INDO-CHINA BUSINESS

INDO-CHINA BUSINESS.

China and India today represent Asia’s two largest and most dynamic societies which are emerging as new trend setters in international relations. Especially, with their annual GDP growth rates. China and India have since come to be recognised as the fastest growing economies. According to World Bank estimates, and assessed on the basis of purchasing power parity, China and India have already become respectively the second and fourth largest economies of the world surpassing developed countries. The context of China-India bilateral trade itself—bilateral as well as regional and global—has been changing rapidly. At the bilateral level, this is self-evident in the way their rapidly growing trade partnership has provided a great boost to their ongoing political confidence-building. It is the nature of China-India bilateral trade as a confidence-building measure that must be underlined to appreciate its interface with their political relations which remains so critical for its long-term prospects. Therefore, more than being measured in terms of statistics and profits, it is the political impact of trade which remains the barometer of their economic engagement. Both sides clearly display that understanding at least in their more recent initiatives. Moreover, with the inclusion of India’s trade with Hong Kong and Macao (as also India’s rising trade with Taiwan, and the possibility of an eventual unification of Taiwan), Greater China has already emerged as India’s largest trading partner and one of its kind. Major items of export from India to China remain iron and chrome ore, plastic and linoleum, marine products, cotton yarn and fabrics, organic and inorganic chemicals, dye intermediates, bulk drugs and pharmaceuticals, construction quality wire rods, tobacco and tea, while China’s exports to India include items like raw silk and silk yarn, coking coal, some types of chemicals, pulses, mercury and antimony, freshwater pearls, pig iron, newsprint and several low-technology consumer items. Gradually, many new sectors—like border trade or high-tech trade—are being also explored while information technology and infrastructure development are already emerging as major areas for co-operation. China now accounts for over 5% of India’s total foreign trade which creates substantial stakes for mutual co-operation.In spite of that the notable fact is that India’s trade balance has gone unfavourable and it is increasing too.India’s growing deficit trade with China has a strong inverse impact to India’s economy although its volume of bilateral trade is stepping upward.Morever, FDI inflows from China is increasing too which has significant future impact on service sector.

India is a strategic partner in East Asian financial integration and Asian integration too where India’s role in forming Asian Monetary Fund may be given importance in the zonal leadership of China and Japan.Otherwise, Asian Monetary Fund will find incompleteness in the process of financial integration.

However,Mody’s visit in Indo-China Business Forum in China which assures 22 billion dollar for forthcoming business may be positive in the consensus on financial integration in increasing business.But this outlook will go in favour of India if trade balance appears to be India’s favour.