India China Trade Ties

8/8/2019 India China Trade Ties

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INTRODUCTION:-

Sino-Indian relations, also called India-China relations, refer to the ties and relationsbetween the People's Republic of China and the Republic of India. The economic anddiplomatic importance of China and India, which are the two most populous states and

the world's fastest growing major economies, has in recent years increased thesignificance of their bilateral relationship.

Relations between China and India date back to ancient times. China and India are two ofthe worlds oldest civilizations and have coexisted in peace for millennia. Trade relationsvia the Silk Road acted as economic contact between the two regions. However, since theearly 1950s, their relationship has been characterized by border disputes, resulting inmilitary conflict (the Sino-Indian War of 1962, the Chola incident in 1967, and the 1987Sino-Indian skirmish).

Both countries have in recent years successfully attempted to reignite diplomatic andeconomic ties, and consequently, the two countries' relations have become closer. Today,China is India's largest trading partner, and has recently reverted its stance on India's bidfor a UNSC seat, after Chinese assistant Foreign Minister Kong Quan formally declaredthat China will back India's UNSC bid. Today, India is a main seller of Iron ore to China,and fills the desperate need of natural resources for the nation.

If we are comparing these two Nations with each other then we realized that one isextremely fine in one dimension and other is fine in other dimensions.

As India maintain always-healthy relation with the boundary touch countries like whetherit is Pakistan, Srilanka, Nepal, China, Afghanistan, Bangladesh. It is India who alwaysstood with them in terms of financial and social and other way to provide aids to their

betterment of its neighbor country. India always follows the principle of Gandhi andIndia always tried to implement of those principals of its policy making and the basicpolitical structure of India is Democrats.

India is always leader in terms of Spiritualization from the ancient time and still we arelead in this field we are give lots of theories regarding civilizations and otherenvironmental context all world see us because we are always take initiatives to take careof the world.

India and China had relatively little modern political contact before the 1950s. However,both countries have had extensive and close historical cultural contact since the firstcentury, especially with the transmission of Buddhism from India to China. Trade

relations via the Silk Road acted as economic contact between the two regions.

China and India have also had some contact before the transmission of Buddhism.References to a people called the Chinas, now believed to be the Chinese, are found inancient Indian literature. The Indian epicMahabharata (c. 5th century BC) containsreferences to "China", which may have been referring to the Qinstate which later becamethe Qin Dynasty. Chanakya (c. 350-283 BC), the prime minister of the Maurya Empireand a professor at Takshashila University, refers to Chinese silk as "cinamsuka" (Chinese


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silk dress) and "cinapatta" (Chinese silk bundle) in his Arthashastra.

In theRecords of the Grand Historian, Zhang Qian (d. 113 BC) and Sima Qian (145-90BC) make references to "Shendu", which may have been referring to the Indus Valley(the Sindh province in modern Pakistan), originally known as "Sindhu" in Sanskrit.

Jawaharlal Nehru based his vision of "resurgent Asia" on friendship between the twolargest states of Asia; his vision of an internationalist foreign policy governed by theethics of the Panchsheel, which he initially believed was shared by China, came to griefwhen it became clear that the two countries had a conflict of interest in Tibet, which hadtraditionally served as a geographical and political buffer zone, and where India believedit had inherited special privileges from the British Raj.

However, the initial focus of the leaders of both the nations was not the foreign policy,but the internal development of their respective states. When they did concentrate on theforeign policies, their concern wasnt one another, but rather the United States of

America and the Union of Soviet Socialist Republics and the alliance systems whichdominated by the two superpowers.

Border disputes resulted in a short border war between the People's Republic of Chinaand India in 20 October 1962. The PRC pushed the unprepared and inadequately ledIndian forces to within forty-eight kilometres of the Assam plains in the northeast andoccupied strategic points in Ladakh, until the PRC declared a unilateral cease-fire on 21November and withdrew twenty kilometers behind its contended line of control.

At the time of Sino-Indian border conflict, a severe political split was taking place in theCommunist Party of India. One section was accused by the Indian government as beingpro-PRC, and a large number of political leaders were jailed. Subsequently, CPI splitwith the leftist section forming the Communist Party of India (Marxist) in 1964. CPI(M)held some contacts with the Communist Party of China in the initial period after the split,but did not fully embrace the political line of Mao Zedong.

