India and China: markets-competitors-partners
In: Bachelorarbeit
Inhaltsangabe: Academics, students, the media and the public have been increasingly drawn to China and India in recent years. Both countries were considered sleeping giants and are now turning into the motors of global economic growth. China and India are both ancient civilizations with a rich history and were among the largest economic powers until European colonization in the 19th century. After Indian independence in 1947 and the establishment of the Peoples Republic of China in 1949 both countries shared the view that economic development should be achieved through a self-sustaining economy led and controlled by the government. In the following decades the share of Chinese and Indian global trade decreased significantly. Economic reform in China and India in 1978 and 1991 respectively resulted in an increasing integration into global markets and triggered large economic growth. However China and India differ in many ways. On the one hand China started its reforms 13 years earlier than India. Due to early establishment of Special Economic Zones (SEZ), strong connections with oversea Chinese in Taiwan and the abundance of cheap labor China was able to position itself as the manufacturing center of the world. India on the other side still lacks the degree of integration in global markets, and the structure of labor and bankruptcy laws, red-tape and poor infrastructure are just some obstacles for further Indian development. In addition, India and China are built on different approaches of governance. India is a democracy which makes it more difficult to introduce pragmatic laws, yet easier to absorb exogenous shocks. China on the other side is solely ruled by the Communist Party of China. As a result it is easier to adopt new policies, but on the other side legitimization to govern is limited and connected to economic growth. A closer analysis of China reveals the existence of several influential interest groups and lobbyists which makes governing China a balancing act in itself yet this will not be subject of this study. China and India both face serious principal-agent problems when it comes to enforcing laws and due to large heterogeneous populations, governing each country is a complex challenge. Today, according to GDP in PPP data China and India rank 2nd and 4th respectively globally. Their share is likely to improve and they are expected to become the world's biggest energy importers and CO2 emitters. The rise of the two nations can be interpreted as a shift of power from the Western Hemisphere towards Asia resulting in major challenges for the international community but also in a regional Asian context. It is very important to note that although China and India are both rising at the same point of time, they are rising in a different pace. China outperforms India in almost every indicator of economic development. It is the key aim of this study to point out this asymmetry between China and India. Another question is, if India is capable of catching up with China in the future and its effects to Sino-Indian relations. In that context noting the mutual perception of India and China is important. To some extent, China dealt with India only as a regional issue, having delegates of provincial governments meet with Indian federal counterparts. On the other side India and China cooperated in international forums, most recently during the Copenhagen summit in 2009, which is an indicator for equal perception. On the other side signs for future tensions can be derived from military modernization programs and competition over natural resources. Analyzing the bilateral trade between China and India serves to increase the understanding of the nature of Sino-Indian relations. It is important to note that the economic structure of India and China differs significantly. Economic aspects are also just one facet of Sino-Indian relations. However heterogeneity is always a common element in every study and although abstraction leads to a loss of information it is a necessary tool to understand Sino-Indian relations. Analyzing bilateral commodity trade provides insight in the intensity of bilateral trade, and intra-industry indices and relative comparative advantage indices provide insight in the complementary and competitive element of bilateral trade relations. Another important aspect is the role of China and India in third markets. India and China are major trade nations, yet the latter outperforms the former significantly. Nevertheless third-market trade reveals possible areas of competition and cooperation. Matching trade baskets are indicators for competitive third-market trade. A dynamic analysis provides insight if the possibility of competition in third markets is increasing and predictions can be derived from it. However it is important to note that commodity trade data are imperfect and the presented results must be regarded critically since they are only an approximation of real international trade. The share of informal economic activities is very high, and differences between international databases are also remarkable. It is important to note that databases receive their information from the very country, and regarding India and China it is particularly in question if they are able or willing to generate and provide accurate data. In addition remittances and triangular trade is not captured by commodity trade databases which are particularly high in the case of India. Hongkong also appears as a separate unit in the trade data. Although it is legally part of China and serves as a major trade hub it will not be recognized in this study. Although China regards Taiwan as a Chinese province it will be analyzed as an independent country. Due to poor availability of bilateral service data, it will not be recognized to the extent as desired. The hypothesis of this study is that there exists a substantial asymmetric component in Sino-Indian relations favoring China. In the long run more symmetric relations are possible to emerge, and India is already catching up yet policy changes could increase this process significantly. Defining India and China as competitors or partners presupposes equality to a certain extend. The last