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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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