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China and India: A Tale of Two Trade Integration Approaches

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  • Przemyslaw Kowalski

Abstract

The comparison of the key features of trade integration processes and the economic outcomes in China and India reveals that while much has already been achieved in both these economies, the Chinese reforms, especially with respect to manufacturing trade, have gone further and that this is likely one of the key determinants of better economic performance of China. Still, China’s integration process so far remains characterized by a certain duality. On the one hand the opening up of trade and FDI in manufactured goods has spurred the emergence of a largely private sector. On the other hand the high level of public ownership and important regulatory barriers continue to dominate the services sectors. India has gone a long way in reducing its tariffs on non-agricultural products as well as selected non-tariff barriers but moderate protection still persists which likely adds to the hurdles faced by the Indian manufacturing sector. India has revealed a comparative advantage in certain segments of the services sector but its services trade policy is still very restrictive, even as compared to China. More generally the extent of liberalisation achieved so far in India and the outcomes it brought about suggest that the remaining goods and services trade barriers are just but one item on the list of reforms that India needs to tackle in order to promote trade-led expansion of more labour-intensive activities.

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  • Przemyslaw Kowalski, 2008. "China and India: A Tale of Two Trade Integration Approaches," Working Papers id:1637, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:1637
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    References listed on IDEAS

    as
    1. Michael Engman & Osamu Onodera & Enrico Pinali, 2007. "Export Processing Zones: Past and Future Role in Trade and Development," OECD Trade Policy Papers 53, OECD Publishing.
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    Cited by:

    1. Sunandan Ghosh & Manmohan Agarwal & Adrita Banerjee, 2019. "India–China Trade: Asymmetrical Developments and Future Prospects," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 20(1), pages 70-93, March.
    2. Biswajit Banerjee & Haiyan Shi & Jan Radovan & Yingying Sheng & Xin Li, 2017. "The Impact of the Exchange Rate and Trade Composition on China’s Trade Balance Vis-à-Vis Selected Partner Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 59(3), pages 311-344, September.
    3. Bagaria, Nidhi & Santra, Swarup & Kumar, Rajesh, 2014. "A study on variation in comparative advantage in trade between China and India," MPRA Paper 53287, University Library of Munich, Germany.

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    More about this item

    Keywords

    China; India; manufacturing; services; trade barriers; trade policy;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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