Abstract
Based on 2000-2011 trade data, this paper decomposes the trade growth factors between China and India by using Constant Market Share model (CMS). The conclusion shows that scale effect is always a major factor; the scale effect of the exports growth from China to India is manifested in the industrial finished or semi-finished products, and the competitive effect of primary products is even more significant; however, the growth of economies of scale of Indian exports to China mainly concentrates on primary products, and the competitive effect is the main factor that is restricting the growth of primary products exports, while the competitive effects of industrial finished products increase export. Adjusting the trade structure in order to meet the changes of import demand is an important means to enhance the competitiveness of export products and expand the scale of bilateral trade development. In addition, China and India Free Trade Agreement strategy should be put on the agenda, and the economic integration mechanism should be actively built.
Highlights
As the largest developing countries in the world, both China and India pursue export-oriented economic policies, which can help them realize rapid economic growth
The political relationship between the favored countries has been improved and developed continuously since 1990s, especially during the new century, and the bilateral economy and the trade cooperation especially the trade in goods area have entered a rapid development period and the inter-industry trades in vertical division of labor forms develop rapidly, which laid a foundation for the establishment of the economic cooperation mechanism between the two countries at the same time, and the status of economic and trade exchanges has become more significant in the Sino-Indian relationship, and is becoming the leading force and the mainstream of the Sino-Indian relationship
Many scholars have implemented related analysis about the Sino-Indian relationship, and the scholars can be divided into 3 groups: 1) scholars such as Wang Yongli (2004) [1], Tan Jingrong (2004) [2], Guo Jianhong (2006) [3], Zhu Jing, Chen Xiaoyan (2006) [4] who analyzed about the competitiveness, complementarity of the Sino-Indian trades, and the Sino-Indian trade relationship from the agricultural product industry, textile industry, minerals industry, other industrial manufactured goods, and concluded that the complementarity of the Sino-Indian trades was relatively weak while a considerable researchers thought that the Sino-Indian trade relationships were complementary, so the enhancement of the trade cooperation would boost the trade development of both China and India
Summary
As the largest developing countries in the world, both China and India pursue export-oriented economic policies, which can help them realize rapid economic growth. Many scholars have implemented related analysis about the Sino-Indian relationship, and the scholars can be divided into 3 groups: 1) scholars such as Wang Yongli (2004) [1], Tan Jingrong (2004) [2], Guo Jianhong (2006) [3], Zhu Jing, Chen Xiaoyan (2006) [4] who analyzed about the competitiveness, complementarity of the Sino-Indian trades, and the Sino-Indian trade relationship from the agricultural product industry, textile industry, minerals industry, other industrial manufactured goods, and concluded that the complementarity of the Sino-Indian trades was relatively weak while a considerable researchers thought that the Sino-Indian trade relationships were complementary, so the enhancement of the trade cooperation would boost the trade development of both China and India Scholars such as Zhang Mingqiu (2004) [5], Ye Deli (2005) [6], Xu Fei (2005) [7], who made the conclusion based on the empirical analysis of the trades between China and India that the Sino-Indian bilateral trade relationship had rivalrousness to some extent, and the improvement of the trade environment and trade policies would benefit the trade cooperation between China and India. This paper has used Constant Market Share model (CMS) based on the general situation of the development of Sino-Indian bilateral trade since the 21th century, decomposes the general causes of Sino-Indian trade growth since 21th century from the total trade volume level and the product classification level, and provides rational suggestions for the advancement of the bilateral trade
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