In 1998, China’s share in World trade, compared to that of India, was higher by approx

Directions: Read the following passage carefully to answer the given question.

In 1971, China contributed US $ 2.78 billion to world trade (exports), which was 0.82 percent of world trade. Since then, its contribution to world trade consistently increased: US $ 183.59 billion (3.37 percent) in 1998; and US $ 250 billion (over 4 percent) in 2001. India's contribution in 1971 was US $ 2.04 billion (0.60 percent of world trade) and US $ 33.44 billion in 1998. In 2001, we achieved exports of US $ 44.5 billion (0.70 percent of world trade). The export figures between India and China showed a big difference in 2001 though it was marginal in 1971.

The key factors influencing world trade are: External trade and foreign investment; relocation of global manufacturing basis; and rapid technological developments. External trade & foreign investment: Capital flows in the form of foreign direct investment (FDI's) and foreign invested enterprises (FIE's). Cross border acquisitions and mergers constituted a major percentage of FDI flows. FDI flow to developing countries increased by six fold from 1990 to 1998. During 1995-98, FDI flow increased to US $ 1886 billion. Of this, China alone attracted US $ 164 billion while India's share was only US $ 11 billion. The impact of FDI to a host country's economy is widely recognised. The foreign-funded firms contributed to nearly 45 per cent of China's export during 1999.

Relocation of global manufacturing basis: Large-scale shift in global manufacturing basis to Asian countries has occurred through the 1990's, with factor costs, especially wages increased in developed countries. The other factor which determined the choice of shifting was the labour laws and work related rules and regulations. China which was associated with rigid labour laws and other economy related rules and regulations came out with a concept of special export zones which are a foreign enclave in the country where no labour laws and other economy related rules are made applicable. In fact, China soon realised that it may not be possible to change labour laws and other economy related rules in the country so soon. However, having realised their importance for attracting FDI and to the growth of their economy, it accepted the idea of creating these foreign enclaves such as Shenzen and attracted foreign capital and technology. That is the reason why approximately 45 per cent of China's exports come from such zones.

Rapid technological developments: Rapid technological developments have led to a steep decline in transportation and telecommunication costs. These in turn have vastly reduced the impact of physical distance for global commerce. Though China had a distinct disadvantage of the lack of knowledge of English, it has come out with Chinese as computer compatible language. It has declared that Chinese will be the world's no.1 computer language soon. The flow of FDI capital has also brought with it the technology from the West including the USA. The cultural ties with Taiwan have helped China to a great extent in achieving access to technology and export.

China has achieved the number one position in world trade in regard to toys and stuffed toys. China captured, in 1999, business to the tune of US $ 52 billion out of global US $ 300 billion in textile and clothing. China achieved more than US $ 20 billion in world trade of US $ 850 billion in electronics and computers in 1999-2000. China's next target is gem and jewellery which is low cost capital but highly labour oriented industry of approximately US $ 40 billion. China is equally exploring organic and inorganic chemicals which had a world trade of US $ 574 billion last year.

Destination wise analysis will show that in the USA's import of top 100 items, China figures among top exporters in respect of 61 items while India appears in only 15 items. Similar is the position in regard to the European Union. In the top 100 items of import by Japan, China appears at 76 items. China has foreign reserves of more than US $ 250 billion but the share of FDI's in it is a question mark.

Should India be afraid of China or should prepare for competing with China in international trade. This writer is of the opinion that where we cannot compete we should co-operate with China and bring some success to our industry by importing semi finished products both for domestic and international trade. India should learn lesson from the next door neighbour and modify its economic policies, including the Exim policy with the sole motive of converting human factor from liability to an asset.

Question

Multiple choice

In 1998, China’s share in World trade, compared to that of India, was higher by approx

Directions: Read the following passage carefully to answer the given question.

In 1971, China contributed US $ 2.78 billion to world trade (exports), which was 0.82 percent of world trade. Since then, its contribution to world trade consistently increased: US $ 183.59 billion (3.37 percent) in 1998; and US $ 250 billion (over 4 percent) in 2001. India's contribution in 1971 was US $ 2.04 billion (0.60 percent of world trade) and US $ 33.44 billion in 1998. In 2001, we achieved exports of US $ 44.5 billion (0.70 percent of world trade). The export figures between India and China showed a big difference in 2001 though it was marginal in 1971.

The key factors influencing world trade are: External trade and foreign investment; relocation of global manufacturing basis; and rapid technological developments. External trade & foreign investment: Capital flows in the form of foreign direct investment (FDI's) and foreign invested enterprises (FIE's). Cross border acquisitions and mergers constituted a major percentage of FDI flows. FDI flow to developing countries increased by six fold from 1990 to 1998. During 1995-98, FDI flow increased to US $ 1886 billion. Of this, China alone attracted US $ 164 billion while India's share was only US $ 11 billion. The impact of FDI to a host country's economy is widely recognised. The foreign-funded firms contributed to nearly 45 per cent of China's export during 1999.

Relocation of global manufacturing basis: Large-scale shift in global manufacturing basis to Asian countries has occurred through the 1990's, with factor costs, especially wages increased in developed countries. The other factor which determined the choice of shifting was the labour laws and work related rules and regulations. China which was associated with rigid labour laws and other economy related rules and regulations came out with a concept of special export zones which are a foreign enclave in the country where no labour laws and other economy related rules are made applicable. In fact, China soon realised that it may not be possible to change labour laws and other economy related rules in the country so soon. However, having realised their importance for attracting FDI and to the growth of their economy, it accepted the idea of creating these foreign enclaves such as Shenzen and attracted foreign capital and technology. That is the reason why approximately 45 per cent of China's exports come from such zones.

Rapid technological developments: Rapid technological developments have led to a steep decline in transportation and telecommunication costs. These in turn have vastly reduced the impact of physical distance for global commerce. Though China had a distinct disadvantage of the lack of knowledge of English, it has come out with Chinese as computer compatible language. It has declared that Chinese will be the world's no.1 computer language soon. The flow of FDI capital has also brought with it the technology from the West including the USA. The cultural ties with Taiwan have helped China to a great extent in achieving access to technology and export.

China has achieved the number one position in world trade in regard to toys and stuffed toys. China captured, in 1999, business to the tune of US $ 52 billion out of global US $ 300 billion in textile and clothing. China achieved more than US $ 20 billion in world trade of US $ 850 billion in electronics and computers in 1999-2000. China's next target is gem and jewellery which is low cost capital but highly labour oriented industry of approximately US $ 40 billion. China is equally exploring organic and inorganic chemicals which had a world trade of US $ 574 billion last year.

Destination wise analysis will show that in the USA's import of top 100 items, China figures among top exporters in respect of 61 items while India appears in only 15 items. Similar is the position in regard to the European Union. In the top 100 items of import by Japan, China appears at 76 items. China has foreign reserves of more than US $ 250 billion but the share of FDI's in it is a question mark.

Should India be afraid of China or should prepare for competing with China in international trade. This writer is of the opinion that where we cannot compete we should co-operate with China and bring some success to our industry by importing semi finished products both for domestic and international trade. India should learn lesson from the next door neighbour and modify its economic policies, including the Exim policy with the sole motive of converting human factor from liability to an asset.

450%
44.9%
82%
817.8%
337%

Reveal answer Fill a bubble to check yourself

Answer 1

A Correct answer

Keep practicing — related questions