China has embarked on a new phase of economic development. In the future, it will no longer rely on export might for economic growth and prosperity. The mainland policymakers have started on a course to turn China into a fully-fledged economy based on domestic consumption, services and innovation. As a result, China has become one of the biggest trade and investment locations for South East Asia.
The Association of Southeast Asian Nations (ASEAN) continues to rise as an economic powerhouse with 600 million people and the combined GDP of US 2.1 trillion. As a region it will be one of world’s fastest growing consumer markets over the next two decades. The ASEAN Economic Community will come into existence at the end of 2015 effectively creating one of the world’s biggest single markets.
Chinese-ASEAN trade relations are essentially reciprocal in nature. No longer is China the same exporting competitor of past decades. China represents an important new consumer market for ASEAN, while ASEAN is growing in importance for mainland China’s manufacturing. These growing ties open up numerous opportunities for many ASEAN countries such as Indonesia, the Philippines, Vietnam and Cambodia, which have large pools of labour and make for competitive low cost production locations for mainland companies.
India’s trade deficit with China after 11 months of this year has reached a record $29.5 billion, exceeding last year’s annual figure, according to newly released trade data.
The numbers underline the sharp decline in once-burgeoning trade, which reached $74 billion in 2011 when China became India’s biggest trading partner.
The following year, a 20 per cent slump in India’s exports, largely on account of iron ore mining bans, coupled with the global slowdown, resulted in a 10 per cent decline as trade fell to $66.50 billion, even as both countries announced an ambitious $100 billion target for 2015.
Doubts over achieving target
The latest figures have cast doubt on whether that target may be achieved. During the period under reference, even as China’s trade with the rest of Asia as well as with its major Western trading partners has picked up, trade with India has remained in a slump, suggesting that causes were more structural rather than a reflection of global trends.
After 11 months of this year, India’s exports to China reached only $14.87 billion out of total bilateral trade of $59.24 billion, according to data released this week by the China’s General Administration of Customs.
Trade between the two countries was down by 2.7 per cent year-on-year, even as China’s overall global trade rose 7.7 per cent. This was driven by an export sector that has continued to show signs of revival, growing 12.7 per cent and marking the second straight month of rising exports.
Among China’s biggest trading partners, trade with the U.S. was up by 7.6 per cent. China’s trade with Southeast Asian countries showed the biggest growth, growing 10.9 per cent.