Indo-China trade hits all-time high of $73.9 bn in 2011

Discussion in 'Economy & Infrastructure' started by nrj, Jan 29, 2012.

  1. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    India-China bilateral trade hit a record $73.9 billion last year, but the ballooning trade deficit in Beijing's favour rose to over $27 billion, raising concern among Indian authorities.

    The bilateral trade registered a $12.2 billion increase in 2011, taking the total to $73.9 billion as against $61.7 billion in 2010, according to official trade figures for the last year.

    The trade deficit in 2011, however, piled up to $27.07 billion even though Indian exports to China went up to $23.4 billion registering a growth of almost 12.26% compared to the same period in year 2010.
    "The overall trade figure looks good but the deficit remains a cause for concern," Indian Ambassador to China S Jaishankar said.

    He said efforts were being made to improve market access for Indian products in China.

    "We have some early signs of movement in access to the Indian IT products. But these are early days," he said, referring to various campaigns organised by the Indian Embassy to push IT and Pharmaceutical exports to China.

    Most important thing is that the bilateral trade is growing well despite the global economic downturn, he said.

    Chinese officials have been acknowledging India's concerns over trade deficit and the issue was expected to figure in detail in India-China Trade Ministers talks during the BRICS Commerce Meeting on March 28 in New Delhi.

    The Indian exports, mainly composed of primary products and commodity sector, increased despite the decline of iron ore exports, which dominated exports to China for long due to ban on mining in Karnataka and Goa, said K Nagraj Naidu, head of the economic and trade wing of the Indian Embassy.

    Indo-China trade hits all-time high of $73.9 bn in 2011
     
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  3. Yusuf

    Yusuf GUARDIAN Administrator

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    We need to add special duty on imports from china.
     
  4. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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  5. jackprince

    jackprince Turning into a frog Senior Member

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    already there for several items, called anti-dumping duty
     
  6. jackprince

    jackprince Turning into a frog Senior Member

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  7. Yusuf

    Yusuf GUARDIAN Administrator

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    Problem is enforcement. Under invoicing is rampant. 74 Billion is surely not the real quantum of $$ going from India to china. Delhi and mumbai importers in my line of business bill a 30 lacs worth container at about 3 lacs. I am not kidding.
     
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  8. jackprince

    jackprince Turning into a frog Senior Member

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    Yeah I know. More intimately than you might guess.
     
  9. Yusuf

    Yusuf GUARDIAN Administrator

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    A guy in chennai who fakes my products sourcing from china went to town a year or two ago saying he gifted customs officer a Honda city.
     
  10. Yusuf

    Yusuf GUARDIAN Administrator

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    Most goods imported from china are industrial consumables in large numbers. Power tools, hand tools, fasteners, welding equipment etc..all very cheap. But if the reporting by importers in mumbai and delhi is about 10% of the real value, one can imagine what is the actual scale of business between India and china and the trade deficit.
     
  11. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    China, sucking the life out of India over 50 years
     
  12. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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    I know. My family has links with a mining baron from Bellary dist. Deals happen in the form of 60:40, 70:30; white:black ratio. That's sold to the Chinese. I doubt there is a single mine baron in India who deals only with white money.

    We can be quite sure that trade is over $100Billion. Quite the same with most other countries, like Iran or UAE.
     
  13. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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  14. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    India can feed Chinese agricultural needs. China is becoming world's largest importer of farm products. There is no bigger opportunity than this one.
     
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  15. Singh

    Singh Phat Cat Administrator

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    India-China trade hits all time high of USD 73.9 bln in 2011

    India-China trade hits all time high of USD 73.9 bln in 2011



    India-China bilateral trade hit a record USD 73.9 billion last year, but the ballooning trade deficit in Beijing's favour rose to over USD 27 billion, raising concern among Indian authorities.

    The bilateral trade registered a USD 12.2 billion increase in 2011, taking the total to USD 73.9 billion as against USD 61.7 billion in 2010, according to official trade figures for the last year.

    The trade deficit in 2011, however, piled up to USD 27.07 billion even though Indian exports to China went up to USD 23.4 billion registering a growth of almost 12.26 per cent compared to the same period in year 2010.

