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Indo China Relationship

Flow of Presentation
2

Introduction Geographical Overview History Events in Last Decade Impact of Chinese goods on India Economy Comparison Trade Relations Strengths of both countries Future Expectation Conclusion

Introduction
3

Relations date back to ancient times Transmission of Buddhism Trade relations via Silk Route Since 1950s - Border disputes, now resolved China is Indias largest trading partner Positive demography is where China is lagging

Geographic Overview
4

China almost 3 times larger Separated by The Mighty Himalayan mountain chain Two countries in between Two territories which were disputed for, by the two nations

History
5

Tibet and The Border Issue Sino - Indian War

Tibet and The Border Issue

6

Tibet & The Border Issue

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1949 Nehru declared control over Aksai Chin 1950 Chinese Peoples Liberation Army invaded Tibet 1956 Chinese Premier, Zhou Enlai stated no claims over Indian controlled territory Later argued that Aksai Chin was already under Chinese Jurisdiction

Source: http://en.wikipedia.org/wiki/Sino-Indian_War

Tibet & The Border Issue

8

(contd)

China did not regard the region as Indian Controlled China regarded The MacDonald Line as the relevant border 1956 67 Chinese extended their influence by building a road India protested against these moves & look for political solution to ensure stable borders

Source: http://en.wikipedia.org/wiki/Sino-Indian_War

Disputed Areas
9

Source: indiaschinablog.blogspot.com

Sino - Indian War

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Date Location

- 20 October to 21 November 1962 - South Xinjiang (Aksai Chin) and Arunachal Pradesh (South Tibet, North-East Frontier Agency) Result - Chinese military victory. Territorial Changes - China controls Tibet and area of Aksai China; India controls North East area of Arunachal Pradesh

Sino - Indian War

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Also known as Sino-Indian Border Conflict Cause Dispute over Aksai Chin & A.P. border region

(contd)

Aksai Chin claimed by India to belong to Kashmir & claimed by China to be a part of Xinjiang Arunachal Pradesh also claimed by both nations

Started with short border wars Notable for the harsh conditions Cease fire on 21st Nov Entered 20Km beyond its restricted line of control

Sino - Indian War

12

(contd)

CASUALITIES & LOSSES

INDIA CHINA

1,383 Killed
1,047 Wounded 1,696 Missing 3,968 Captured

722 Killed
1,697 Wounded

The Sino Indian war had a very devastative impact on relations of both the nations The two countries had no sign of happy relations then on In 1996, Chinese President Jiang Zemin visited India

Events in Last Decade

Events in the last Decade

2000
Indian

President K. R. Narayanan visited China Gradual re-engagement of Indian and Chinese diplomacy

2002
Chinese

Premier Zhu Rongji visited India Focus on economic issues

SOURCE: http://forum.globaltimes.cn/forum/showthread.php?t=21870

Events in the last Decade

(contd)

2003
Prime

Minister, Atal Bihari Vajpayee visited China Both nations moved towards resolving their border disputes

2004
Surpassed Milestone

$10 billion mark for the first time

in China-India bilateral trade

SOURCE: http://forum.globaltimes.cn/forum/showthread.php?t=21870

Events in the last Decade

(contd)

2005
Chinese Premier Wen Jiabao visited Bangalore Push for increased China - India cooperation in hightech industries Wen stated 21st century will be Asian Century for IT industry

2006
Chinese President, Hu Jintao visited India declared A year of friendship July 6, Opening up of Nathula and Jelepla Passes in Sikkim benefited both nations

SOURCE: http://forum.globaltimes.cn/forum/showthread.php?t=21870

Events in the last Decade

(contd)

2007
December, China & India held their 1st ever joint war games Sign To build trust 100 soldiers from both sides participated in the drill lasted for 9 days Held in Chinas Yunnan Province
In

SOURCE: http://forum.globaltimes.cn/forum/showthread.php?t=21870

Events in the last Decade

(contd)

2008
In

January, Prime Minister Manmohan Singh visited China Met with President Hu Jintao and Premier Wen Jiabao Bilateral discussions related to trade, commerce, defense, military, and various other issues Milestone in China India bilateral trade, surpassing the $37 billion

SOURCE: http://forum.globaltimes.cn/forum/showthread.php?t=21870

Events in the last Decade

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(contd)

2008
During Sichuan earthquake, India offered aid to help the earthquake victims

SOURCE: http://forum.globaltimes.cn/forum/showthread.php?t=21870

Events in the last Decade

(contd)

2010
Chinese

premier Wen Jiabao met Indian Prime Minister Manmohan Singh in Hanoi Wen stated that China is willing to give full play to billateral economics and trade cooperation

Impact of Chinese Goods on Indian Economy

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No way to escape the DRAGON!!!

