I. Bilateral Trade
Sino-Indian trade started in 1951. The trade agreement was signed by the governments of the two countries in 1954 and renewed in August 1984. Seven yearly trading agreements have been signed in sequence since 1986. The bilateral trade between China and India grows rapidly with trade volume continuously increasing, variety of exchanging commodities gradually expanding, the communication between professionals of the two nations strengthening.
(1) General Trade
Since 1991 when India started economic liberalization process, the two-way trade between China and India has been increasing steadily and by a big margin. The two-way trade in 1991 amounted to US$265 million. In 1995, it reached US$1162 million. By 1996 it topped US$1400 million (20.9% increase over 1995). In 1997, the bilateral trade registered US$1830 million, a further increase of 30.2% over 1996.
According to the statistics of China Customs, the total amount of Sino-Indian trade in 2002 came to US$4.95 billion, increased by 37.6% over the last year, of which China’s export accounted for US$2.68 billion, 41% up comparing to that of last year, while China’s import amounted to US$2.27 billion, an increase of 33.8% comparatively. In the year 2001, bilateral trade rose to US$3.6 billion, of which China’s export was US$1.9 billion, the import was US$1.7 billion. Currently, India is the biggest trade partner of China in South Asia.
(2) Export and Import Commodities
The main export items from China to India include raw silk, beans, sheet and paper pulp, rosin, coke, medical products, light industrial products, textile products, chemical industrial products, foods, metal products, machinery, etc.
The export of machinery and electronic products to India covers mainly machine tools, electrical wires and cables, power equipment, television sets and CKD components, spare parts and accessories of TV, radio and telecommunication equipment, etc.
China’s import from India includes iron ore, chrome ore, gem, steel, leather, vegetable oil, southern medicine, raw material for chemical industry, etc.
II. Economic Cooperation
On economic cooperation, China has made some progress. A break through has been achieved in contracting turnkey projects. The bid for erecting a 540MW captive power plant for an Aluminum Company of Sterlite Industries Ltd. was awarded to China Shandong Electric Construction Corporation (SEC) in August 2003.
In 2002, China signed with India some labor contracts and consulting agreements, contract value totaling US$0.6 billion, actual fulfillment value US$57.64 million. By the end of 2002, the number of Chinese-Indian Joint Venture Company has come to 15, of which Chinese investment accounts for nearly US$20.63 million.
By the end of 2002, the number of Indian-Chinese Joint Venture Companies reached 71, of which actual Indian investment accounted for nearly US$63 million. In 2002, India signed 21 investment agreements with China, contract value totaling US$26 million, actual fulfillment value arriving at US$31 million.
III. Big Potential for Development of Bilateral Trade
According to our statistics, the trade turn-over between China and India in 2000 accounted for only 3.46% of Indian’s total foreign trade of US$84 billion, and accounted for 0.61% of China’s total foreign trade of US$473.3 billion.
The Sino-Indian economic and trade relations developed a great deal over the past few years, especially a quick growth in bilateral trade. However, the total trade volume between China and India in 2002 constituted 4.8% of India’s total trade only, and China’s export to India only constituted about 4% of India’s import. The present annual trade volume between the two countries is still not commensurate with the overall economic strength and huge market demand of both countries.
China and India have many similarities and are complementary to each other in many sectors, such as chemical and pharmaceutical, machinery and electronics. There is a big potentiality for increase of trade and expansion of economic co-operation between the two economies.
China attaches great importance to strengthening of economic and trade relations with all her neighbors. The Chinese side desires to establish an overall, long-term and stable economic and trade relationship with India while the Indian business community strongly desires to strengthen the trade and economic ties with China. So there is a bright future for the expansion of bilateral trade and economic cooperation.
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