Relations between the PRC and India deteriorated during the rest of the 1960s and theearly 1970s as Sino-Pakistani relations improved and Sino-Soviet relations worsened.The PRC backed Pakistan in its 1965 war with India. Between 1967 and 1971, an all-weather road was built across territory claimed by India, linking PRC's Xinjiang UyghurAutonomous Region with Pakistan; India could do no more than protest. The PRCcontinued an active propaganda campaign against India and supplied ideological,financial, and other assistance to dissident groups, especially to tribes in northeasternIndia. The PRC accused India of assisting the Khampa rebels in Tibet. Diplomaticcontact between the two governments was minimal although not formally severed. Theflow of cultural and other exchanges that had marked the 1950s ceased entirely. Theflourishing wool, fur and spice trade between Lhasa and India through the Nathula Pass,an offshoot of the ancient Silk Road in the then Indian protectorate of Sikkim was alsosevered. However, the biweekly postal network through this pass was kept alive, whichexists till today.


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EARLY HISTORY:-

ANTIQUITY

India and China had relatively little modern political contact before the 1950s. However,both countries have had extensive and close historical cultural contact since the firstcentury, especially with the transmission of Buddhism from India to China. Traderelations via the Silk Road acted as economic contact between the two regions.

China and India have also had some contact before the transmission of Buddhism.References to a people called the Chinas, now believed to be the Chinese, are found inancient Indian literature. The Indian epicMahabharata (c. 5th century BC) containsreferences to "China", which may have been referring to the Qinstate which later becamethe Qin Dynasty. Chanakya (c. 350-283 BC), the prime minister of the Maurya Empireand a professor at Takshashila University, refers to Chinese silk as "cinamsuka" (Chinesesilk dress) and "cinapatta" (Chinese silk bundle) in his Arthashastra.

In theRecords of the Grand Historian, Zhang Qian (d. 113 BC) and Sima Qian (145-90BC) make references to "Shendu", which may have been referring to the Indus Valley(the Sindh province in modern Pakistan), originally known as "Sindhu" in Sanskrit. WhenYunnan was annexed by the Han Dynasty in the first century, Chinese authoritiesreported an Indian "Shendu" community living there

MIDDLEAGES

After the transmission of Buddhism from India to China from the first century onwards,many Indian scholars and monks travelled to China, such as Batuo (fl. 464-495 AD)

founder of the Shaolin Monasteryand Bodhidharmafounder of Chan/Zen Buddhismwhile many Chinese scholars and monks also travelled to India, such as Xuanzang (b.604) and I Ching (635-713), both of whom were students at Nalanda University in Bihar.Xuanzang wrote the Great Tang Records on the Western Regions, an account of hisjourney to India, which later inspired Wu Cheng'en's Ming Dynasty novelJourney to theWest, one of the Four Great Classical Novels of Chinese literature.

TANGAND HARSHA DYNASTIES

During the 7th century, Tang Dynasty China gained control over large portions of theSilk Road and Central Asia. Wang Xuance had sent a diplomatic mission to northern

India, which was embroiled by civil war just following the death of Emperor Harsha(590-647). After the murder of 30 members of this mission by usurper claiments to thethrone, Wang fled, and returned with allied Nepali and Tibetan troops to back theopposing claimant. With his forces, Wang besieged and captured the capital, while hisdeputy Jiang Shiren captured the usurper and sent him back to Emperor Tang Taizong(599-649) in Chang'an as a prisoner.


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During the 8th century, the astronomical table of sines by the Indian astronomer andmathematician, Aryabhata (476-550), were translated into the Chinese astronomical andmathematical book of the Treatise on Astrology of the Kaiyuan Era (Kaiyuan Zhanjing),compiled in 718 AD during the Tang Dynasty. [6]TheKaiyuan Zhanjingwas compiledby Gautama Siddha, an astronomer and astrologer born in Chang'an, and whose family

was originally from India. He was also notable for his translation of the Navagrahacalendar into Chinese.

MING DYNASTY

Between 1405 and 1433, the Ming Dynasty China sponsored a series of seven navalexpeditions. Emperor Yongle designed them to establish a Chinese presence, imposeimperial control over trade, and impress foreign people in the Indian Ocean basin. Healso might have wanted to extend the tributary system, by which Chinese dynastiestraditionally recognized foreign peoples.

Admiral Zheng He was dispatched to lead a series of huge naval expeditions to explorethese regions. The largest of his voyages included over 317 ships and 28,000 men, andthe largest of his treasure ships were over 126.73 m in length. During his voyages, hevisited numerous Indian kingdoms and ports. On the first three voyages, Zheng Hevisited southeast Asia, India, and Ceylon. The fourth expedition went to the Persian Gulfand Arabia, and later expeditions ventured down the east African coast, as far as Malindiin what is now Kenya. Throughout his travels, Zheng He liberally dispensed Chinesegifts of silk, porcelain, and other goods. In return, he received rich and unusual presentsfrom his hosts, including African zebras and giraffes that ended their days in the Mingimperial zoo. Zheng He and his company paid respects to local deities and customs, andin Ceylon they erected a monument (Galle Trilingual Inscription) honouring Buddha,Allah, and Vishnu.