    "The overall trade figure looks good but the deficit remains a cause for concern," Indian Ambassador to China S Jaishankar told PTI here. He said efforts are being made to improve market access for Indian products in China.

    "We have some early signs of movement in access to the Indian IT products. But these are early days," he said, referring to various campaigns organised by the Indian Embassy to push IT and Pharmaceutical exports to China.

    Most important thing is that the bilateral trade is growing well despite the global economic downturn, he said. Chinese officials have been acknowledging India's concerns over trade deficit and the issue was expected to figure in detail in India-China Trade
    Ministers talks during the BRICS Commerce Meeting on March 28 in New Delhi.

    The Indian exports, mainly composed of primary products and commodity sector, increased despite the decline of iron ore exports, which dominated exports to China for long due to ban on mining in Karnataka and Goa, said K Nagraj Naidu, head of the economic and trade wing of the Indian Embassy.

    Chinese exports to India continue to surge crossing the USD 50 billion mark. The exports logged USD 50.04 billion registering a growth of 23.51 per cent over 2010.
    The share of India-China bilateral trade in China's overall trade increased to about 3.8 per cent compared to 2.06 per cent in 2010.

    Naidu said India's exports of ores, slag and ash to China have dropped by 11 per cent to 10.45 billion in 2011. Iron ore which has traditionally been the top item of export has dropped by 14 per cent to USD 9.6 billion in 2011 compared to the USD 11.2 billion exports in 2010.

    The share of iron ore in the basket of Indian exports to China has dropped to 41 per cent in 2011 compared to 54 per cent in 2010 and 55 per cent in 2009, he said. The drop in iron ore exports could be attributed to the ban on mining in Karnataka, illegal mining in Goa, restriction on iron ore truck movements in Orissa.

    Also the other reason could be that China is diversifying its spot iron ore purchases away from India, largely in favour of South Africa, Naidu said. India's cotton, yarn and fabric exports to China have seen a growth of 49 per cent reaching USD 3.1 billion in 2011.

    While India's concerns over trade deficit remained, Indian officials say that there are encouraging signs about Chinese investments in India even though figures are not available as most of the investments are coming through Singapore and Mauritius.

    The high volumes of Chinese trade in India is also focussed on infrastructure development specially, telecom and energy generation equipment. Over all trade and investment appears to emerging as a strong binding force for the bilateral ties, according to the officials.

    India's items of export which have seen positive growth rates include, copper (USD two billion) precious stones (USD 1.1 billion), organic chemicals (USD 999 million) slat, sulphur, earth, stone (USD 514 million) and machinery (USD 478 million). Under machinery, India's principal exports to China included diesel machines worth USD 47 million and crank shafts worth USD 32 million. India is China’s 16th largest source of imports.

    India-China trade hits all time high of USD 73.9 bln in 2011
     
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  16. Nagraj

    Nagraj Regular Member

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    That's an too optimistic thinking . well as our population grows coupled with rise in income levels our own polpuation will need both higher quality and quantity of food. i don't think we will be able to spare any for china.
     
  17. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Indian agricultural related exports to EU have been rising at steady 20% for last 4yrs even looking at stringent import quality standards set by EU & few cases where consignments were rejected. The regional proximity & cost factor makes China the best export destination for our farmers. Its just that China has to come around on market access to Indian exporters. But looking at rising costs from other sources, china will have to ease the norms sooner or later.
     
  18. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Himalayan Boulder

    The India-China trade route is strewn with irritants and menaces


    Chinese Checkers

    India, China officially resume trade in 1978. In 1984, they sign the Most Favoured Nation Agreement

    Total trade: over $ 67 billion. Balance of trade in China’s favour—around $20 billion
    Reason: China sells finished goods, and India, largely raw materials

    Problems Indian businessmen face in China

    • A big language barrier
    • Trade below $1 million done in cash. Lack of bank credit feeds irregularity.
    • Disputes often resolved through coercion
    • Chinese officials sympathetic to locals


    Problems Chinese businessmen face in India

    • Permit to open representative office dogged by delays
    • Paucity of Chinese banks, so trade in local currency than dollars
    • Indians want to pay less but not compromise on high-end features
    • Inordinate delay in securing business visas, work permits


