India’s trade with China falls 12 %

[haidian]

India’s trade with China falls 12 %
BEIJING, January 10, 2013

Overall Chinese exports grow 7.9 per cent in 2012

India’s bilateral trade with China has fallen by 12 per cent to $ 66 billion in 2012, driven by a record slump in exports, which has expanded the trade deficit to $29 billion — despite the decline in overall trade — and cast doubt on the sustainability of an increasingly strained trade relationship.

Figures released by China’s General Administration of Customs (GAC), on Thursday, showed that Indian exports to China had fallen by as much as 19.6 per cent year-on-year in December, reflecting the challenge faced by both countries to find a new driver of trade after iron ore exports have slumped following bans.

India’s exports in 2012, comprised largely of ores, cotton, chemicals and raw materials, reached $18.8 billion, while imports from China — driven by growing demand for power and telecom equipment and machinery — reached $47.7 billion. Bilateral trade last year reached $66.47 billion, down from $73.9 billion in 2011 when China became India’s biggest trade partner.

The gloomy outlook for India’s future trade ties with China came even as overall exports out of the world’s second-largest economy rebounded last month, recording a higher than expected 14.1 per cent growth, suggesting a revival — whether temporary or permanent — in the Chinese economy following the downturn last year.

China’s exports last year rose by 7.9 per cent despite “a deepening debt crisis in the Eurozone, a sharply slowing world economic recovery, continuously sluggish demand on the global market and big downward pressure on the domestic economy,’’ said Zheng Yuesheng, a spokesman at the GAC.

He forecast that trade in 2013 would be ‘slightly better’ than last year, pointing to the 14.1 per cent surge in exports in December that followed a 2.9 per cent rise the previous month.

On the India-China trade front, however, the coming year is expected to be a difficult one. With bans on iron ore exports, import duties on power equipment, and likely restrictions in the telecom sector, the outlook for bilateral trade — and the likelihood of meeting the $100 billion target for 2015 — remains uncertain.
Silver lining

A silver lining in recent months, according to E.B. Rajesh, the chief representative of the Confederation of Indian Industry (CII) in China, was increasing interest among Chinese firms to invest in India. A new trend, he said, was of more small and medium Chinese enterprises and newer firms joining the bigger and more established companies in investing in Indian facilities. Mr. Rajesh pointed to the example of Yapp, an automotive company based in the town of Yangzhou, which has opened facilities in Chennai and Pune and made inroads into the plastic fuel tank market.

“With new duties, there is some thinking among Chinese companies about setting up component manufacturing facilities in India,” he said.

 

[Chinese-Dragon]

That is not good news at all.

 

[kewell333]

China trade with most other countries are growing.
India’s trade with China falls because India trade with other countries are also declining.

Exports decline 9.74% in August - The Times of India

 

[Yogi]

these steps were necessary as India was basically exporting its mineral ore which is more important for our own industry's future requirements rather than exports to China, the bilateral trade will optimise itself in couple of year with expansion of economy so nothing wrong in current move of GOI...

 

[oct605032048]

China's trade 2012 was 3.87 Trillion USD.

The biggest trade partner is the EU, 546 billion,
followed by US 485 billion,
then by ASEAN 400 billion,
then by HKSAR 341 billion,
then by Japan 329 billion.

India ranks #12 on the list (66 billion).

 

[my2cents]

That is not good news at all.

India just exports mostly raw material and chemicals.. But it is not possible to mine enough to meet your demand and also domestic demand and keep the prices in check. In long run these exports are not sustainable. Indian business should look for more product mix and value added products suitable for Chinese markets to address the trade imbalance.

It would be better if Chinese can set up manufacturing units in India making use of liberal investment policy here and export these products back to China and other countries. This will address multiple issues facing China.

1.China has huge foreign reserves ( looking for suitable investment avenues around the world)

2. China has huge trade imbalance(mostly in its favor) with its trading partners.

So, if you guys can give back by investing in countries with which you have huge trade imbalance.... then it will be a win win situation.

 

[Chinese-Dragon]

India just exports mostly raw material and chemicals.. But it is not possible to mine enough to meet your demand and also domestic demand and keep the prices in check. In long run these exports are not sustainable. Indian business should look for more product mix and value added products suitable for Chinese markets to address the trade imbalance.

