QRE presentation

1
The Global Institute Russia-India-China (RIC)
Conference Export Diversification in India and
China A Comparative AnalysisBy Rajesh
ChadhaGeethanjali Nataraj Anjali Tandon Work
in progress
2
India-China A Brief Comparison

• Per Capita Incomes (PPP) India 2600, China
  5340
• Economic Reforms India (1991), China (1978)
• Reform thrust India (started off with import
  substitution strategy and gradually opened up its
  export sector), China (Export led growth
  strategy)

3
Chinas Export Story

• Attracted global attention
• Mainly due to the comparative advantage of due to
  labour surplus
• Recent literature/studies have highlighted the
  increasing technology content of Chinese
  exportsXu (2006), Rumbagh (2004)

4
Objectives

• Direction of Trade
• Composition of Trade
• Diversification of Trade

5
Segregation of Chinese and Indian Exports

• ETA (Empirical Trade Analysis)
• UNCTAD
• NCAER
• Scheme of segregation based on five factors
• Skill
• Scale
• Resource endowment factors
• Technology content
• Stage of the final product

6
NCAER Classification derived from ETA and UNCTAD

• Product group A Primary products (91)
• Product group B Natural-resource intensive
  products (21)
• Product group C Unskilled-labour intensive
  products (27)
• Product group D1 Low and medium technology
  intensive products (35)
• Product group D2 High technology intensive
  products (40)
• Product group E1 Low and medium human-capital
  intensive products (33)
• Product group E2 High human-capital intensive
  products (10)
• Sectors not classified according to intensity F
  (2)
• SITC Revision 3, 3 digit ( 259 products)

7
(No Transcript)
8
Trade Balance Region wise, TE 2006
TE Triennium Ending
9
Trade Balance GroupWise, TE 2006
TE Triennium Ending
10
Export Composition Regionwise, TE 2006
TE Triennium Ending
11
Import Composition Regionwise, TE 2006
TE Triennium Ending
12
Export Composition Group wise, TE 2006
TE Triennium Ending
13
Import Composition Group wise, TE 2006
TE Triennium Ending
14
China's region wise trade balance in select
manufacturing sectors, TE 2006
TE Triennium Ending
15
India's region wise trade balance in select
manufacturing sectors, TE 2006
TE Triennium Ending
16
TE Triennium Ending
17
Inferences China

• China has relatively strong export penetration
  with most developed partners as comapred to
  India It has a trade surplus with all its major
  trading partners except Japan and ASEAN and with
  the world.
• China continues to export more labour intensive
  products (C, E1 E2) with increasingly more
  technology intensive exports(D1 D2 )
• However, even higher imports of technology
  intensive products, particularly from ASEAN and
  Japan, result in a net trade deficit of these
  items in Chinas external trade balance.

18
Inferences India

• Unlike China, India has a trade deficit with all
  its major trading partners including China except
  the USA
• Indian exports are relatively more diversified
• India continues to be a major exporter of primary
  commodities (A), though its exports of
  technology intensive items (D2) have enhanced.
• Dominance of labour intensive products as a group
  (C, E1E2) continues.
• Trade with China is highly skewed.
• Nearly 67 percent of total exports to China of
  primary products (A)
• Nearly 43 per cent of total imports of high
  technology intensive products (D2)

19
Conclusions

• China exports technology intensive products on
  the strength of its relatively large share of
  their imports Processing Trade.
• Indian manufacturing sector needs to gear up
• Such expansion should come through intensive
  expansion ( of labour intensive products) as well
  as extensive diversification ( of technology
  intensive products) of Indias manufactured
  sector as well as exports.
• Intensive expansion would create numerous job
  opportunities for the unemployed sections of
  Indias rural and suburban workforce
• Learning from China, India must make the best us
  of production as well as assembling opportunities
  in technology-intensive goods. Finally, success
  in expanding Indias exports would be achieved
  mainly through overall opening up of the economy,
  further liberalisation and decentralisation.

20
Thank You