Chapter 17 Flashcards
What is China’s population?
1.41bn
What is India’s population?
1.43bn
What is China’s GDP?
17.80 trillion USD
12600 usd per capita
What is India’s GDP?
3.57 trillion USD
2500 usd per capita
When did China’s reform happen?
1978 under Deng Xiaoping
China moved away from a communist system where gov controlled all aspects towards a mix
When did India’s reform happen?
1980 under Manmohan Singh
Reforms reduced trade barriers and removed layers of bureaucracy and regulation
What was China’s plan?
No plan
No one knew how to transition from socialism to capitalism
What was India’s plan?
Small farmers were given control and sell to local markets
What did the Chinese trade reforms create?
Foreign trading companies
Special economic zones
What did Indian reforms trigger?
Break-up of USSR
Success of other countries made India think they are falling behind
Financial crisis in 1991 due to heavy borrowing
What were the 3 stages of the reforms?
1st - targeted reduction of regulations and permits
2nd - targeted the privatization of enterprises
3rd - targeted international trade and investment
How did China reform?
Movement of people from countryside to city - agriculture to manufacturing
Investments in transport, power plant and infrastructure
How can we relate the gravity model to the trade India and China did?
Both countries traded most with large markets and those closer to reach
Which countries did China trade with?
Hong Kong, Japan, USA, Germany and Korea
Which countries did India trade with?
Same as China with UAE
How is protectionism in China and India?
Low tariffs except India’s agriculture - 45% of labor in agriculture
Limited access to machinery so policies tried to protect farmers from competition with high tariffs on agricultural goods imports
What does China and India use other than tariffs?
Non-tariff measures - anti-dumping duty
Both markets were open to goods expect India and agriculture
How does China have a high trade surplus?
Focuses on exports and desire to build large forex reserves after the Asian Crisis of 1997
What is India’s comparative advantage?
IT allows it to trade with the US and other high-income countries
What is China’s comparative advantage?
Low-cost goods production
