India-China Become New Engines of
World Growth
Abstract
The Chinese enter into India through liberalization. Recently, Sino-Indian
bilateral trade continues to grow by leaps and bounds. Bilateral trade in
calendar year 2007 stood at 38.65 billion $, registering an increase of
56% over the previous year. But restrictions on export of iron ore from
India have widened the trade gap. India's exports to China would be about
9 billion $ and imports from China could be about 19 billion $ and this
strengthened the relationship between India and China as strong hold in
its relation. Recently, India-China have proves how they share common
interests on issues, such as world trade and global warming. This was
evident in the Doha Round WTO discussions, where India-China found
themselves ranged against the US and EU. The real challenge to Indian
diplomacy lies in (I) how to utilize China's approach towards India (2)
India's advantage while creating relation with China i.e. in securing
enhanced cooperation in the areas like space, military technology
transfers and in promoting ties an issues ranging from agriculture and
infrastructure development, energy securing etc. Presently, Iron ore
constitutes about 53% of India's total exports to China. Among the
potential exports to China, marine products, oil seeds, salt, inorganic
chemicals, plastic, rubber, optical and medical equipment and dairy
products are the important ones. The study highlights the services and
knowledge trade between India and China have significant potential for
growth in areas like biotechnology, IT and ITES, health, education,
tourism and financial sector. Value added items dominate Chinese exports
to India, especially machinery, including electrical machinery, which
together constitute about 36% of exports from that country.
Introduction
Sino-Indian bilateral trade continues to grow by leaps and bounds. India
and China were on course to raise their bilateral trade to $60 billion by
2010, which was the target suspect by India. The Federation of Indian
Export Organization had appointed an agent in India to promote Indian
participation in the 104th edition of the Canton Fair, in order to enhance
India-China trade relations. India and China is not equal in the same
league in case of development concern but regarding economic cooperation,
they keep equal among themselves. But the Chinese have also been a lot
cheaper between 10% and 15% lower than the best price that India could
offer. In 2006, India’s development was lagging behind the China. The
India’s GDP per Capita in international dollar was only 53% of China,
goods exports only 13%, goods imports 22%, and Foreign Direct Investment
13%. Similarly, in social dimension the gap is too large. In 2006, India’s
literacy rate 61% as against China’s 90.9%, life expectancy at birth was
64 years as against China’s 72 years.
1. Objectives of
the Study:
Today India and China becomes a new engine of bilateral trade relations.
The present study focus the 1. Agreement held between the people’s
republic of China and India, 2. when India lag and behind China, and 3.
India-China trade agreements.
2. Five Principles
of Peaceful Coexistence
The five principles of Peaceful Coexistence of Punchasheel are a series of
agreements between the people’s republic of China and India . After the
Central Chinese government took control of Tibet, China came into
increasing conflict with Indis. However, both nations were
newly-established and interested in finding ways to avoid further
conflict. Therefore in 1954 the two nations drew up the Five Principles of
Peaceful Coexistence:
1. Mutual respect for each other’s territorial integrity and sovereignty
2. Mutual non-aggression
3. Mutual non-interference in each other’s internal affairs
4. Mutual benefit and equality
5. Peaceful co-existence
The Five Principles of Peaceful Coexistence
were first put forth by Premier Zhou Enlai China at the start of
negotiations that took place in Bijing from the Delegation of the Indian
and Chinese Government on the relations between the two countries with
respect to Tibet. Later, the principles were formally written into the
preface to the “Agreement between the Peoples’ Republic of China and the
Republic of India on intercourse of trade and transparency between the
Tibet Region of China and India.
India and China set an objective in the join statement to increase the
two-way trade volume from 13.6 billion dollar at present to 20 billion
dollar by 2008 and planned to take it to 30 billion dollar by 2010.
Further, the two countries agreed for a joint feasibility study for a
bilateral Free Trade Agreement.
India and China Economy have also agreed to work together in energy
security and at the multilateral level at the WTO to support an “open,
fair, equitable and transparent rule-based multilateral trade system.
