China and Our Economy- a Comparative Study

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Chinese goods right now make up less than 3% of India’s imports and if the figures are right they are growing at no more than 25% a year. So, why is everyone making such a hue and cry over the Chinese threat? Aren’t Indian industrialists merely trying to get more tariff protection by stoking xenophobia? Probably some are. But that should not divert attention from the main point: China has finally shown up on India’s economy radar screen and it needs to be watched. The figures my not yet reflect it, but anecdotal evidence points to the fact that China is weighing heavily on the minds of the manufacturing industry. Even if you discount all the praying and petitioning for protection there is enough indication that increasing number of businessmen are today looking at setting up operations in China. In other words they are putting their money where their mouth is: If you are in manufacturing, it makes far more sense to operate out of China than out of India. According to newspaper reports, Ajanta, the world largest clock maker is shifting it’s manufacturing base lock, stock and barrel from Gujarat’s Saurashtra region to Shenzhen in China. Many other Indian companies, from Bajaj Electricals to Blowplast are looking at options that range from setting up their own operations in China to starting joint ventures to outsourcing. What we have seen so far could be just the tip of a bigger trend: there are a lot more Indian companies centered on three fourth of China’s exports. Only one-fourth of its exports consist of goods made by Chinese owned companies and that store is shrinking according to the Wall Street Journal. In other words, China’s amazing export performance is due to its ability to sell itself as the perfect base for global manufacturing. This puts the issue in a larger context. This is the largest issue that should engage the attention of policy makers, more than the flood of imported goods from China. It is almost as if focusing on exports means letting down...
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