section of this study discusses this question and provides a brief outlook of possible areas of competition and partnership. However it has to be kept in mind that Indian-Chinese relations are a complex matter and providing a simple yes or no answer is not aim of this study.Inhaltsverzeichnis:Table of Contents: I.Introduction II.Historical Overview II.Comparing India and China IV.Chinese-Indian Bilateral Trade Relations V.China and India in Third Markets VI.ConclusionTextprobe:Text Sample: Latin America: Chinese and Indian trade with Brazil reveals that Chinese exports were 6.8 times larger than India's in 2004. However the gap decreased to a ratio of 5.7:1 in 2008. Both countries have shown large growth rates in their exports in this time period accounting 49.2%(China) and 53.5%(India) respectively. Brazil is not a major import partner for India. Chinas imports from Brazil increased significantly faster than India's. In 2004 Chinese imports were 13 times larger than Indian but the ratio increased to 25.7 in 2008. Chinas average import growth rate (32.9%) also exceeded India's (10.2%). With respect to possible areas of competition, 28 (Metalliferous Ore, Scarp) and 67 (Iron and Steel) are both major import goods for the two countries.28 (Metalliferous Ore, Scarp) accounts for 47.7 % of Chinese and 20.1% of India's imports from Brazil. On the export side, India and China are likely to face competition in the area of 65 (Textile Yarn, Fabric,ect). However China was able sign major deals with Brazil in 2010 and is expected to continue its relative dominance in Brazil. India's main export good to Brazil is 33 (Petroleum, Petrol.Product) accounting 49.1% of total exports. Chinas main export good to Brazil is 76 (Telecomm. Sound Equip ect), accounting 16.7%. Chinas exports to Argentina exceeded India's by the factor 8.1 in 2004 and increased further to 13.2 in 2008. On the import side China also gained relatively to India, increasing the China-India ratio from 6.5 in 2004 to 15.8 in 2008. Regarding import trends it is noteworthy that India's imports from Argentina have been decreasing between 18-25% during 2006-2008 while Chinas imports increased ranging from 48% to 78%. Analyzing the trade baskets reveals that competition in 42 (Fixed Veg. Fats and Oils) and 61 (Leather, Leather Goods) is likely to occur regarding imports. On the export side 51 (Organic Chemicals), which is the main export article for both countries accounting 15.3% of Chinas exports and 16% of India's exports is a potential area of competition. Chinas exports to Chile were 16.1 times larger than India's in 2004 and 14.9 times larger in 2008. China's imports exceeded India's by the factor of 11.9 in 2004 and by 6.4 in 2008. Regarding imports, China increased its imports from Chile by 24% annually on average, while India's imports were quite volatile. Between 2005 and 2006 India's imports increased by 300%. This can be traced back to trade agreements between India and Chile, since imports stayed on the level. However growth rates slowed down to 22% the following year and decreased by 7% between 2007 and 2008. Analyzing the trade baskets of China and India reveals 68 (Non-Ferrous Metals), 28 (Metalliferous Ore, Scarp) and 52 (Inorganic Chemicals) as possible fields of import competition. On the export side, 84 (Clothing and Assessories) and 65 (Textile Yarn, Fabric,ect ) are possible areas of competition. Therefore in Latin America, there is also a large gap between the involvement of India and China. Only in Chile indicators reveal relative increases of Indian importance as a trade partner. On the other side several areas of possible competition can be identified including 28 (Metalliferous Ore, Scarp), 52 (Inorganic Chemicals), 67 (Iron and Steel), 68 (Non-Ferrous Metals), 74 (General Industl. Mach. Nes), 79 (Other Transport Equipment) and 87 (Scientific Equipment nes) on the import side and 51 (Organic Chemicals), 65 (Textile Yarn, Fabric,ect), 84 (Clothing and Assessories ) and 89 (Misc Manufactured Goods, nes ) on the export side . EU27: The European Union is the largest trade partner of China and also one of the largest partners of India.Chinas exports to EU27 were 7.9 times larger than India's in 2004. The gap increased slightly to 8.4 in 2008. Chinese imports outperformed India's by the factor of 2.8 in 2004 and decreased the factor 2.5 in 2008. Analyzing the trade baskets reveals that both countries list 74(General Industl. Mach. Nes), 77 (Elec Mch Appar,Parts, nes), 72(Special. Indust. Machinery) and 79 (Other Transport Equipment) as their major import goods from Europe. On the export side, 84 (Clothing and Assessories) is a possible area of competition, since it is India's first and China's third largest export commodity to Europe. Africa: Chinas exports to Nigeria exceeds India's by the factor of 3.18 in 2004 and by 4.9 in 2008. Regarding imports a major shift occurred during the time of analyzis. In 2004 Chinese imports exceeded India's by the factor 8.7. However since 2006 Indian imports started to surge (increased by 900% in one year, because of a major contract regarding oil drilling rights) and in 2008 Indian imports from Nigeria were 19.1 times larger than China's. The import trade baskets reveal that India and China import mostly 33 (Petroleum, Petrol. Product) from Nigeria. Petroleum and petroleum products account for 96.4% and 81.8% of exports respectively. However given the large demand of oil by China this indicates, that Nigeria is not a major supplier of 33 (Petroleum, Petrol. Product) to China. Regarding exports both countries are likely to engage in competition in 78 (Roads Vehicles). Regarding Sudan, the picture is quite different. In Sudan, Chinas exports exceeded India's by the factor 3.3 in 2004 and by 4.6 in 2008. Chinese imports from Sudan were 74,7 times larger than India's in 2004 and the ratio dropped to 11.6 in 2008. Both countries increased their exports to Sudan on a double digit percentage level while data from 2008 shows India's increase (31.1%) ahead of China's (20.5%). Regarding import growth, China's largest increase occurred in 2007. It is noteworthy that China is a major investor in order to obtain Sudanese oil. India's imports from Sudan increased significantly in 2006 (+253%).