Trade Patterns Of China And India

From 2003-2004 to 2006-2007, annual Real Growth Rate increases from 8.4% to 9.7%. Because of the summer’s credit-market crisis, the Indian GDP Growth decrease to 9.0% from 2007 to 2008 and Indian government estimates GDP Growth for 2008-2009 is 7.1%. The decrease of GDP ascribes the global financial crisis which affects India primarily through trade and capital outflows (The World Bank, 2008:16). On trade, exports are possible to weaken and make its contribution to GDP growth may be drop sharply. However, during

China and India are two of the world’s fastest developing economies and most populous nations on the earth. The question is whether “Chindia” is a friend or a threat to the United States. Together these nations have attributed to prosperity, but are it beneficial or harming to others?

The various parts of this essay are organized as follows: In section 2, we discuss the historical background of the trade patterns of two identified countries being analyzed. It states the recent trade patterns of US-China and recent developments of trade policies since China’s WTO accession in 2001. Section 3 will provide an in-depth analysis of various economics policies adopted by both countries and critically discuss their contribution to the aspect under analysis in section 2. In section 4, we provide with theoretical evidence to support the argument provided in the previously reviewed empirical findings depicting the impact of trade policies over the trade pattern of US-China. Section 5 concludes the essay by highlighting our key findings and policy implications and provides US on this trade perspective on how to improve the trade relations by addressing to the arising disputes with China.

From April to June 2005, India’s GDP grew at 8.1 per cent, compared with 7.6 per cent in the same period the year before. More impressively, India is achieving this result with just half of China’s level of domestic investment in new factories and equipment, and only 10 per cent of China’s foreign direct investment…

Then, the foundation of People’s Republic of China and the implementation of the ‘Five-Year Plan’ accelerated the development of China 's textile industry greatly. But china’s textile industry really started to develop after 1978 when the Chinese government decided to focus on economic reconstruction, and implemented reform policies like the opening policy. And these new policies not only stimulate textile industry development but also enabled china’s textile industry to forge new economic ties with other countries. The development of the national economy, the development of the modern technology and equipment as well as the expansion of foreign trade has made the textile industry become flourishing. Another one of the significant achievements coming in 1983, when china canceled the three decade-long practice of issuing coupons. And in the past, the operation of textile industry in china was under the planned economy, which means raw materials were allocated with low prices which were set by the State, production tasks were assigned by administrative orders and the marketing of finished products was monopolized by State-owned commercial departments.

In 2013 the total exports for India was at $313.2 billion whereas the import stood at $467.5 billion (CIA, 2014). India followed the Adam Smith model producing only what it was efficient at and imported the rest. There started a reversal in capital inflows which hit the export demand and posted a crunch in the domestic markets leading to a decline of more than 2% in India’s GDP in the fiscal year 2008-2009 (Kumar & Vashisht, 2009). In 2008 India was already experiencing a high inflation rate, which reduced expenditure in the country. To address the crisis and its affects the Indian government and the banks introduced fiscal stimulus and relaxed monetary policies in order to boost domestic demand. The market interest rates increased to 20% and above suddenly. India had received a fiscal stimulus of $80 billion injected into the economy to ensure liquidity. India was loosing badly on FDI’s and remittances. During 2008, India’s FDI inflows experienced a negative growth of 2% (Kumar & Vashisht, 2009). Remittances also are a major part of the capital inflows of the country, in 2008 the remittance inflow declined by more than 29% (Kumar & Vashisht, 2009) as every country first wanted to protect jobs of its home citizens and there was a severe lay off. Exports to USA is a major component of India’s GDP. After a sharp decline in the demand from the US, India had to lay off more than 300,000 workers instantly. There was a decline in exports of India by

Kapitel 1 Einführung International Trade Ningbo University BA International Trade & Economy Winter Semester 2013 / 2014 Dr. Thomas Schuster Guest Professor Useful Information Office hour: After the lecture or at any other time upon appointment E-Mail: drth.schuster@web.de Assistent • Fu Suying • fusuying@nbu.edu.cn • Phone: 13566627298 Classes: • Tuesday 8.00-9.35 a.m. every week • Thursday 8.00-9.35 a.m. every even week Dr. Thomas Schuster Ningbo University International Trade WS 2013 / 2014 1-2 Useful Information The course material will be published at schuster.gnomio.com • Go to the internet site schuster.gnomio.com • Click on the course „

There are the lots of factors which are playing hidden role on the economic development in china and India. According to World Investment Report UNCTAD, 1994 following reasons are playing role on development in both countries Capital investment. , advanced technologies, highly skilled labour , transportation, communication and infrastructure development, low tax rate ,stable and supportive political and social institutions favourable regulatory environment. However, China’s current growth miracle is increasing by total factor productivity (TFP), Capital accumulation etc.India’s growth miracle is in the race of development because private business is increasing rapidly. There are lots of private forms like Tata, reliance industries, Aditya Birla, Essar and many more (Goldman Sachs,2011).However, China’s and India’s economic growth history starts after economic reform in both countries.