Trade Pattern (Value in USD millions)
Year China’s Export to India China’s Export
from India
2000 1560.75 1353.48
2001 1896.27 16699.97
Percent Growth 21.5 25.6
2002 2617.73 2274.18
Percent Growth 22.2 87
2004 5926.67 7677.43
Percent Growth 77.3 80.6
Sources taken from Economy Watch
According to a CII study, besides traditional manufacturing a special
focus on investments and trade in services and knowledge-based sectors
have dynamic comparative advantage to India. Indian companies could enter
the $ 615 billion Chinese market by using it as a production base.
3. How today India
is behind China in most Economic Indicators?
If India achieves a double digit growth rate from the year 2006, India may
perhaps expect possibly to catch up China in 2015. For instance, in the
year 2006 India’s GDP per Capita was $2392.7 as it was keep up by China
only eight years ago (1998), when it was $2330.5. During the years
2002-2006, the annual growth rate of India’s per capita income was 7.25%.
If this rate could be maintained by India in 2006, India would be a head
of China’s per capita income by 2015. But China’s open economy was made
much in exports. India’s merchandise exports in 2006 were $ 120.2 billion,
which was equally to China only 12 years ago (121$ billion in 1994). India
maintains its growth rate of its exports during 2002-2006, its exports
then by 2015, it will be equal to China in 2006 ($968.9 billion). India’s
exports of goods and services as percentage of GDP were 23% in 2006,
higher that china’s only 7 years ago (20.4% in 1999). India’s Foreign
Direct Investment in 2006, at $7.8 billion, were higher than Chin’s in
1992 ($ 7.2 Billion) but tey are growing rapidly an by tat this current
rate of growth India will catch China in 2006 by 2015.
India is tracking the Chinese experience in
share of agriculture. The share of services of India is higher than China
while industry is lower than that of China. There are some areas such as
tractors per hectare, agricultural value added per farmer, information
communication and technology as % of GDP, India is a head of China. India
is set to accelerate its growth rate while China is slow down largely due
to demographic factors. As per the economic Indicators, by 2020, India is
likely to surpass China.
4. India’s Hi-Tech
lag behind China
From the year 1985-2005, the share of China’s hi-tech manufacturing
industries in global value added in high technology was rose slowly from
1.53% to 3.15% subsequently shot up to 16.06% by 2005. On the other hand,
India’s share in global added value in hi-tech increased from a negligible
0.12% to an almost equivalent and insignificant 0.43%.
The remarkable performance was showed by China in the relative share of
the high technology sector was its manufacturing sector as a whole, while
India’s performance was unimpressive. The share in India doubled from 4.3
to 8.6%, the absolute value of that share was much less than the global
average. On the other hand, China’s performance was remarkable, with the
tech share in its case rising from 8.4 to 29.4% of manufacturing value
added over 20 year period from 1985 to 2005.
China’s rise in the global league tables for hi-tech manufacturing was the
result of rapid expansion of exports. The ratio of export sales in respect
to per capita income revenues rose from 25% in 1985 to more than 75% in
the mid-1990.
Only to moderate later as domestic consumption of high technology products
rose along with Income. By 2005, that ratio had fallen below 60% because
of a rise in domestic consumption and not because of decline in exports.
On the other hand, India shows a slow and steady trend from 1985 to 2005
with 8.6% to 29%.
5. Structure of HI
tech Sectors:
The structure of hi-tech sector was completely dominated by
radio-television and communications equipment sector in the mid-1980, when
it accounted for 2/3 of all hi-tech manufacturing value added. Since, the
production of office and computing machinery has been rising rapidly. So
that by 2005, it accounted for 39% of hi-tech value added while that of
radio, television and communications equipment had fallen to 43%. On the
whole, information technology hardware is central to china’s hi-tech
success. On the other hand, India is considered and information techno
power, these two its sectors accounted around 20% of hi-tech value added
in 1985 contributed, just about 12% of that value added in 2005. But the
Structure of Aerospace industry from 1985 to 2005, China is better than
that of India.
Structure of
Hi-Tech manufacturing In China
The structure of pharmaceuticals in India accounted for 60% of value added
in 1985 and a massive 77% in 2005. The ratio of exports to revenue in the
hi-tech industries rose 7.5% to 15% between 1985 and 1999 and then doubled
again to 31% by 2005.
