Finance, Forex and Investments

How did China ＆ India benefit?

How did China ＆ India benefit from trade growth? Please give me long answer~^^

Public Comments

1. China and India, the world's two most populous countries, used to be described as giant ships passing in the night, such was the paucity of economic and other ties between the two neighbours. But they are starting to sound the foghorns as they draw closer. Perhaps the most important shift in perception has been from the fast- growing, increasingly powerful Chinese side, which long dismissed India as being backward in contrast. Huang Jinxin, of the University of Wisconsin-Madison, recalls that standard Chinese school textbooks compared India unfavourably with China on key indicators. "Based on India's comparative experience, the Chinese concluded that development and democracy were a trade-off," she says. But India's economic performance in the last few years has prompted a re- assessment by Beijing. The emergence of a world-class Indian software outsourcing industry has been the most important factor in changing China's mindset. This is increasingly translating into trade and investment. More than 25,000 Chinese software students have already passed through the doors of NIIT, India's largest software training company, which has 106 "education centres" in China - up from just two in 2001. "China is our number one overseas market and growing rapidly," says Vijay Thadani, chief executive of NIIT, from his offices in New Delhi. "China's thirst for Indian software skills is remarkable." Meanwhile in Bangalore, Liu Hongqi, India head of TCL, the Chinese consumer electronics enterprise, talks of the growing purchasing power of India's middle classes. TCL recently set aside $150m to build an Indian factory and market its televisions, DVD players and air conditioners to Indian consumers. "India is not only a new market for us but [is becoming] a strategic market as well," says Mr Liu. The two countries are held up as having contrasting models of development and economic records, with the Chinese hare outstripping the Indian tortoise. But this is to overlook the growing interaction between the two neighbours, borne out by the experiences of companies such as Mr Liu's and Mr Thadani's. From only $1.8bn in 2001, bilateral trade will hit $14bn during India's current financial year, which ends next month. By Chinese standards the numbers are still small - its exports are more than $300bn. But in the next two years China is set to overtake the European Union to become India's largest trading partner, having been its ninth largest in 2001. Until 2002 there were no direct flights between India and China: now there are five a week with the number set to rise in the next year. India and China are even exploring ways of joining forces to find cheaper sources of supply and boost their competitiveness. There is increasing awareness - especially in India - that, far from competing in a zero sum game, both countries are growing at such a speed that there is enough room for each to accommodate greater productive capacity. "People used to say it was China and not India, then it was China against India - but if you look at any number of sectors the real story is more likely to be China and India," says N. Srinivasan, head of the Confederation of Indian Industry. To some extent China and India's strengths are complementary rather than clashing. Whereas China has become the world's workshop for manufactured goods, India is developing a highly competitive services sector.