    ***

    Indian businessmen encounter certain problems in China so severe that they could well be forgiven for disbelieving its economy is the world’s second biggest. Ask S.K. Jain of LNJ International, who in August 2009 entered into an agreement with a Chinese company, Tangshan Ganglu Iron and Steel Pvt. Ltd, for delivering 43,000 metric tonnes of iron ore fines. Two months later, the Korean-owned vessel MV OSM Arena left the Paradip port, Orissa, for Caofeidian in China with Jain’s cargo, undertaking to deliver it in 18 days—the time usually taken for the voyage.

    As the stipulated date of delivery expired, Jain began to make inquiries and discovered that the Arena had docked at Tianjin—not Caofeidian—and a local Chinese company, whose owner enjoyed a clout among local officials and knew the Korean owner of the ship well, was trying to offload and take possession of the cargo. Shocked, Jain took recourse to legal assistance; months passed before a Chinese court agreed to release the cargo to him, subject to a payment of $4 million until the settlement of all counter-claims. And though these claims were subsequently dismissed, Jain claims the court hasn’t yet reimbursed his money. “What pains us most is the fact that we have not received any payment for the cargo shipped in 2009,” Jain said.

    Jain’s ordeal in China resonates sharply at a time the Indian media is agog with the story of how local traders in China’s southern trading hub of Yiwu recently kidnapped and assaulted two Mumbai-based Indian businessmen, Deepak Raheja and Shyamsunder Agarwal, who were employed by a Yemeni company. Unable to return the money owed to Chinese traders, the Yemeni owner simply fled the country, leaving behind Raheja and Agarwal to face the wrath of Yiwu traders. They demanded the payment from the two Indians who were in their custody. Ultimately, the Indian consulate in Shanghai intervened, extricated the two from the tangle, and lodged then in a safehouse in the city. But Raheja and Agarwal can’t leave China until a local court passes a verdict on their case.

    By contrast, it was good news for 12 Indian traders, who returned to India after a Chinese court decided on their deportation on charges of smuggling diamonds worth $ 7.3 million from Hong Kong into Shenzen, which is famous for processing diamonds. However, another 10 of their comrades were found guilty, and awarded prison sentences from three to six years. So, is China increasingly becoming a dangerous place for Indian businessmen? Or is it the case of Sino-phobic Indian media trumpeting stray cases of harassment, inevitable in any country?

    “Doing trade in India, a lot of time gets wasted in securing due clearance from officials to finally start work.”Qiu Shaoling, Marketing Head, ZTE

    Reacting to the uproar back home, the Indian embassy in Beijing issued an advisory cautioning Indian businessmen to stay away from Yiwu, which is in China’s eastern Zhejiang province, and is a massive hub for the small-commodities trade. Director-general of the Federation of Indian Export Organisation Ajay Sahai told Outlook, “The treatment of the two Indian businessmen in Yiwu is deplorable. But this is a local problem, though it shows that law and order is still an issue in some parts of China.” Sahai, however, feels such one-off incidents are not likely to have any major impact on Indo-China trade. The newly-appointed president of the Federation, Rafeeque Ahmed, agrees, “Trade disputes do arise from time to time between parties doing business in each other’s country but they need to be resolved through negotiations and arbitration. We cannot support the way the Indian businessmen were handled by local traders in Yiwu.”
    South Block officials, however, say the problem is systemic, claiming that the Raheja-Agarwal case isn’t the first of its kind. Particularly vexing is the aspect of payment—small Indian traders have to make their purchases with hard cash, as they are denied bank credit. Over time, though, the Indian and Chinese forge trust and bonding, thus ensuring credit to Indian buyers of Chinese goods. Business-on-trust works admirably most of the time. Occasionally, though, trust is betrayed and Indians are exposed to the risk of abduction and torture.

    The Chinese often employ such strong-arm tactics against their own countrymen. Incidents involving local toughs kidnapping defaulters are not uncommon. Since the disputes are not taken to officials—remember, no notarised documents can exist in an informal arrangement—negotiations with the defaulter take place as he languishes in the creditor’s custody. Obviously, this system is unequal and unjust, yet many Indian merchants willingly subscribe to the rules of the game and boast a thriving business.