The period between 2000 and 2005 was one in which the share of
pharmaceuticals in hi-tech manufacturing value added in India rose from 61
to 77%. On the other hand, China is not noteworthy than that of India in
relation with share of pharmaceuticals.
6. India-China- Trade Transparency
India and China entered a MOU on trade remedy cooperation recently. This
would ensure more transparency as well as better understanding of the
anti-dumping and other investigations that are taken by the 2 countries.
India-China trade in 2007-08 reached $ 37.8 billion an increase of 47%
over 2006-2007. There is an enormous opportunities for both India and
China in expanding trade in services particularly in construction and
engineering, education entertainment, financial serves, IT and IT Enabled
Serves, Transport, tourism and health.
According to NATHU LA TRADE, the Indian side
proposed addition of 24 more commodities tradable through Nathu La. On the
other hand, China proposed 36 commodities including machinery, motor
cycles and electrical appliances. Nathu La is one of the three trading
border posts between China and India, the other two are Shipkila in
Himachal Pradesh and Lipulekh in Uttarkhand Sealed by India after the 1962
Sino-Indian was, it was re-opened in 2006 following numerous bilateral
trade agreements. The opening of the pass is expected to bolster the
economy of the region and play a key role in the growing Sino-Indian
trade.
The top sectors attracting FDI inflows from China comprise training,
industrial machinery, mining, hotel and tourism and drugs and
pharmaceuticals. In turn, the top sector attracting technology from China
is metallurgical industries, chemicals, electrical equipment industrial
machinery and drugs and pharmaceuticals. India trade with China has
developed significantly in recent years. The real challenge to India is
how to utilize the advantage by securing enhanced co-operation in areas
like space, military, technology transfer and in promoting areas like
agriculture and infrastructure development, to energy security. But
China’s approach towards India is considerable diversion of natural
resource especially in case Brahmaputra River, for its own use. The Doha
Round WTO proves that India and China share common interests on issues,
such as world trade and global warming.
7. India- China
Territory Limits
Mon Autonomous Region Demand Committee (MARDC) recommended two autonomous
councils on the basis of sixth schedule of the constitution. In which,
ones comprises of Tawang and West Kameng districts in the western corner
known as Mon Region and another comprises Tirap and Changland districts in
the eastern corner known as Patkai region. If these regions get solvency
then China can root its trade line through
Arunachel Pradesh.
8. Eco-friendly
Programmes.
Currently, emissions-related trading is dominated by the European Climate
Exchange, the world’s largest plat form for carbon emissions trading, and
the Chicago Climate Exchange. China and India are speckled with
dots-projects in the two countries account for 65% of the reduction in
greenhouse gas emissions achieved by the Kyoto protocol, and therefore,
65% of all the carbon credits generated every year.
9. Conclusion
India-China relations continue to be characterized by a mix of mutual
concerns, mutual suspicions and mutual goodwill. India- China relations in
recent years had increased the significance of their bilateral
relationship. They are emerging as world powers but they expected to
forecast the rival of US in the coming decades in economic as well as
military might. Their relationship has undergone times of both war and
peace. Both countries, despite their belligerent mutual histories, have in
recent years attempted to reignite diplomatic, military and economic ties.
References
1. www.wikpedia.com
2. www.thehindu.com
3. www.expressindia.com
4. www.economywatch.com
5. www.cs3.org.com
6. www.hinduonnet.com
7. www.indiandefenceereveiw.com
Written By:
Dr. K.
Krishnakumar, Experience: Dean as 5 Years, 10 years as HOD
Dean, VMKV Engineering, Publications: 1 article, 2 has selected for
publication Faculty of Management Studies Guideship: Phd. 8
under guidance, 5 Mphil Vinayaka Mission University, Salem
M. Manickam, M.phil Experience: Dean as 7 Years,
Lecturer, VMKV Engineering, Faculty of Management Studies
Vinayaka Mission University,
Miss Nirmala
Devei .B, Presently working in Vinayaka Missions University,
Researh Scholar, VMKV Eng. College, Salem Department of Management
Studies, Experience: 5 years Manonmaniam Sundaranar University,
Publication: 1 has selected for publication Tirunelveli
devibs2003@yahoo.co.in
|
|