SINO-KIKH WAR

In the 18th to 19th centuries, the Sikh Confederacy of the Punjab region in India wasexpanding into neighbouring lands. It had annexed Ladakh into the state ofJammu in1834. In 1841, they invaded Tibet with an army and overran parts of western Tibet.Chinese forces defeated the Sikh army in December 1841, forcing the Sikh army towithdraw from Tibet, and in turn entered Ladakh and besieged Leh, where they were inturn defeated by the Sikh Army. At this point, neither side wished to continue theconflict, as the Sikhs were embroiled in tensions with the British that would lead up tothe First Anglo-Sikh War, while the Chinese was in the midst of the First Opium War

with the British East India Company. The Chinese and the Sikhs signed a treaty inSeptember 1842,which stipulated no transgressions or interference in the othercountry's frontiers.


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AFTER INDEPENDENCE

Jawaharlal Nehru based his vision of "resurgent Asia" on friendship between the twolargest states of Asia; his vision of an internationalist foreign policy governed by theethics of the Panchsheel, which he initially believed was shared by China, came to griefwhen it became clear that the two countries had a conflict of interest in Tibet, which had

traditionally served as a geographical and political buffer zone, and where India believedit had inherited special privileges from the British Raj.

However, the initial focus of the leaders of both the nations was not the foreign policy,but the internal development of their respective states. When they did concentrate on theforeign policies, their concern wasnt one another, but rather the United States ofAmerica and the Union of Soviet Socialist Republics and the alliance systems whichdominated by the two superpowers.

1950s

On October 1, 1949 the Peoples Liberation Army defeated the Kuomintang (NationalistParty) of China in a civil war and established the People's Republic of China. On August15, 1947, India became an independent dominion under British Commonwealth andbecame a federal, democratic republic after its constitution came into effect on January26, 1950. Mao Zedong, the Commander of the Liberation Army and the Chairman of theCommunist Party of China viewed Tibet as an integral part of the Chinese State. Maowas determined to bring Tibet under direct administrative and military control ofPeoples Republic of China and saw Indian concern over Tibet as a manifestation of theIndian Government's interference in the internal affairs of the Peoples Republic ofChina. The PRC sought to reassert control over Tibet and to end Lamaism (TibetanBuddhism) and feudalism, which it did by force of arms in 1950. To avoid antagonizing

the People's Republic of China, Nehru informed Chinese leaders that India had neitherpolitical nor territorial ambitions, nor did it seek special privileges in Tibet, but thattraditional trading rights must continue. With Indian support, Tibetan delegates signed anagreement in May 1951 recognizing PRC sovereignty but guaranteeing that the existingpolitical and social system of Tibet would continue. Direct negotiations between Indiaand the PRC commenced in an atmosphere improved.

Meanwhile, India was the 16th state to establish diplomatic relations with the People'sRepublic of China, and did so on April 1, 1950.

In April 1954, India and the PRC signed an eight-year agreement on Tibet that set forth

the basis of their relationship in the form of the Five Principles of Peaceful Coexistence(orPanch Shila). Although critics called the Panch Shila naive, Nehru calculated that inthe absence of either the wherewithal or a policy for defense of the Himalayan region,India's best guarantee of security was to establish a psychological buffer zone in place ofthe lost physical buffer of Tibet. Thus the catch phrase of India's diplomacy with China inthe 1950s wasHindi-Chini bhai-bhai, which means, in Hindi, "Indians and Chinese arebrothers". Up until 1959, despite border skirmishes and discrepancies between Indian andChinese maps, Chinese leaders amicably had assured India that there was no territorial


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controversy on the border though there is some evidence that India avoided bringing upthe border issue in high level meetings.

