Al-Arab Blog - مدونة العرب

:: Xinhuanet - English ::: "Is India China's imaginative rival?"


www.chinaview.cn 2004-02-24 10:36:48

BEIJING, Feb. 24 (Xinhuanet) -- As the two most populous countries of ancient civilizations China and India are often brought up for comparison. The hottest issue in question is whether India is going to be an imaginative rival of China. The following is an interview with Tian Wei, first secretary of the Chinese Embassy in India on this question.

Some foreign investors believe that Chinese market has been exploited for many years and competition is becoming increasingly fierce. Therefore, they want to shift their arenas and exploit the emerging Indian market. Tian Wei believes this to be a narrow-minded way of thinking: "Currently the majority of direct foreign investment still remains in developed countries, for example, the United States and Japan. It is not that the space is still available in the US and Japan for the construction of new roads and new market. But they have matured markets, which can make rooms for the commercialization of new inventions. Though Indian has market space its citizen's consuming ability is still inadequate. The majority of foreign businessmen, including Chinese businessmen, still suffer from losses in business."

Bilateral trade between China and India is developing fast. Trade volume increased from 1991's US$291 million to 2001's 3.596 billion - growing by more than 1,100 percent in 10 years. It reached a new level in 2002 with the trade volume to add up to US$ 4.946 billion. In 2003, the new record was US$7.595 billion - more than 25 times that of 1991.


Sino-Indian trade intercourse

Based on the present speed of development and taking into account of possible fluctuations, said Tian Wei by looking into the future, the bilateral trade between China and India in 2007 is expected to reach US$15 billion - 10 percent of India's planned foreign trade volume if the annual average growth is set at 21 percent.

According to Indian official statistics, goods from China made up about 2.59 percent of the total import in the fiscal year of 1998 - 1999 -ranking only the 16th place. In the fiscal year of 2000 - 2001, however, since non-oil import goods from China grew fast China's rank rose to the 7th. In 2002 - 2003, it jumped to the 3rd - next only to the United States and Belgium.

Goods import from India to China is seen growing in India's export. In the fiscal year of 1998 - 1999 the proportion was 1.29 percent - ranking the 18th while between 2002 - 2003 the figure indicates 2 percent - after the US, UAE, UK, Hong Kong and Germany, ranking the 6th.

According to Indian statistics from the 1990s China gradually becomes a major import country of India. Import volume increased from 1991 - 1992's US$210 million to 2001 - 2002's US$2.039 billion. The yearly growth rate is 58 percent. Chinese export to India makes up 3.98 percent of India's total import, ranking the 6th. Among them, the main goods include electronic products, coal and coke, organic chemical products, raw silk, medicine and silver etc.

Goods that India exports to China consist of mineral ores, iron and steel, marine products, chemical products and electronic equipment. India also intends to increase export to China by 200 percent in two years. On the basis of traditional exports including iron and steel and ores India is striving to increase the varieties of exporting goods.

Indian software industry has been developing quickly in recent years and has become one of the biggest software development and export countries in the world. India enjoys not only an absolutely leading position among developing countries but also an advantageous position even in comparison to many developed countries. In the 2001 - 2002 fiscal year India's software and service export was about US$7.8 billion.


Restrictive factors

Considering China's relatively weak software developing technology India hopes to expand China's software service and education market through cooperation. According to statistics on Indian side its software export to China was US$90 million in 1999 - about 0.08 percent of its yearly software export. The figure is increasing rapidly for sure but the latest data is so far not available.

Tian Wei pointed out that China-India trade still has room and space for expansion, though it is curbed by objective conditions. And the economic and trade intercourse between the two countries is not commensurate with their economic strength and populations. Take the fiscal year of 2001 - 2002 as an example, the bilateral trade amounted to US$4.946 billion - an increase of 37.5 percent over the previous year. Its proportions in Chinese and Indian foreign trade were 0.79 percent and 5 percent respectively.

He said many large Chinese project-contracting companies and large & medium companies in electrical home appliances, telecommunication and auto-bike industries have conducted extensive survey on Indian market in recent years. Some companies have offices set up in India for more than 5 years for tracking related projects. Though there is some progress the pace is slow and the result is far from being remarkable. TV set manufacturer Konka was among the first to step into Indian market and withdrew all their personnel after two years operation. TCL also has serious trouble with its Indian partner.

Tian Wei pointed out that India is wary of China's development. The theory of "China Threat" is still haunting now and then in the economic circle and a series of unfriendly measures appeared at the governmental level - political relations press hard on economic and trade relations. Departments of the Indian government have long adopted an uncooperative stand toward Chinese businessmen and unreasonably interfered with the port-dredging-up project contract that Chinese company acquired through public bidding. Indian Defense Ministry even stopped Chinese construction ships, which have arrived, from entering the port to carry out the contract. Indian Customs once conducted synchronized raids on so-called Chinese "under quoted goods" in several big cities within a single day, which have seriously damaged the reputation of the Chinese goods.

Though Chinese products have little share in Indian market they enjoy a reputation of being inexpensive but good in quality because Indian companies, particularly small & medium companies, drove up the production cost with their low productivity making their products less competitive. This caused the panic of these companies and the Indian government, proceeding from its political consideration, caters to the needs of these companies by conducting frequent anti-dumping investigations on Chinese goods. Most of the cases involve small amounts of money and because there are so many of them Chinese companies rarely respond to them. Nevertheless they cast a shadow on the regular trade development of the two countries. According to statistics in the fiscal year of 2002 - 2003 there were altogether 30 anti-dumping cases in India. Among them Chinese products were regarded as the main targets, taking up half of them - 15 cases. Enditem

(People's Daily Online)