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Using the big Indian market to dump their products Killing the Indian units

Example Last year during Diwali, china made crackers were sold in the Indian market. These crackers reportedly contained Sulphur. Sulphur is more harmful than Nitrate. Since the Chinese crackers were cheaper than the Indian crackers, so they managed to attract innocent Indian lot. As a result the Indian cracker industry saw a decline in the revenue.

No way to escape the DRAGON!!!

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(contd)

Due to cheaper prices of Chinese products popular among the Indian masses Negative effect on our own manufacturing units

For instance Data reveals that 60% of the Industrial units in the region of Thane and Bhivandi near Mumbai have been closed down. (Indian cottage industries i.e. handicraft)

No way to escape the DRAGON!!!

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(contd)

Due to its cheap labor

China offers low priced imports

Also affected Indian export market

China replaced Indian goods in the foreign market Due to being cheaply produced

Fact to be noted:

China manufactures both low as well as high quality products Eg: the manufacturing of Apple iPhone, Nokia Handset etc. But India only imports cheap products

Made in China, Sold in India

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China is ruling in many markets India is the hub of diverse business opportunities

Slowly yet steadily, Chinese products are dominating similar Indian products Eg: Electronics, crackers, statues, apparels, etc Eg: In 2010, flooding of the Indian markets with Chinese made statues - welcomed with open arms by the Indian consumers

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Can anyone guess which brand is this?

BlueBerry not BlackBerry

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Same design Same colour shade May be having advance features Very cheap Same has been done to various products and brand

E.g.: Apple iPhone

Pros & Cons

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Positive Aspects

Negative Aspects

Relatively Cheaper than the regular/known brands Advanced features Affordability, common man can easily purchase Widely available

Unsafe products Non long-lasting Resulted in closure of many businesses Outflow of capital Increased in Imports & decreased in Exports

Comparison
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India and China Growth Stories

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SOURCE: http://business.mapsofindia.com/india-economy/india-vs-china.htm

India and China Growth Stories

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(contd)

SOURCE: http://business.mapsofindia.com/india-economy/india-vs-china.htm

Economic Indicators
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FACTS Population GDP

INDIA 1,215 million around $1.3123 trillion

CHINA 1,362 million around $4909.28 billion

GDP growth
Per capita GDP Inflation Labour Force Unemployment Foreign Direct Investment

7.5%
$1124 7.48 % 467 million 9.4 % $12.40 billion

9.60%
$7,518 5.1% 813.5 million 4.20 % $9.7 billion $2.65 billion 687.71 million 81 million

Foreign Exchange Reserves $2.41 billion Mobile Users Internet Users 842 million 123.16 million

Focus

Service

Industry

SOURCE: http://business.mapsofindia.com/india-economy/india-vs-china.htm

Sector Wise Comparison

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Indias 54% population is engaged in Agriculture but only accounts for 17% of GDP
SOURCE: http://www.web.mit.edu/aSGuest34327-293522-india-vs-china-economy-2009/

Infrastructure Investment
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SOURCE: China Statistical Yearbook, Morgan Starley Researc

Education
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Educational Growth rate

India @ 17% China @ 13%

Primary & Secondary education:

China results in 99.1% literacy rate Where as in India it is 50 60%

Adult literacy Rate - India @ 61%, China @ 91% Expenditure on education - India @ 10.7%, China @ 12.8%

SOURCE: China Statistical Yearbook, Morgan Starley Researc

Health
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China
Particular Life Expectancy Infant Mortality Rate 1950 40 200 1980 68 39 2000 70 30

India
Particular Life Expectancy Infant Mortality Rate 1950 40 200 1980 48 130 2000 62 70

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Facts
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India lags behind China in infrastructure China has a weak banking and legal system What holds India back are
Bureaucratic red tape Corruption Inability to build infrastructure fast enough

According to Peter Drucker,

India has managed rural to urban transition in a relatively smooth and peaceful manner, which China is still struggling to do

Trade Relations

Trade Relations
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(contd)