In 1954, India published new maps that included the Aksai Chin region within theboundaries of India (maps published at the time of India's independence did not clearly

indicate whether the region was in India or Tibet). When an Indian reconnaissance partydiscovered a completed Chinese road running through the Aksai Chin region of theLadakh District ofJammu and Kashmir, border clashes and Indian protests became morefrequent and serious. In January 1959, PRC premier Zhou Enlai wrote to Nehru, rejectingNehru's contention that the border was based on treaty and custom and pointing out thatno government in China had accepted as legal the McMahon Line, which in the 1914Simla Convention defined the eastern section of the border between India and Tibet. TheDalai Lama, spiritual and temporal head of the Tibetan people, sought sanctuary inDharmsala, Himachal Pradesh, in March 1959, and thousands of Tibetan refugees settledin northwestern India, particularly in Himachal Pradesh. The People's Republic of Chinaaccused India of expansionism and imperialism in Tibet and throughout the Himalayan

region. China claimed 104,000 km of territory over which India's maps showed clearsovereignty, and demanded "rectification" of the entire border.

Zhou proposed that China relinquish its claim to most of India's northeast in exchange forIndia's abandonment of its claim to Aksai Chin. The Indian government, constrained bydomestic public opinion, rejected the idea of a settlement based on uncompensated loss ofterritory as being humiliating and unequal

1960s

SINO INDO-INDIAN WAR

Border disputes resulted in a short border war between the People's Republic of Chinaand India in 20 October 1962. The PRC pushed the unprepared and inadequately ledIndian forces to within forty-eight kilometres of the Assam plains in the northeast andoccupied strategic points in Ladakh, until the PRC declared a unilateral cease-fire on 21November and withdrew twenty kilometers behind its contended line of control.

At the time of Sino-Indian border conflict, a severe political split was taking place in theCommunist Party of India. One section was accused by the Indian government as beingpro-PRC, and a large number of political leaders were jailed. Subsequently, CPI splitwith the leftist section forming the Communist Party of India (Marxist) in 1964. CPI(M)held some contacts with the Communist Party of China in the initial period after the split,

but did not fully embrace the political line of Mao Zedong.

Relations between the PRC and India deteriorated during the rest of the 1960s and theearly 1970s as Sino-Pakistani relations improved and Sino-Soviet relations worsened.The PRC backed Pakistan in its 1965 war with India. Between 1967 and 1971, an all-weather road was built across territory claimed by India, linking PRC's Xinjiang UyghurAutonomous Region with Pakistan; India could do no more than protest. The PRCcontinued an active propaganda campaign against India and supplied ideological,


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financial, and other assistance to dissident groups, especially to tribes in northeasternIndia. The PRC accused India of assisting the Khampa rebels in Tibet. Diplomaticcontact between the two governments was minimal although not formally severed. Theflow of cultural and other exchanges that had marked the 1950s ceased entirely. Theflourishing wool, fur and spice trade between Lhasa and India through the Nathula Pass,

an offshoot of the ancient Silk Road in the then Indian protectorate of Sikkim was alsosevered. However, the biweekly postal network through this pass was kept alive, whichexists till today.

Source:-Wiki: Sino-Indian relations 2000 year

INDIA-CHINA RELATIONS: THE WAY FORWARD

During the visit of the then Indian Prime Minister Shri Rajiv Gandhi to China in

December 1988, at which I was a delegate and witness to history in the making, ouryoung leaders celebrated long hand-shake with Chinas leader, Deng Xiaoping,generated great excitement and anticipation as the two countries emerged out of theirbrief estrangement and looked boldly to the 21st century The visit remains a definingpoint in India- China relations .

Today, there is an overarching consensus across Indias political spectrum that an

People's RepublicofChina RepublicofIndia

ea 9,639,688 km (3,721,904 sq mi) 3,287,240 km (1,269,210 sq mi)

pulation 1,345,751,000 1,176,622,000

pulation Density 140/km (363/sq mi) 358/km (927/sq mi)

pital Beijing New Delhi

rgest City Shanghai Mumbai

vernment Unitarysocialist republic (onecountry, two systems)

Federal republic

ficiallanguages Chinese (see the list) Hindi, English (see the list)

DP (nominal) $4.327 trillion $1.242 trillion

DP (PPP) $7.916 trillion $3.298 trillion

DP (nominal)per

DKLVKcapita$3,259 $1,017

DP (PPP)percapita $5,963 $2,930

man DevelopmentCDFX

dex0.772 0.612

reignexchangeDSASD

erves2,400,000 (millions of USD) 287,000 (millions of USD)

litaryexpenditures $70 billion $30 billion


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efficiently transacted, stable, durable and well- balanced relationship with China is vitalto India. It is heartening to see similar sentiments expressed by the top leaders in China,who have defined ties with India as a strategic policy of their country. Our leaders todayare meeting with increasing frequency, as befits the two great nations. Our twogovernments have decided to characterize our engagement in the changed geopolitical

and geo-economics scenario as a Strategic and Cooperative Partnership for Peace andProsperity. This means that we should not only take a strategic and long-term view ofour bilateral ties in their multiple dimensions, but should constantly bear in mind ourconverging worldview of global, international and regional issues and events and thusgive full play to our role as the two largest developing nations.