Nowadays, the outlook of the global economy is clearly not optimistic, and there are so many severe issues have been plaguing the world economy in recent years. Such as potential asset bubbles, higher financial market volatility, weaker global demand, and deteriorating monetary and credit crisis, and falling of oil prices, and so on a series of troubles around the world. (World Economic Situation and Prospects 2016 2016)Once when we discuss and analyse those economic problems, it is inevitable to associate with China’s slowdown. Indeed, since China entered WTO, China takes advantages of large population to develop the labour intensive industries like manufacturing to expand the relationship with the world by frequently international trade, as greater interaction and stronger cooperation between China and the world, Chinese economy is merged to the world economy and become an integral part of the global economy. Therefore, the Chinese slowdown is bound to affect the growth of world economy. So the question arises, why China slows down its economy? If exploring further to figure out why, one factor which cannot be ignored is the declining export. (China’s Export Decline Accelerates 2016) Thus, the study I concentrate on is to investigate the reasons of declining export in Chinese international trade.

India, a federal republic country, was under the colonial rule of British for around 200 years, which leads a large extent of economic resources loss. This changed till 1990s since the initiation of economic reform policies in 1991. On the other hand, China, a communist country, adopted the reform policies in 1978 which drove the economic a dramatic growth. Figure 1 indicates the development trends of these two countries in the past decades. We can easily figure out the difference between them is barely until 1990, after that, the growth rate of China is extremely larger than that of India.

In 1991, when Prime Minister Narasimha Rao agreed to take a loan from the International Monetary Fund to stave off a financial crisis we witnessed the low-point of the Indian economy. At that time, the country had dwindling foreign exchange reserves and was months away from defaulting on its debts. As part of the I.M.F. package, the government passed reforms such as devaluing the rupee, encouraging private sector competition, and deregulating the economy after 40 years of central planning. By opting for market-oriented reforms in 1991, India’s GDP has grown at a rate of 6.6% annually over the past 20 years. As a rapidly emerging economy and a member of the BRICS, we must continue to push our strategy of export led

China has seen unprecedented economics expansion through the last decade. This has helped the country build important infrastructure such as roads, ports and airport that are vital to importation. Furthermore, the accession of China to the WTO in 2001 can be seen as door to china has opened to the world. This has resulted in the adoption of unilateral trade regulation of the 90s. As a result, China trade and investment regulation is more transparent and predictable; overall, access to China has been facilitated ever since. This has made the country number one exporter to the US and as according to the ONS release of January 2014, China is second exporter to the UK. This shows that China has potential for foreign investment. However, China still remains a communist country with heavy restriction in area such as that of the Internet and communication and its labour law is still heavily criticise.

My topic is about comparing the trade balance between Mongolia and China. First, as a background information, Mongolian economy is dominated by services and agricultural products. Mongolia is the country that has Asia 's richest mineral deposits. Therefore, the Mongolia trade is primarily dominated by products, such as minerals, apparel, livestock, animal products, cashmere, wool or fuel. For Mongolian exports, China has the most percentage that the country imports from Mongolia. Moreover Mongolia depends largely on China for their imports. On the other hand, for China trading information, since they became a member of WTO in 2001, China‘s share in global trade has double increased. For many countries around the world, China is rapidly

Finally trade has become more concentrated among the industrialised nations. Helpman and Krugman pointed that the conventional trade models like Heckscher-ohlin model cannot explain these facts. “These……..empirical weakness of conventional trade theory……….becomes easy only if the economies of scale and imperfect competition are brought into the analysis” said by them. Paul Krugman gave the example that one could say that the conventional theory views the world as taking place in goods like Wheat; In New Trade Theory could be seen in goods like aircraft. From the year 1950-1990, the ratio of trade to gross domestic has enlarged by 86.1%. In 1961 the facts that incorporated by the model was , the world was very poor than in 1990 and the consumption of manufactured goods and the distribution of income was much more than in 1990.This new theory generalises ,fluctuations in relative prices to have bigger effect on trade volumes. The deviations in the level of income among industrialised countries, accounts the observed expansion of trade relative to income.

Fortunately India has not been affected to the same extent as the other economies of the world. But our exports have suffered a decline since last 10 months due to contraction in demand in the traditional export markets.