, two people familiar with the matter said, as Beijing seeks newer markets amid the ongoing trade war with the United States.

The 16-country Regional Comprehensive Economic Agreement (RCEP) has been in the works for some time, and China is keen to conclude it by end of 2019, the people said, asking not to be identified as the matter is not public.

India’s wariness about a possible flood of Chinese goods, and its demand for looser immigration rules for its technology professionals remain sticking points.

China’s inability to close the trade deal highlights the continuing suspicion among its Asian trading partners over Beijing’s effort to increase its influence in the region.

RCEP, along with the “Belt and Road Initiative” to build investment and trade links with countries along the old Silk Road to Europe, is a key element in China’s efforts to seize the geopolitical advantage following what many in the region see as a US retreat under President Donald Trump.

Neither India’s foreign ministry or China’s commerce and foreign affairs ministries responded to the comments.

The meeting is likely to take place before the end of this month, and New Delhi has drawn up a list of issues it will take up with Asia’s largest economy.

China and India agree to boost trade and lower temperature on the border

That includes providing zero-duty access to fewer Chinese goods as opposed to those offered to other members of RCEP.

It also will seek a longer period to phase out levies on Chinese goods compared to 20 years offered to the others.

India’s imports from China have been rising with the deficit reaching US$55.6 billion in 2017 compared to $48.19 billion in 2015.

A resolution of the stalemate appears unlikely in the short term as RCEP member countries like Australia, India and Indonesia have elections in 2019.

Apart from China, India is planning to reach out to key players like Singapore and Australia to seek a consensus on the issues.