Thus our relations hold great promise, and beckon to us to rise to the challenges before usin a rapidly evolving world situation. As long as we keep the long term and strategicnature of our partnership in mind, we will be able to calmly approach seemingly difficultand intractable issues in the interest of the long- term objectives of peace and friendship,which, as Premier Wen Jiabao has famously observed, have been the mainstream of

India- China civilization ties for 99.99 percent of the time. While the scope forcompetition and cooperation exists side by side, the choice,of whether to makecompetition or cooperation the dominant theme of India.

CHINAS EXPORT:

China is become so much advance in terms of technologies and able to produce incheaper cost in terms of other developed nation like America and Japan. So chinas mainfocus on the electronics export like Mobile, Electronic goods like electronic decorativeitems like jhalars, lamps, hair dryer, massagers, computers hardware and software. Thatis the core competence and it is acceptable to India because Indian people get those item

or goods in cheaper rates so its increasing the life style of the people and those productare acceptable in wide range of the consumers of India.

Trade has been the vital part of strengthening the bilateral economic relationship betweenthe two countries. In 2008-09, China was India's second largest trading partner after theUAE. Bilateral trade engagement between India and China stood at US$ 41.85 billion in2008-09, an increase of nearly 10 per cent over US$ 38.02 billion in the year ago period,according to data available with the Ministry of Commerce and Industry.Imports from China expanded 19 per cent and stood at US$ 32.5 billion in 2008-09,while exports were at US$ 9.35 billion. During April-December 2009, exports to Chinahave been US$ 7.3 billion, while imports from China have been US$ 22.57 billion.

During April-December 2009, China has overtaken the UAE to become India's largesttrading partner.

SINO-INDIA TRADE RELATION:UNDERSTANDING THE


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BILATERAL AND REGIONAL IMPACATIONS

When Indian Prime Minister Manmohan Singh spoke in Beijing, during his visit from13 15 January 2008, of a historic need for India and China to work together, he waslooking beyond the border dispute that has plagued relations for half a century to freeing

millions of the worlds poorest from disease and economic deprivation. Paradoxically,this goal, and not any misplaced nationalistic or protectionist sentiment, forced him todecline Chinese requests for a free trade agreement (FTA).

The implications for the Association of Southeast Asian Nations (ASEAN) and, inparticular, Singaporean economic and security concerns are significant. Once expected toweave India, China and the region into an inextricable economic web that renderedconflict unthinkable, trading relations are now under threat from a growing imbalancewhich directly affects Indias hinterland. Between January and November 2007, Indiastrade deficit with China widened to US$9.02 billion, compared to the US$843 millionsurplus New Delhi enjoyed as recently as 2005. India exports primary products, mainly,

iron ore. Nearly half of Chinese exports to India are manufactured goods which NewDelhi fears will affect incipient local industries that would otherwise have absorbedIndias rapidly growing educated young. New Delhi fears unemployment might lead tocivil unrest. The deficit is tolerable only for a finite period, beyond which we risk seeinga positive of the relationship assuming negative tones, warns Indias Ambassador toBeijing, Nirupama Rao.

For all its size and population, India, like ASEAN, might also feel it is coming under thelooming shadow of a vast economic power. Singapore Minister Mentor Lee Kuan Yewsexplanation of why he attempted to engage India long before India expressed an interestin the region is revealing in this context. China threatened regional security in the 1950s,

1960s and 1970s by supporting guerrilla movements. From the 1980s onwards, China hasbeen burgeoning into an overpowering economic force. We dont want to beoverwhelmed and become like Laos or Cambodia! Minister Mentor Lee said in a recentconversation. The statement echoed his earlier comments that India alone had the girthand weight to balance China. No other country can hold the other end of the see-saw, hesaid as long ago as 1962.Other ASEAN leaders may be less forthright, but this is the only reason why Indonesias

former President Suharto so readily agreed in 1995 to India becoming a full ASEANdialogue partner.

Indian diplomacy is not, however, designed to balance China. Dr Singh allayed fears of atrade war when he invoked a phrase familiar to ASEAN and said problems would besolved in the Asian way. His definition of avoiding confrontation and building trust,confidence and consensus almost reiterates what ASEAN calls the usyawarah danmuafakar(consultation and consensus) process. India expects its discussions in the EastAsian Summit and other fora to result in an open and inclusive economic architecture interms of trade in goods and services and the flow of investment and human capital in anarea encompassing India, China and ASEAN. The impetus is local in terms of creating


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infrastructure and jobs in the Indian hinterland but the realisation depends on Indiafurther integrating into Asias economic and security architecture.

