Trade Slide Final

8/13/2019 Trade Slide Final

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Prepared by: LIU Yun Kai Egon (HIH1067),

TING Chun Hing, (HIH1056),

CHAN Kwok Hung, Peter (HIH1098)


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Trade relationship between China & India Why them?

hinaIndia relations, also called Sino-Indian relations.Historically, India and China have had relations for morethan 2,000 years

Both of them are Members in BRICS Two most populous countries and fastest growing major

economies in the world

China and India's international diplomatic and economicinfluence has also increased the significance of their

bilateral relationship In 2013, the bilateral trade was estimated to be US$73.9

Billion


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Mineral Products and Base Metal (EspeciallyIron ore) constitutes about 66% of Indiastotal export to China

Among the potential exports to china: salt,inorganic chemicals, plastic, rubber, opticaland medical equipment and dairy productsare the important ones


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Value added items dominate Chinese exportsto India, especially machinery (IncludingElectrical Machinery, which togetherconstitute about 49% of exports.

Also, Top exports to India are also includedMachinery, Alloy and fertilizers (Products ofChemical)


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Land Size Population

Natural Resource

Labour Force Status Country's Development Direction


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India is the World's third biggest exporter ofIron ore as in 2013

Minor minerals available are Building stone,Brick earth, Quartzite, Marble, Granite, Gravel,Clay and Sand, etc.


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Some of Chinas metallic minerals such astungsten, tin, molybdenum, antimony andrare earth have large reserves, and are ofhigh quality and competitive in world markets.

However, many important metallic mineralssuch as iron, manganese, aluminum andcopper are of poor quality, with ores lean anddifficult to smelt. Most of the metallic mineral

deposits are small or medium-sized, whereaslarge and super-large deposits account for asmall proportion.


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"Employing Workers - 2011data (based on input from ILO, OECD, local governments and private employers)". The World Bank. 2012.


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Over 94 percent of India's working populationis unorganized sector

India's Ministry of Labor, in its 2013 report,classified the unorganized labor included:small farmers, landless agricultural laborers,building and construction workers, personalservice, and workers in stone quarries

Source: Planning Commission of India (2007). "Labour Laws and Other Labour Regulations". The Government of India.


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Indian employment chart for 2012,using data from: Economic Survey


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In 2012, Chinas total population stood at 1.35billion. The working age population (those agedbetween 15 and 59 years) was 937 million

The number of SOE employees in China has

remained relatively stable at just over 60 million In 2012, around 33.6 percent worked in primary

industries, 30 .3 percent in secondary industries(manufacturing and heavy industry, included

Products of Chemical & Machinery) and 36.1percent in tertiary industries such as services,finance, information technology, sales etc.


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China Mineral Products (Ore) 52.7

Base Metals & Articles of Base Metal 167.2

Product of Chemical 941.2

Machinery & Machinery Appliance 2340.9

India Mineral Products (Ore) 211.4

Base Metals & Articles of Base Metal 861.3

Product of Chemical 127.4 Machinery & Machinery Appliance 26.5

*Data is extracted from World Bank

USD $ (Million)


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In China, they can produce a unit of Productsof Chemical or Machinery & machineryappliance, but it CAN NOT PRODUCE SAMEUNIT of Mineral Products or Base Metals

under same resource On the other hand, In India, they can produce

a unit of Mineral Products or Base Metalsunder same resource, but it CAN NOTPRODUCE SAME UNIT of Products of Chemicalor Machinery & machinery appliance


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China has a lower opportunity cost ofproducing Products of Chemical or Machinery& Machinery Appliance

India has a lower opportunity cost ofproducing Mineral Products or Base Metals &Articles of Base Metal.


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Labor Law India to have the most restrictive labor laws in any

major economy of the world (e.g. Companies needto obtain government permission to lay off workers)

Legal provisions on working hours and wages inChina ( the minimum wage is slated to increase atan average rate of 13 percent a year )


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India and China officially resumed trade in 1978 and in 1984, thetwo sides signed the Most Favoured Nation (MFN) Agreement. In 1994, both countries signed a Double Taxation Avoidance

Agreement and the prevention of fiscal evasion with respect totax on income.

Further by deciding to offer some trade benefits to each otherboth countries signed the Bangkok Agreement in 2003.According to the Agreement, China extended concessions on217 products from India while India offered concessions on 188products exported by China. After this deal India-China bilateraltrade got a boost and it surpassed US $ 10 billion in 2004, Chinabecame Indias largest trading partner by 2008

In June 2012, Wen Jiabao, the Premier of China and Manmohan

Singh, the Prime Minister of India set a goal to increase Bilateraltrade between the two countries to US$100 billion by 2015


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As shown in the above figure Indias export toChina mainly consist of raw materials, whereasChinas export consists of manufactured andvalue added goods

But, It is not easy for Indian goods to enter China

and the most restrained are the Indianpharmaceutical products which find it difficult toreach the Chinese market.

On one side Indian firms and value added goodsare restricted from entering China and on the

other hand Chinese manufactured goods areinvading Indian markets this has adverselyaffected growth of manufacturing Industry inIndia.


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By taking into account Chinas ability to producelow cost manufacturing goods and Indiasinability to do the same, the fiscal deficit is likelyto persist in near future.

As a result in the current decade, Indias topeconomic priority should focus on infrastructurebuilding to develop its industrial sector.

On the other hand China is aggressively

developing its service sector and if the growthcontinues it is likely to take over Indian servicesector in future


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The study said that service and knowledgetrade between India and China havesignificant potential for growth in areas likeIT related and Financial sector


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Trade Slide Final