The ballooning Indian trade deficit with China is no longer only affecting India, but is impacting China and their international play. India’s limited trade with China, means the country has few inroads into India, enabling less control over the region and a deferred geopolitics. In order to play the game right, China on her part has encouraged the Indian government and companies to increase bilateral trade and investments. Yet, as this has failed to see optimum results,signs are the Chinese government is taking matters into their own hands to make sure the basket of goods attains equilibrium.
On its part one of the more large scale operation the Chinese government is considering is building manufacturing excellence within a large plot of land owned jointly by Chinese companies. Similar to export promotion zones of various caliber build in China, this large plot of land within India is expected to have world class infrastructure and manufacturing facilities, from which Chinese companies will be able to take advantage of India’s talented yet cheaper workforce and export quality made in Inchin goods. The facility which is yet under consideration, will enable the Chinese to control the production and logistics supply chain and enable India to export goods to international markets, raising her stature in the global game.
In the meanwhile though, prior to Indian Prime Minister Dr. Manmohan Singh’s visit to China scheduled for next month, China is sticking to old school tradeonomics by signing an increased number of deals with Indian companies to even out the balance of trade. Recently, companies from both countries signed 15 contracts worth US$ 338 million in sectors ranging from cotton yarn, marine and agricultural products. While the signing of increased bilateral agreements is significant, the value and impact of the 15 contracts remains minimal. According to industry watchers, the deals are struck predominantly in the raw material sector which continues to auger low value trade for India as compared to China’s finished goods exports to India.
Maybe it would augment well for both nations if we built a little chinatown in India – a chinatown of excellence, where both nations could jontly produce world class products and services?