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Explained: Sino-Indian ties in figures

A Correspondent | January 10, 2008 | 15:32 IST

On January 13, Prime Minister Manmohan Singh will reach Beijing with issues related to business and
economy on his mind.

The Chinese economy is roughly three times bigger than India's. The overview of China and India's trade
statistics and other related information given below suggests that both countries have a long way to go.

Both countries have some striking similarities and deep differences.

The most-striking difference between India and People's Republic of China is that the latter is largely an
atheist country while in the case of the former one has to put an effort to find them.

The country, which is 9.56 million sq km in size, has 23 provinces, five autonomous regions, four
centrally-administrative municipalities and two special administrative regions.

Unlike India, China's diversity is not striking. It has 56 ethnic groups of which the Han account for �94 per
cent. �
The second biggest difference between India and China is its political system.

In China, there is the party and then the government -- Two Constitutions are at work and working so far
without colluding. It embodies following power structures.

Communist Party of China structure

Party Congress, Central Committee (16th CC, members: 198+158 alternate, term: 5 years)
Politburo, Central Military Commission, Politburo Standing Committee (members: 9)
Party Control over Government, Legislature, Armed Forces

Unicameral National Legislature

National People's Congress is the Chinese parliament and highest law-making body.
(members: 2,989, term: 5 years). Theoretically it is the supreme organ of State power.

Chinese People's Political Consultative Conference is between CPC & 8 'democratic' parties plus unions.

Executive
State Council (Premier + 4 Vice Premiers + 5 State Councillors) plus ministries.

Provincial leadership

�
Similar to Centre, 22 provinces, four municipalities and five autonomous regions.

Even a novice knows that China's economy is fourth largest in the world, but if taken on account of
purchasing power parity it is the second largest.

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Print Article - Explained: Sino-Indian ties in figures http://www.rediff.com/cms/print.jsp?docpath=/news/2008/jan/10spec.htm

It contributes to 5.5 per cent of world's Gross Domestic Product and 7.2 per cent of the world's trade. Since
1978, its economy has grown at an average rate of 9.67 per cent. Since 1978 so much money has been
poured into China that its growth cannot be halted now.

So far, world investors have overall contributed direct investment of $750 billion (about Rs 30 lakh crore) to
�
China's growth. It obviously has helped China to build awesome foreign exchange reserve of $1,400 billion
(about Rs 56 lakh crore), the largest on the planet.

China overtook Japan ($860 billion or about Rs 34 lakh crore) in February this year in forex reserves

�
And, China has made sure that it will also buck up its agriculture production. In 2006, it is grain production
was 497 metric tonnes. But, obviously, everything is not rosy here, too. The urban-rural gap is growing with
actual urban income approaching six times that of rural income.

Evidence of fast changing Chinese

Some socio-economic indicators are enough to put China ahead of all world economy in near future. Its retail
�
sales in 2006 -- $979 billion (about Rs 39 lakh crore) will be unabated. Its national savings rate is 49 per
�
cent even though people have been changing old habits fast.

The Chinese society's biggest fad is automobiles. China produced 7.28 million cars in 2006.

Like all Asians, Chinese too love talking. China has about 520 million mobile phone owners. China has 660
cities of which 141 have a population over 1 million.

The Chinese have changed the way they dress and yearn to learn English. Life expectancy is 74 years.

What makes China click

There are many drivers of China's growth, but following are the key reasons:

�
State-led investment -- $1.465 trillion in 2006
Administratively-directed lending
Continued strong supply side growth
Large FDI inflows
Robust exports (39 percent of GDP) �
FDI and Foreign Trade accounts for 80 percent �of the GDP
China means foreign trading. Following are the major features of the China's maddening export sector:

� �
Exports: 93 percent are manufactured goods
� � �
Exports are import intensive (40 percent inputs imported)
� � �
Processing trade is 49 percent of total trade
Imports are chiefly capital goods and industrial raw materials
� � � � �
In 2006 58 percent of FDI went into manufacturing, 12 percent into real estate and
� �
10 percent into banking
�
Region-wise: Bulk of FDI to eastern provinces (roughly 90 percent)
�
Shanghai and surrounding areas have a 46 percent. Guangdong and surrounding areas get �
� �
26 percent and Beijing and surrounding areas received 14 percent. �
610,000 foreign-invested firms

Challenges to the economy

Disparities in the Communist state
Large Non Performing Assents with banks ($500 billion or about Rs 20 lakh crore)
Inflation

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Print Article - Explained: Sino-Indian ties in figures http://www.rediff.com/cms/print.jsp?docpath=/news/2008/jan/10spec.htm

Low domestic demand

Speculation in the property and capital markets
Pressure to revalue the yuan
Protectionism /economic slowdown in the United States and European Union
Growth at the cost of the environment
Quality of Chinese exports being questioned

India-China commercial and economy story

�
Trade and economic ties -- biggest gainers of improved political relations
Extended most favoured nation status to each other in 1984
Rapid growth in bilateral trade and economic relations since late 1990s. Trade targets regularly beaten
Since 2000 trade has increased at an average rate of 49 percent. � �
Bilateral trade trends

�
Top 10 Indian Exports to China (all figures in $ millions)
Top 10 Chinese Exports to India

Growing commercial linkages

100 Indian companies are located in China ($400 million/Rs16,000 crore investments)
�
50 Chinese companies are located in India. The contracts are worth $12 billion (Rs 48,000 crore)
About 200 trade delegations were exchanged in 2007.
Eight major Indian banks are also present in China.

Areas of Indian presence

Manufacturing (for domestic market and exports)
Sourcing (components, intermediate goods, contract manufacturing for brands in India)
Trading
Services: IT (system solutions, products and IT education); legal; education; entertainment services.
Financial services (banks)

Indian companies in China

�
Ranbaxy, Orchid Pharmaceuticals, Dr Reddy's Lab, Aurobindo Pharma, Sundaram Fasteners, JK
� � � �
Tyres, Suzlon, Thermax, L&T, Reliance, Adani Group, Essar Steel, Apollo � �
� � � � � � �
Tyres, TCS, Infosys, Satyam, Zensar, Aptech, NIIT, iGate, IIHT, Essel Pro-Pack Ltd, Aditya Birla �
�
Group, Real and KGK Diamonds, Mahindra & Mahindra, Videocon and Zee TV �
Shortcomings in the trade �
Indian exports are dominated by primary products and commodities. Reverse is true for Chinese.
India faces an increasing trade deficit.
Free Trade Agreement.

Statistics �& information courtesy: Embassy of India, Beijing

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