China's accession to the World Trade Organisation is a serious concern for India given that it is a member of three big trading blocs - the Asia Pacific Economic Co-operation, the East Asia Economic Co-operation and the Association of South-East Asian Nations.
India is not a member of any trade bloc.
According to Macrotrack, a monthly report published by the National Council of Applied Economic Research, the issue is relevant since intra-bloc exports as a ratio of world exports has increased from 74 per cent in 1990 to 86 per cent in 2000.
Moreover, with China's formal entry into the WTO, it would receive the most favoured nation treatment from the other members, which was a cause for alarm, Macrotrack pointed out.
It said the only advantage India had over China -of English-speaking professionals - was also getting fast eroded. Between 1980 and 2000, while India's trade openness increased about 50 per cent, China's surged 150 per cent.
Notwithstanding these concerns, India could gain significantly from trade with China, the report says.
India more than doubled its exports to China to $947 million during January-March 2003 over the same period last year. Trade between the two countries climbed 78 per cent during the same period, Macrotrack said.
India is the cheapest steel producer in the world and China is one of the biggest importers of the product. Steel Authority of India Ltd plans to increase its exports to China in the current financial year.
Many other Indian companies have also lined up investments in the country. The reopening of the trade route through the Nathu La Pass in Sikkim will foster closer and stronger commercial ties between the two neighbours.
The main difference in the policies of the two most populous countries in the world is India has not fully exploited its manufacturing sector, which accounts for just 16 per cent of its gross domestic product, while China has developed into a major manufacturing hub, reaping economies of scale and offering world-class products at unbeatable prices.
The secondary sector contributes as much as 35 per cent to its GDP. China's manufacturing GDP per capita is $1,322, four times that of India's at $ 381.
In India, services contribute as much as 50 per cent to the GDP. However, the trickle-down effect of the phenomenal growth in services, led rather lopsidedly by software services, has not taken place.
Both countries stand to gain immensely if they synergise operations in the information technology sector.
China has a competitive advantage in hardware and India's software sector grown at an exponential rate of 30 per cent per annum in the last decade.
Prime Minister Atal Bihari Vajpayee's recent visit to China yielded an agreement on infotech but how it takes shape and who the beneficiaries will be remains to be seen.