It would be better if Chinese can set up manufacturing units in India making use of liberal investment policy here and export these products back to China and other countries. This will address multiple issues facing China.

1.China has huge foreign reserves ( looking for suitable investment avenues around the world)

2. China has huge trade imbalance(mostly in its favor) with its trading partners.

So, if you guys can give back by investing in countries with which you have huge trade imbalance.... then it will be a win win situation.

This makes sense to me.

We need more places for investment. Having $3.3 trillion in currency reserves is dangerous when a large portion of it exists in US/Euro bonds.

 

[xuxu1457]

India just exports mostly raw material and chemicals.. But it is not possible to mine enough to meet your demand and also domestic demand and keep the prices in check. In long run these exports are not sustainable. Indian business should look for more product mix and value added products suitable for Chinese markets to address the trade imbalance.

It would be better if Chinese can set up manufacturing units in India making use of liberal investment policy here and export these products back to China and other countries. This will address multiple issues facing China.

1.China has huge foreign reserves ( looking for suitable investment avenues around the world)

2. China has huge trade imbalance(mostly in its favor) with its trading partners.

So, if you guys can give back by investing in countries with which you have huge trade imbalance.... then it will be a win win situation.

US and Germany are more imbalance than China
in 2011
export of US,China,Germany（Share of world trade） :8.1%,10.4% and 8.1%
import of US,China,Germany（Share of world trade） :12.3%、9.5% and 6.8%
balance: -4.2%, 0.9%,1.3%

 

[Protocol man]

India just exports mostly raw material and chemicals.. But it is not possible to mine enough to meet your demand and also domestic demand and keep the prices in check. In long run these exports are not sustainable. Indian business should look for more product mix and value added products suitable for Chinese markets to address the trade imbalance.

It would be better if Chinese can set up manufacturing units in India making use of liberal investment policy here and export these products back to China and other countries. This will address multiple issues facing China.

1.China has huge foreign reserves ( looking for suitable investment avenues around the world)

2. China has huge trade imbalance(mostly in its favor) with its trading partners.

So, if you guys can give back by investing in countries with which you have huge trade imbalance.... then it will be a win win situation.

Businesses don't invest because you are India.
Businesses invest in countries that has many different factors that include things like labour cost, land cost, electricity cost, energy & raw material cost, hard infrastructure like transportation networks and telecommunications, soft infrastructure like rule of law and intellectual property rights, access to capital, cost of capital, tax rates, regulations, size of market, stability of government, etc

Because China provides many of these things is why China is such an attractive place for companies all over the world to invest in. Countries like India can talk but its very difficult to actually walk the talk. Chinese government does everything it says.
China is not even the lowest cost labour source but China still attracts FDI and more high end manufacturing is coming to China. The low end manufacturing moving out.

Chinese government is currently reforming big ticket items like financial reform and opening up more state owned sectors to private and foreign capital. China is also improving the education system, judicial system, have a flexible labour market, increase skilled education, industrial upgrading, use of robotics in manufacturing, use of 3D printing, etc.

Chinese economy will accelerate once these reforms are fully completed. It will make the Chinese economy a diverse and dynamic economy.

 

[my2cents]

US and Germany are more imbalance than China
in 2011
export of US,China,Germany（Share of world trade） :8.1%,10.4% and 8.1%
import of US,China,Germany（Share of world trade） :12.3%、9.5% and 6.8%
balance: -4.2%, 0.9%,1.3%

You cannot go by one year data. China has over a period of 2 decades have amassed huge forex reserves of 3.1 trillion dollars and leads the list of countries by foreign reserves. Germany is 10th in the list. US is a net importer.

You are in enviable position and don't know what to do excess money. IT is good position to be in and not many countries can say that.

 

[my2cents]

Businesses don't invest because you are India.
Businesses invest in countries that has many different factors that include things like labour cost, land cost, electricity cost, energy & raw material cost, hard infrastructure like transportation networks and telecommunications, soft infrastructure like rule of law and intellectual property rights, access to capital, cost of capital, tax rates, regulations, size of market, stability of government, etc

Because China provides many of these things is why China is such an attractive place for companies all over the world to invest in. Countries like India can talk but its very difficult to actually walk the talk. Chinese government does everything it says.
China is not even the lowest cost labour source but China still attracts FDI and more high end manufacturing is coming to China. The low end manufacturing moving out.