The talk of multifaceted relations has been translated into a remarkable shift in militaryrelations. For the first time last year, both countries held joint anti-terrorism exercises and

India will host the second round of exercises this year. The Manmohan Singh-WenJiabao

Joint Declaration points to greater co-operation with spill over effects for the region. TheDeclaration says that, The two sides take a positive view on each others participation insub-regional multilateral cooperation processes between like-minded countries, includingthe South Asian Association for Regional Cooperation, the Bay of Bengal Initiative forMulti-Sectoral Technical and Economic Cooperation and the Shanghai CooperationOrganisation. That points to regions like Southeast Asia where Sino-Indian interests notonly touch but overlap, repeating the historical process that gave Indochina its name.

Singapore could become a key-player in this interaction between the Asian giants. Interms of business, Singapore could be a facilitator for rapidly expanding Sino-Indian

trade. This years US$20 billion target was reached two years ago and the revised targetof US$40 billion by 2010 is also likely to be achieved two years ahead of schedule. As anestablished player in China, Singapore is strengthening trading links with India.Negotiations are currently underway to revise the groundbreaking ComprehensiveEconomic Cooperation Agreement (CECA), which has played a major role in Indiaoutstripping even China to become Singapores fastest growing trade partner amongst themajor economies. Post CECA, exports from India to Singapore increased to US$5.4billion, a growth of 35.6 percent. Exports to Singapore accounted for 5.26 percent ofIndias total exports during 2005-2006, which meant a more than a two-fold increasefrom 2.3 percent in 2002. Singapore is well positioned to facilitate trading links betweenthe regional giants. With its special links with China,

Singapore might even be able to convince Beijing not to allow trade to join thecontentious border question as a negative in surging relations. After all, by his ownadmission, Minister Mentor Lee succeeded in convincing Deng Xiaoping that it was notgood politics to export revolution to Southeast Asia.

Admittedly, questions of nationalism rule out a quick resolution of the border dispute.But this does not affect Indian consumption patterns. The share of Chinese imports inIndias global import basket rose from four percent in 2001 to 9.4 percent in 2007. ThatChinas exports to India today amount to 10 percent of Indias entire industrial grossdomestic product indicates Chinas ability to sell cheap and the openness of ordinaryIndians to foreign goods. From under one percent in 2001-02, today China suppliesnearly 75 percent of Indias tubes and pipes. Similarly, in the area of transmissionapparatus for radio and telephony, imports from China have jumped from 12 to 50percent in a few years. In the case of automatic data processing machines, Chinas sharein Indias imports has risen from 12 to 35 percent. Pragmatic and practical, Indians spurn,without a second thought, locally made goods for cheaper Chinese alternatives. The factthat these are allegedly dumped on India does not stop anyone buying them.Dumping, defined as selling goods abroad at a cost lower than production, is only


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possible with state complicity as it involves a complex transfer of profits from asuccessful sector to a failing industry. It should be welcomed by Indians because, ineffect, the Chinese government is indirectly subsidising a rise in Indian living standards!

Nevertheless, shrill cries for a tax on imports from China, amounting to a tariff barrier,

pierce the Sino-Indian discourse. Respected national daily newspapers warn darkly of adependency syndrome in critical areas. Indian trading associations complain that Indiaoccupies a miniscule 1.3 percent of Chinas global imports. But these are the voices notof Indias poor who welcome Chinese products by buying them but of pampered andprotected industrialists who see with alarm their long-captive markets now slipping away.Indias elite is learning that globalization does not discriminate against anyone. Itbestows free choice on consumers. The migration of industries to the underdevelopedworld checks price-inflation in the rich world a phenomenon that is being replicatedwithin the underdeveloped world.

As an Oxford and Cambridge educated economist, Dr Singh is well versed in the theories

and practices of free trade. He demurred about an FTA not because he opposes freechoice, but because China has not reciprocated in opening its market to Indian goods.That might deprive Indian exporters of a market but the real losers are Chinas consumersand manufacturers. If the Chinese government does indeed subsidise cost-inefficientindustries with profits earned in other sectors, then it is setting a dangerous precedent.Such practices skew the market and rob it of its fundamental virtue the ability to conveyinformation about choices efficiently to all quarters. If there is a shock in one sector ofthe Chinese economy as is likely with the slowdown of the United States economy andfalling Western consumer spending then shockwaves will reverberate through out theChinese economic system.