India considers China its largest trading partner China & India export and import from each other in a huge quantity India scores only in resource based exports & low technology based exports China is no. 1 in low technology product, also scores well in medium & high technology
BASIS Export of Goods & Services (% of GDP) INDIA 21% CHINA Over 40%

Imports of Goods and Services (% of GDP)

24%

Over 30%

SOURCE: http://blog.made-from-india.com/Trade_relations_between_India_and_China-22.html

Trade Analysis
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Years

Indias Exports to China 825.74 1353.44 1699.06 2273.82

Indias Trade Imports from Balance China 1287.18 1527.51 2057.85 2779.14 -461.44 -174.07 -358.79 -505.32

Total Trade

1999 2000 2001 2002

2112.92 2880.95 3756.91 5052.96

2003 2004

4251.32 7677.98

4004.50 5994.59

246.82 1733.39

8255.82 13622.57

Indias exports to China in 2003 and 2004 were phenomenally high due to a surge in exports of steel. This can be attributed to a record growth in the iron and steel sector in India during this year.
SOURCE: UN Commodity Trade

List of Imports by India from China

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Electrical Machinery (47%) Organic Chemicals and Inorganic Chemicals Iron And Steel, Iron/Steel Products Rare Earth Metals Fertilizers

Impregnated Text Fabrics

Manmade Filament, Fabric Silk; Silk Yarn, Fabric

Vehicles
Mineral Fuel, Oil Aluminum etc
SOURCE: http://blog.made-from-india.com/Trade_relations_between_India_and_China-22.html

List of Import by China from India

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Ores, Slag, Ash Metals Organic Chemicals Salt; Sulphur; Earth, Stone Inorganic Chemicals; Rare Earth Metals Cotton and Yarn, Fabric

Copper and Articles Thereof

Hides And Skins Artificial Flowers, Feathers Tanning, Dye, Paint, Putty Precious Stones Fish And Seafood Plastic
SOURCE: http://blog.made-from-india.com/Trade_relations_between_India_and_China-22.html

Companies
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Indian companies in China:

Reliance

Industries Ashok Leyland Adani Power Limited Bank of India

Chinese companies in India:

Lenovo Haier Industrial

Bank

Trade Relations
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(conclusion)

China Rapid export growth involving aggressive increases on world market shares Based on capital attracted by:

Cheap labour Heavily subsidized infrastructure

India Low rate of export growth Cheap labour due to low absolute wages & poor infrastructure Exports have not yet become engine of growth, except in services

Recommendations
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Emphasis on quality Quality at an affordable price always create a value proposition thats difficult to challenge So, India should try to increase their competitiveness in the Chinese market by trying to provide an unparalleled value proposition Product Diversification Feed into each others supply chain Increase the variety of products that are exchanged between the two countries

Recommendations
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(contd)

Unique Comparative Advantage Both India & China have comparative advantage in similar sectors such as chemicals, metals, alloys, textile etc. This makes them highly competitive in third country markets

Strengths of the two

Indias Strengths

Strong science and engineering capabilities centred in chemical and software areas Is becoming worlds service centre for software development and back office offshore outsourcing Is also becoming centre of innovation for MNCs Jumped from growth rate of 2-3% to 6-8% last decade Has large critical mass of educated, skilled, and knowledgeable workers Has network of successful Indians in US and Europe providing links to markets, technology, and finance

Chinas Strengths

Very high economic growth, large internal market Very large supply of excess labour will continue to give it low wage advantage Becoming worlds manufacturing base Very high savings and investment rate Moving rapidly up from labour intensive to more technology intensive exports Critical mass in R&D, decreases its competitiveness Strong investments in education and training

Future Expectations

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Facts on Indian Economy

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India would achieve a growth rate of 10% says Economist, Mr. Kaushik Basu who is now Chief Economic Advisor Indian economy growing at 7.9% which is internationally superb Very few economies have recovered so fast

Growth of 7.5% - 8% is in the books

9% 10% growth within Indias reach according to the finance minister Within 5 years, Indias growth rate crossing over Chinas, according to him

SOURCE: http://www.in.com/videos/watchvideo-pm-speaks-on-indiachina-relations-5339527.html

Conclusion
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India & China together constitute 1/3rd of the total world population and 1/4th of worlds skilled labour force. They are two future economies to reckon with! For sustainable trade relationship between the two nations, its imperative that they move from competition to cooperation. As 20th century was US century, 21st century would be Asian century where the two nations would lead SO, IT COULD BE CHINA & INDIA IN THE FUTURE, NOT CHINA v/s INDIA

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