INTRODUCTION

•How world’s two largest populous economies,

having two different political systems and growth
strategies had performed?
•How both China and India had compete with each
other in the world market?

China being the manufacturing

+
India being the strong service provider
in the world have much to offer.
 Recent Co-operation: Political
• 1976: Restored ambassadorial level relations
after 15 years
• 1979: Atal Bihari Vajpayee visited China for
resumption of high level exchanges
• 1981: Chinese foreign minister Huang Hua
visited India
• 1988: Prime minister Rajiv Gandhi visited
China for resumption of meaningful political
dialogue at the highest level
 Contd…..
• 1996: The agreement of confidence building
measures in the military field along India China
borders areas was signed
• 2000: Both sides also agreed to accelerate the
process of clarification and confirmation of the
LINE OF ACTUAL CONTROL along the India China
boundary
• 2003: Atal Bihari Vajpayee alongwith Chinese
premier Mr. Web Jiabao signed the declaration on
“ Principles for relations and comprehensive co-
operation”
 RECENT COOPERATION: ECONOMICS
• 1978: India China resume trade officially
• 1984: Two countries signed the most favoured
nation agreement
• 1988: India China joint group on economic
relations and trade, science and technology
(JEG) was established
• 2000: 6th session of JEG India and China signed
an agreement on issue related to the WTO
and signed and MOU for setting up a joint
working group in the field of steel
 Trade Dynamics between India &
China
40000

35000

30000

25000

20000
Imports (US $ million)
Exports (US $ million)

15000

10000

5000

0
 INDIAN’S MAJOR EXPORTS TO CHINA
• Iron ores
• Cotton
• Cathodes & sectns of cathode
• Aluminium oxide other than artificial corundum
• Granite crude
• O – xylene
• Polyethylene
• Chromium ores& concentrates
• Polypropylene
• Other semi finished products of stainless steel
• Ferro chromium carbon
 INDIA’S MAJOR IMPORTS FROM
CHINA
• Transmission and reception apparatus
• Coke & semi/coke of coal/lignite/peat w/n
agglomerated; retort carbon
• Tubes and pipes
• Project goods
• Parts & accessories of machine
• Portable digital automatic data processing machine
• Other coal w/n pulverized but not agglomerated
• Organic compounds
• Penicillin and there derivatives
• Other machines
• Storage units
 SECTOR WISE COMPETITIVENESS IN
EACH OTHER’S MARKET
SECTOR COMPETITIVENESS
• AGRICULTURE INDIA (-)
CHINA (-)

• MINERALS INDIA (+)

CHINA (-)

• CHEMICALS INDIA (+)

CHINA (+)

• PLASTICS INDIA (+)

CHINA (+)

• RUBBER INDIA (+)

CHINA (+)

• TEXTILES INDIA (+)

CHINA (+)
• METALS INDIA(+)
CHINA(+)

• AUTOMOBILES INDIA (+)

CHINA(+)

• ELECTRICAL EQUIPMENTS INDIA(+)

CHINA(+)

• PHARMACEUTICALS INDIA(+)
CHINA(+)

• TOYS INDIA(-)
CHINA(+)
 CHINA’S INCREASE IN EXPORTS TO
INDIA(1999-02)
GROUP GENERAL INCREASE IN INCREASED
IMPORTS IN INDIA COMPETITIVENESS OF
CHINESE EXPORTS

AGRICULTURE -1 -200
CHEMICALS 4 55
PLASTICS 2 89
RUBBER 40 -27
METALS 28 -489
AUTOMOBILES 3 101
TOYS 30 63
ELECTRONIC GOODS 30 -61
ELECTRIC EQUIPMENTS 42 54
TEXTILES 63 -100
 CHINA’S INCREASE IN EXPORTS TO
INDIA(2002-04)
GROUP GENERAL INCREASE IN INCREASED
IMPORTS IN INDIA COMPETITIVENESS OF
CHINESE EXPORTS