Only the political courage to let the market run its course can contain the damage.Pharmaceuticals are a case in point. India boasts the largest number of United StatesFood and Drug Administration-approved plants outside the United States. Pharmaceuticalis a core Indian competency and exports to Western markets have grown by 19 percentyear-on-year for the last three years, racing ahead of the world average growth rate of sixpercent. Yet, Indias pharmaceutical exports to China have grown by just three percentfrom US$94 million in 2002 to US$109 million in 2005.

This failure to penetrate China is due to non tariff barriers that manifest themselves inlong and complicated registration procedures, prohibitively expensive drug importlicences and inordinately protracted customs checks. Ultimately, even if a foreign firmenters China, the drug distribution system operates mainly through hospitals which, inpractice, give preference to locally-produced drugs. The ultimate sufferer is the Chinesepatient who is denied inexpensive, world class medicine.

As the 19th century British politician, Richard Cobden, wrote, Free trade is Godsdiplomacy and there is no other certain way of uniting people in the bonds of peace.Nationalistic Indian voices which risk upsetting a relationship on which the future of one-third of humanity depends can be silenced if China matches India and lowers trade


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barriers. That would pave the way for the FTA Beijing wants. The ultimate beneficiarywould be the common man. The goodwill generated by a booming economic relationshipmight even prove a solvent for seemingly intractable problems like the border dispute.Southeast Asias trade, investment and security only stand to benefit from closer Sino-Indian cooperation.

WHAT SHOULD BEEXPORT ITEMS ACCEPTED BY INDIA

TECHNOLOGIES: -

Audio & VideoComputerMobileCamera

LCD-PLASMAElectric Iron (Press)Electronic FansAir Conditioner


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Source:- PRC Ministry of Commerce

It shows that the trade between India and China during year 2009-2010


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Source:- PRC Ministry of Commerce

Among the most encouraging recent developments in India ChinaEconomyand India-

China ties is the rapid increase in bilateral trade. A few years ago, India Inc had a fear of

being swamped by Chinese imports Today, India enjoys a positive balance of trade with

China.In 2004, India's total trade to China crossed US $13.6 billion, with Indian exports

to China touching $ 7677.43 million and imports from china at US $ 5926.67 million. But

major industry players in India feel there is no need to give the Chinese a free ride into

the domestic market so early. This is particularly, when India and China have been

directly competing across several product categories. And that too, when both the applied

and bound import tariffs are higher in India compared with China. Indian industry's

ambivalence over the proposed Indo-China FTA stems from concerns over previous

FTAs signed by the government. There's a feeling that some of these FTAs were signed

in haste, and without adequate homework. Result: There has been confusion about the

country of origin issue as well as the items to be put in the early harvest lists.


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Chinaand Indiaestablisheddiplomaticrelations onApril 1, 1950. India was the

second country to establish diplomatic relations with China among the non-socialist

countries. In 1954, Chinese Premier Zhou Enlai and Indian Prime Minister Nehru

exchanged visits and jointly initiated the famous Five Principles of Peaceful Coexistence.

Indian Prime Minister, Rajiv Gandhi's visit to China in December 1988, facilitated a

warming trend in relations. The two sides issued a joint statement that stressed the need

to restore friendly relations on the basis of the Panch Sheel and noted the importance of

the first visit by an Indian prime minister to China since Nehru's 1954 visit. India China

Economy agreed to broaden bilateral ties in various areas, working to achieve a "fair and

reasonable settlement while seeking a mutually acceptable solution" to the border

dispute.

Rajiv Gandhi signed bilateral agreements on science and technology cooperation, on civil

aviation to establish direct air links, and on cultural exchanges. The two sides also agreed

to hold annual diplomatic consultations between foreign ministers, and to set up a joint

ministerial committee on economic and scientific cooperation and a joint working group

on the boundary issue. The latter group was to be led by the Indian foreign secretary and

the Chinese vice minister of foreign affairs. As the mid-1990s approached, slow but

steady improvement in relations with China was visible. Top-level dialogue continued

with the December 1991 visit of Chinese premier Li Peng to India and the May 1992 visit

to China of Indian president Ramaswami Venkataraman.

Border trade resumed in July 1992 after a hiatus of more than thirty years, consulates

reopened in Bombay (or Mumbai in the Marathi language) and Shanghai in December

1992, and, in June 1993, the two sides agreed to open an additional border trading post.

