Indo-China Relationship

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it depicts the indo - china relationship


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Indo – China Relationship:

Indo – China Relationship 1

Flow of Presentation:

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 India’s largest trading partner Positive demography is where China is lagging

Geographic Overview:

Geographic Overview 4 China almost 3 times larger Separated by T he 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:

Tibet and The Border Issue 6

Tibet & The Border Issue:

Tibet & The Border Issue 7 1949 – Nehru declared control over Aksai Chin 1950 – Chinese People’s 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://

Tibet & The Border Issue:

Tibet & The Border Issue 8 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 (cont’d) Source : http://

Disputed Areas:

Disputed Areas 9 Source:

Sino - Indian War:

Sino - Indian War 10 Date - 20 October to 21 November 1962 Location - 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:

Sino - Indian War 11 Also known as Sino-Indian Border Conflict Cause – Dispute over Aksai Chin & A.P. border region 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 21 st Nov Entered 20Km beyond its restricted line of control (cont’d)

Sino - Indian War:

Sino - Indian War 12 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 INDIA CHINA 1,383 Killed 722 Killed 1,047 Wounded 1,697 Wounded 1,696 Missing 3,968 Captured CASUALITIES & LOSSES (cont’d)

Events in Last Decade:

Events in Last Decade

Events in the 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:

Events in the last Decade:

Events in the last Decade 2003 Prime Minister, Atal Bihari Vajpayee visited China Both nations moved towards resolving their border disputes 2004 Surpassed $10 billion mark for the first time Milestone in China-India bilateral trade SOURCE: (cont’d)

Events in the last Decade:

Events in the last Decade 2005 Chinese Premier Wen Jiabao visited Bangalore Push for increased China - India cooperation in high-tech industries Wen stated 21 st 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: (cont’d)

Events in the last Decade:

Events in the last Decade 2007 In December, China & India held their 1 st ever joint war games Sign “To build trust” 100 soldiers from both sides participated in the drill – lasted for 9 days Held in China’s Yunnan Province SOURCE: (cont’d)

Events in the last Decade:

Events in the last Decade 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: (cont’d)

Events in the last Decade:

Events in the last Decade 19 2008 During Sichuan earthquake, India offered aid to help the earthquake victims SOURCE: (cont’d)

Events in the last Decade:

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 Events in the last Decade (cont’d)

Impact of Chinese Goods on Indian Economy:

21 Impact of Chinese Goods on Indian Economy

No way to escape the DRAGON!!!:

No way to escape the DRAGON!!! 22 U sing the big Indian market – to dump their products K illing the Indian units Example L ast 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!!!:

No way to escape the DRAGON!!! 23 Due to cheaper prices of Chinese products – popular among the Indian masses N egative 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) (cont’d)

No way to escape the DRAGON!!!:

24 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 No way to escape the DRAGON!!! (cont’d)

Made in China, Sold in India:

Made in China, Sold in India 25 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

Can anyone guess which brand is this?:

Can anyone guess which brand is this? 26

BlueBerry not BlackBerry:

BlueBerry not BlackBerry 27 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:

Pros & Cons 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 28 Positive Aspects Negative Aspects


Comparison 29

India and China – Growth Stories:

India and China – Growth Stories 30 SOURCE:

India and China – Growth Stories:

India and China – Growth Stories 31 (cont’d) SOURCE:

Economic Indicators:

FACTS INDIA CHINA Population 1,215 million 1,362 million GDP around $1.3123 trillion around $4909.28 billion GDP growth 7.5% 9.60% Per capita GDP $1124 $7,518 Inflation 7.48 % 5.1% Labour Force 467 million 813.5 million Unemployment 9.4 % 4.20 % Foreign Direct Investment $ 12.40 billion $9.7 billion Foreign Exchange Reserves $2.41 billion $ 2.65 billion Mobile Users 842 million 687.71 million Internet Users 123.16 million 81 million Focus Service Industry Economic Indicators 32 SOURCE:

Sector – Wise Comparison:

Sector – Wise Comparison 33 India’s 54% population is engaged in Agriculture but only accounts for 17% of GDP SOURCE : http://

Infrastructure Investment:

Infrastructure Investment 34 SOURCE : China Statistical Yearbook, Morgan Starley Research


Education 35 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 Research


Health Particular 1950 1980 2000 Life Expectancy 40 68 70 Infant Mortality Rate 200 39 30 Particular 1950 1980 2000 Life Expectancy 40 48 62 Infant Mortality Rate 200 130 70 36 China India

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Facts 38 India lags behind China in infrastructure China has a weak banking and legal system What holds India back are B ureaucratic 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

Trade Relations :

Trade Relations 40 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 SOURCE: BASIS INDIA CHINA Export of Goods & Services (% of GDP) 21% Over 40% Imports of Goods and Services (% of GDP) 24% Over 30% (cont’d)

Trade Analysis:

Trade Analysis 41 Years India’s Exports to China India’s Imports from China Trade Balance Total Trade 1999 825.74 1287.18 -461.44 2112.92 2000 1353.44 1527.51 -174.07 2880.95 2001 1699.06 2057.85 -358.79 3756.91 2002 2273.82 2779.14 -505.32 5052.96 2003 4251.32 4004.50 246.82 8255.82 2004 7677.98 5994.59 1733.39 13622.57 India’s 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 Stats

List of Imports by India from China :

List of Imports by India from China 42 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:

List of Import by China from India:

List of Import by China from India 43 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:


Companies 44 Indian companies in China: Reliance Industries Ashok Leyland Adani Power Limited Bank of India Chinese companies in India: Lenovo Haier Industrial Bank

Trade Relations:

Trade Relations 45 China Rapid export growth involving aggressive increases on world market shares Based on capital attracted by: C heap 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 ( conclusion)


Recommendations 46 Emphasis on quality Quality at an affordable price always create a value proposition that’s 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 other’s supply chain Increase the variety of products that are exchanged between the two countries


Recommendations 47 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 (cont’d)

Strengths of the two:

Strengths of the two

India’s Strengths:

India’s 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

China’s Strengths:

China’s Strengths Very high economic growth, large internal market Very large supply of excess labour will continue to give it low wage advantage Becoming world’s manufacturing base Very high savings and investment rate M oving 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:

Future Expectations

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Facts on Indian Economy:

Facts on Indian Economy 53 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 India’s reach according to the finance minister Within 5 years, India’s growth rate crossing over China’s, according to him SOURCE:


Conclusion 54 India & China together constitute 1/3 rd of the total world population and 1/4 th of world’s 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 20 th century was US century, 21 st 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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