Chinese government is currently reforming big ticket items like financial reform and opening up more state owned sectors to private and foreign capital. China is also improving the education system, judicial system, have a flexible labour market, increase skilled education, industrial upgrading, use of robotics in manufacturing, use of 3D printing, etc.

Chinese economy will accelerate once these reforms are fully completed. It will make the Chinese economy a diverse and dynamic economy.

Actually India is attracting lot of FDI because of investment climate. It will only get better because of lot of infrastructure projects coming up.

Regarding investing in a country you look at different factors and I agree with you. Investing can mean many things. It could in the form of manufacturing, Institutional Investment, buying securities, buying up prime real estate, investing in technology and research, building infrastructure projects, setting up educational institutions, etc. Strategy for different countries differs according to country strengths and weakness.

 

[xuxu1457]

You cannot go by one year data. China has over a period of 2 decades have amassed huge forex reserves of 3.1 trillion dollars and leads the list of countries by foreign reserves. Germany is 10th in the list. US is a net importer.

You are in enviable position and don't know what to do excess money. IT is good position to be in and not many countries can say that.

Not 2 decades, in 2002, China forex reserves of 217.4 billion$, trade:620billion$, only 30billion$ trade surplus. forex reserves not all come from trade surplus， and Germany Japan did this for 40 years.

I think the most important thing for China from 2000 to now, is joining WTO, and full open domestic market to the world, during 2001 to 2004 China coms very worried about domestic coms will be washed away by multinational，and predicted that China export only increase 2% during 2002-2012 and import will explosion. but infact, competition is really a good thing, many domestic coms became stronger and stronger, and economic explosion.

GDP of China
2002-2011 (1$=6.27RMB now)
2002 12trillion RMB

2003 13.58228trillion RMB

2004 15.9878 trillion RMB

2005 18.4937trillion RMB

2006　 21.6314trillion RMB

2007 26.5810trillion RMB

2008 31.4045trillion RMB

2009 34trillion RMB

2010 40trillion RMB

2011 47trillion RMB

Foreign exchange reserves（100million$）
2002 2864.07
2003 4032.51
2004 6099.32
2005 8188.72
2006 10663.44
2007 15282.49
2008 19460.30
2009 23991.52
2010 28473.38
2011 31811.48

China export and import（billion$）
2002 620billion$'
2003 851
2004 1155
2005 1422
2006 1760
2007 2170
2008 2562
2009 2207
2010 2973
2011 3642


Now, India is like 2002's China, India should brave enoungh to open and let domestic coms and systems compete with Multinational，if you want become a wolf you must dance with wolves, if you put you coms inner fence they will always be sheep.

 

[JohnyD]

China must open up its Pharma and IT market to Indian companies to increase the trade and balance the trade deficit....China is a very selfish country which only spoils the economy of trading countries...Better not to do any business with China!

 

[haidian]

China must open up its Pharma and IT market to Indian companies to increase the trade and balance the trade deficit....China is a very selfish country which only spoils the economy of trading countries...Better not to do any business with China!

ok,then don't.China has so many big trading partners and India is not one of them.

 

[xuxu1457]

China must open up its Pharma and IT market to Indian companies to increase the trade and balance the trade deficit....China is a very selfish country which only spoils the economy of trading countries...Better not to do any business with China!

？？China has opened all Pharma and IT market to the world, including to India,
China Pharma trade with the world 73.2billion$, 4billion $ with India in 2011
In fact, China -India cooperated at Pharma for long time, China provided pharmaceutical raw materials to Indian ,such as 75.9% Indian 3 main pharmaceutical raw materials (Antibiotics, vitamins and antipyretic analgesics) come from China(account for 94% China's export to India on Pharma), and Indian Pharma made them end product to export to US and EU at higher price. Same, China import oter pharmaceutical raw materials from India(account for 96.3% India's export to China on Pharma).

China software export in 2011 is 30.4billion$, just as clothing exports， China can export clothing all over the world but no one can export clothing to Indian, Pakistan, Bangladesh。。。