Though, RajivGandhi's visitto Chinain December 1988 is usuallyidentifiedas a

turningpointandbreak-through in India-Chinarelations, it shouldalsobenoted

thatmanyyears ofprevious effort hadacontributiontoit.. In 1976, the two countries

decided to restore ambassadorial-level diplomatic ties after a gap of 15 years. The next

major step was foreign minister Vajpayee's visit to China in February 1979 -


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The first high-level visit between the two countries since 1960. In 1984 India & China

signed a Trade Agreement, providing for Most Favoured Nation Treatment. In 1994 the

two countries signed the agreements on avoiding double taxation. Agreements for

cooperation on health and medical science, MOUs on simplifying the procedure for visa

application and on banking cooperation between the two countries have also been signed.

The Chinese economy was decentralized in 1978 and major economic reforms were

introduced which created conditions for rapid economic growth and structural changes in

China. In 1980, China's share in world trade was less than one percent, and it started

permitting foreign direct investment(FDI). In 1999, China had grown to become the

world's second largest economy after US in terms of GDP. The high growth rate of China

is attributed to high levels of trade and greater investment effort. Strong exports growthfrom China has helped push China's economy to 9.1% growth rate in 2003-2004. China is

the world's second largest recipient for FDI with total FDI inflows crossing US $ 53

billion in 2003. Growth in Special Economic Zones (SEZ) has also helped China increase

its productivity.

Recently Chinesepremier Wen Jiabaovisited India, where he saidthat Indiaand

Chinamusttaketheirtradeto $30 billionlevelby 2010. Seeing the whopping growth

in Sino-Indian trade, China outlined a five-point agenda, including reducing rade barriersand enhancing multilateral cooperation to boost bilateral trade.

Chinese Premier Wen Jiabao said "We have set an objective (in the joint statement) to

increase the two-way trade volume from 13.6 billion dollar at present to 20 billion dollar

by 2008.....we plan to take it to 30 billion dollar by 2010." Addressing Indian business

leaders at New Delhi on April 11, he said that the two countries agreed for a joint

feasibility study for a bilateral Free Trade Agreement.

India 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", the joint statement signed by Prime Minister Manmohan

Singh and Wen said. Wenalsoofferedtocooperate with New Delhiinits

infrastructureprogramme.


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Indian Commerce Minister Kamal Nath said China was poised to become India's largest

trade partner in the next two-three years, next only to the US and Singapore.

TRADEPATTERN (valuein USD millions)

YEAR India imports from

China

India Exports to China

2000 1560.75 1353.48

2001 1896.27 1699.97

2002 2617.73 2274.18

2003 3343.59 4251.49

2004 5926.67 7677.43

YEAR Percentage Growth in

Indias Imports to China

Percentage Growth in

Indias Exports to China

2000-01 21.5 25.6

2001-02 40.9 33.8

2002-03 22.2 87

2003-04 77.3 80.6

Source:-Financial Express year 2006

According to a CII study, special focus on investments and trade in services and

knowledge-based sectors, besidestraditional manufacturing, must be given, in view of the

dynamic comparative advantage of India. Indian companies could enter the $615 billion

Chinese domestic market by using it as a production base.

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 said that 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.

The top 15 Chinese exports to India have recorded growth between 29% (organic


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chemicals) and 219.89% (iron and steel).

China is bringing their cheap quality phones at lower than expected prices. This can becalled as a strategy to find a new market for their products(apart from the indigenousmarkets) simultaneously Chinese dump their obsolete electronic goods in India. This also

evacuated Indian currency to the Chinese manufacturers.

The good in this is that the Indian Companies have to face competition from the outsidemarket. But not always as they are not providing a good quality at the prices it is beingoffered at.

Soft Toys market is no different. This market requires products that are high on quality asthese are mostly dealt by kids. Any lag in the quality issue is will make its ramificationsbeing felt of the health of children in the longer run. Along with the soft toys the TVshows are also casting a negative impression on the minds of young India. The TV showsthat are a direct translation of Chinese shows present violence with Gory details which is

indeed in bad taste and bad humour. This will only make the kid aggressive in his peergroups. The toys based on these TV shows are also being sold out with aggressivemarketing strategies. The Toys are percolating the Indian households, faster than beingexpected to diffuse.

Chinese goods are cheap and tend to create a cheap replica of the Indian and internationalproducts. They also tend to do the imitation of label graphics that already establishedproducts are having. This cuts the market for the genuine manufacturers thus cheating thenot so literate Indian customer. China also provides eatables that are of lower qualitystandards and are not even FPO approved. Food Products Organization should look into

the matter.


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References:-

Documents

India China Trade Ties