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    South Asia
     Feb 11, 2005
China, India move closer in trade

HONG KONG - China has edged past the United Arab Emirates to become India's second-largest trading partner. Bilateral trade has set a record, touching US$13.6 billion in 2004, up by 79% over the total trade volume of 2003. India enjoyed a comfortable trade surplus of $1.75 billion, according to Chinese customs statistics. If growth remains at current levels, India-China trade could cross $17 billion by end of 2004-05. In contrast, India's trade with the United States - its largest trading partner - has grown by just over 23% in April-August 2004.

The total figure achieved during 2004 was $3.6 billion more than expected at the beginning of the year, indicating the huge trade potential between the two fastest-growing economies. Bilateral trade at the end of 2000 stood at $3 billion, increasing to $5 billion at the end of 2002 and touching $7.6 billion the next year. These represent year-on-year increases of 23.4%, 37.6% and 53.6%, higher than those of the incremental Chinese trade volume in the corresponding periods - 7.5%, 21.8% and 37.1%.

During this period, India's annual trade surplus with China widened rapidly. Before 2002, India's trade deficit with China was about $0.2 billion on average, never exceeding $0.4 billion. In 2003, India's trade deficit with China was converted to a surplus of $0.91 billion. The trade surplus in the first half of this year reached $1.78 billion, exceeding the total amount of India's trade deficit with China over the years. In 2004, Indian exports to China grew by 80.5% to reach $7.68 billion, while India's imports from China registered a 77.2% year-on-year growth to hit $5.93 billion.

For China, India has emerged among the top 10 Asian trading partners for the first time. India was the ninth-largest trading partner of China in Asia in 2004 while the European Union breezed past Japan and the US to become its biggest trading partner. Though Japan was relegated to the third position in overall ranking, it was China's top Asian trade partner with bilateral trade at $167.88 billion in 2004, up 25.7%. China's exports to Japan last year reached $73.51 billion, up 23.7%. However, Chinese imports also rose 27.3% to touch $94.36 billion, resulting in a trade surplus worth $20.86 billion in favor of Tokyo. The EU toppled Japan and the US to become China's biggest trading partner in 2004, with bilateral trade mounting to $177.28 billion, registering a 33.6% growth over the previous year.

Monthly trade volume between India and China recorded in December stood at a yearly high of $1.44 billion, surpassing November's high of $1.32 billion. Indian exports to China in December touched $744 million and imports for the month reached $697 million. India mainly exports iron ore to China. China-India trade maintains a momentum of rapid increase this financial year as well. According to the statistics of China's customs, the gross volume of imports and exports in the first six months reached $6.674 billion, a year-on-year increase of 93.1%. China's exports to India amounted to $2.447 billion, while imports from India stood at $4.427 billion, increases of 65.7 % and 113.5% respectively.

Exuding confidence on the growing Sino-Indian trade, industry lobby FICCI (Federation of Indian Chambers of Commerce and Industry) president Onkar Kanwar was quoted by media reports as saying: "It's a stunning development. Our view is that China is poised to emerge as India's largest trading partner in two to three years. And this is just the beginning." FICCI believes the bilateral trade figure will hit $30 billion by the end of this decade. But most experts are of the opinion that even that is a conservative estimate. "It is a positive trend and we strongly believe India and China will be the largest trading partners. In all our global industry interactions, it is no more China or India. It is now China and India. In the coming years we see it as China with India," the Times of India quoted CII Director-General N Srinivasan as saying.
ASSOCHAM (the Associated Chambers of Commerce and Industry of India), another industry body, holds that trade will increase between India and China but US will be the major partner for both. China's total bilateral trade with the US in 2004 touched $169.62 billion, up 34.3% over that of 2003. According to a research by Deutsche Bank, China and India will be the world's second and third largest economies by 2020, pushing Japan into fourth place. However, India and Malaysia will overtake China to become the world's fastest-growing economies over the next 15 years primarily because of strong population growth. The National Intelligence Council, the think-tank of the Director of Central Intelligence, recently came out with a study titled "Mapping the Global Future" that also forecast the rise of India and China as potential global powers by 2020. Of the two countries, China's GDP is predicted in the NIC document to overtake America's by the year 2042.

India's demographics compare well with China, with a labor force of 600 million people and a good base of top-notch scientific, technological and managerial manpower. This workforce is set to overtake China's by 2025. India is already the second-highest source of legal immigration into the US after Mexico, a trend that is likely to continue for some time.

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China-India trade to exceed US$13b in 2004 (Jan 12, '05)

 
 

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