    Former president of the Gems and Jewelry Export Promotion Council Sanjay Kothari told Outlook, “We are not advocating anything that will encourage Indian traders and merchants to violate Chinese laws. Both Indian merchants and their Chinese counterparts have flourished through cooperation.” In the same vein, he says the diamond merchants, now incarcerated in China, were clearly at fault: “They were trying to evade duties and were caught while doing so. It was an open and shut case.”

    But doing business in China is slightly more complicated than what Kothari portrays. Take S.K. Jindal of Jindal Export Limited, whose 30-year experience of trading in China hasn’t always been pleasant. He remembers at least two instances. In one, he was contracted to supply menthol to a party in China. “The price we had agreed to was not honoured by the Chinese side and I was forced to bring it down after delivery. Otherwise, my consignment would have been returned, and I would have incurred a huge loss,” Jindal told Outlook. Again, in another case, the Chinese supplier sent him a defective consignment of pens. “It was quite tough trying to return the consignment and get back my money,” recalls Jindal, who feels that despite adhering to officially laid out procedures in China—including seeking the help of the local arbitration body—most decisions there unjustifiably favour the sons of the soil. “Since you are forced to look for a compromise, as a precautionary measure you tend to build this additional cost into your price,” says Jindal.

    There’s also the contentious problem of entering into business arrangements with companies online. For instance, the Indian consulate in Guangzhou last year received a number of complaints from those who had booked and paid for orders to Chinese companies online. When it was raised with the Chinese authorities, it was found that most firms had only a cyber existence. The Indian government has now cautioned businessmen about visiting China, and asked them to verify the physical existence of companies before placing orders online.

    The Indian media, in its jingoism, often ignores the converse situation: the harrowing task it must be for the Chinese to conduct business here. Talk to Qiu Shaoling, marketing head of ZTE, a leading Chinese telecom firm, and he’d tell you that Indians want to buy cheap but never hesitate to demand all the features and service of high-end products. “A lot of time also gets wasted in securing clearance from officialdom to start work in India,” says Qui. Similarly, Xian Electronics Engineering Company’s Chen Tao complains about the delay in getting the required visa for working and opening a representative office in India. Chinese company representatives feel that Indian officials are unduly suspicious about their intent and the ensuing trust deficit dogs every step of their securing official approval of any kind.

    Considering the obstacles Indians and Chinese businessmen encounter, the booming trade between them is astonishing. Currently worth over $67 billion, it is expected to breach the $100-billion mark in a year or two. And though the trade imbalance is loaded in China’s favour, Indian companies are hopeful of gaining greater access to the Chinese market in the near future, particularly in pharmaceuticals and IT. China is a lucrative base for business for Indians, from biggies like Tatas and Reliance to shopkeepers who arrive atits coastal cities with barely anything more than two suitcases.

    A FICCI report, released two years ago, tried to warn Indian companies, especially those of small and medium scale, of the looming threat from China on account of its competitive prices. It listed a variety of items that were 10-70 per cent cheaper in China than India. No wonder, Indian businessmen make a beeline for China, for the fabulous profits that are to be made. Jindal, despite his bad experiences, hasn’t given up on China, citing its prices as the main attraction for businessmen such as him. Even Jain, yet to recover more than $ 4 million, gushes, “China is a breathtakingly huge market and a favourite destination for a number of Indian exporters. No sane Indian exporter would like to lose this growing market unless he finds it increasingly difficult to do business there.”

    Indeed, for businessmen such as Jain and Jindal—and Qiu and Chen—you can only hope that the Indian and Chinese governments will remove the irritants, reign in the recalcitrant, and boost bilateral trade beyond the conservative estimates of trade bodies.

    www.outlookindia.com | Himalayan Boulder
     
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  19. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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  21. badguy2000

    badguy2000 Respected Member Senior Member

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    The high volumes of Chinese trade in India is also focussed on infrastructure development specially, telecom and energy generation equipment. Over all trade and investment appears to emerging as a strong binding force for the bilateral ties, according to the officials.
     

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