AGRICULTURE 193.89 -21.68

CHEMICALS 97.45 -7.52
INORGANIC 48.91 -8.57
ORGANIC 123.05 2.26
PHARMACEUTICALS 39.38 -5.20
PLASTICS 23.00 75.76
RUBBER 48.46 -26.83
LEATHER 20.14 30.23
PAPER 15.29 89.08
COTTON AND TEXTILES 29.57 30.80
SILK 88.22 26.52
COTTON 9.99 -6.56
GROUP GENERAL INCREASE IN INCREASED
IMPORTS IN INDIA COMPETITIVENESS OF
CHINESE EXPORTS

TEXTILES 45.88 35.77

FOOTWEAR 37.59 30.18
CERAMIC 50.24 39.88
METALS 35.44 68.94
IRON AND STEEL 37.30 67.87
ALUMINIUM 12.11 79.77
MECHANICAL MACHINERY 28.42 71.11
ELECTRICAL /ELECTRONIC 46.49 -42.53
GOODS
ELECTRONIC GOODS 8.24 90.48
ELECTRICAL EQUIPMENTS 59.85 -44.06
FUR AND TOYS 97.86 28.77
SOME FACT ABOUT CHINA
 TOTAL IMPORT AND EXPORT VOLUME AND ITS GROWTH RATE

14000

12000

10000
$BILLION

8000
export of good
6000 imports of goods

4000

2000

0
2004 2005 2006 2007 2008
 TOATAL IMPORT &EXPORT VOLUME GROWTH RATE

40.00%

30.00%

20.00% toatal import

&export volume
10.00% growth rate

0.00%
2004 2005 toatal import…
2006 2007
2008
 gross domestic product
300000

250000

200000
$BILLION

150000 gross domestic product

100000

50000

0
2004 2005 2006 2007 2008
 gross domestic product
14.00%

12.00%

10.00%

8.00%
gross domestic
6.00% product
4.00%

2.00%

0.00%
2004 2005 2006 2007 2008
China’s Fiscal and Monetary policy…
After the outbreak of Financial crisis Chinese
government adjusted its macroeconomic
policies in time and implement a PROACTIVE
FISCAL POLICY and a MODERATE EASING
MONETARY POLICY.
 Suggestions about coordination of
Fiscal and Monetary policies….
• China can take advantage of fiscal and monetary
policies to adjust its economic structure….
 Focus more on consumption and people’s
livelihood project rather than investment.
 Promote tax reforms, policies of tax cuts and
credit support for small and medium – sized
enterprises as well as consumers to improve
business investment and household
consumption.
To adjust the pattern of income distribution and
increase financial subsidiaries.
Adjust the structure of financial expenditure,
accelerate the development of social cause,
promote social security and improve people’s
livelihood.
To support technology innovation to improve
economic structure.
A good use of monetary policy to expand
domestic demand and adjust the structure.
 Major Crisis faced by India since
1980’s…
• 1991 – 92 BOP crisis.
• 1997 – 98 Asian financial crisis.
• 2000 – 02 crisis caused by the worldwide
bursting of the dotcom bubble and 9/11
incident.
 Channels through which India is
affected by the Global Crisis…
• Financial markets
• Trade
• Exchange rate
 Causes of Slow Down in India during
2008 – 09
• Impact of Monetary Tightening
• Industrial Sector Weakness
• Monsoon – dependent Agriculture
• Investment weakness
• Fiscal measures
 2008 – 09 Scenario…
• Fiscal deficit is 11% in 2008 – 09 as against
5.4% in 2007 – 08.
• Collapse of global demand for Indian export
both merchandise and services.
• Software export grew by 22% and remittances
by 49%.
• Rupee depreciated from an average of
Rs40.36 to an average of Rs 49.
• Budget deficit.
 Comparison…
• Indian economic growth could turn out to be
more sustainable than that of China.
China is more export dependent.
East Asian economies are dependent on
Chinese demand.
Personal consumption as a percentage of GDP
in China is less than 45% lower than that of
India.