Chinese Exports Help Boost Economy Over India

Fellows Spring 2012

By Christopher Werth

July 18, 2012


India has lost its ranking as the country with the most upbeat consumers. That's according to the global information company Nielsen, which says Indonesia now holds the top spot on the list.

It's more bad economic news for India, which has been hurt particularly hard by the European debt crisis. It wasn't long ago that many thought India's growth rates could surpass those of its long-time rival, China.

But as Christopher Werth reports, China retains the upper hand in that relationship, thanks in part to its exports.

Chinese goods are flooding into India. If you want an example just look at toys.

At this children's store in Mumbai, owner Karim Rajpurohid scans a row of teddy bears and plastic robots. He takes down a toy dog, a hot item among kids in India right now. But…

Karim Rajpurohid: "China. All product is made in China. China product is low quality..."

Low quality, and much less expensive than almost anything India makes. The Indian government is worried about the large and growing trade deficit with China and accuses it of dumping cheap goods onto the Indian market.

Arvind Subramanian is with the Peterson Institute in Washington. He says the same complaints U.S. politicians make about make about Chinese imports, can now be heard in India too.

Arvind Subramanian: "I'm told now what's really making Indians nervous is that saris -- silk saris -- are coming from China. Talk about displacing symbols of Indian culture."

And potentially displacing Indian jobs. That's the fear anyway with India adding about 12 million new people to its workforce every year.

Barry Bosworth is an expert on China and India at the Brookings Institution. He says India would like to sell more of its goods and services to China.

Barry Bosworth: "But India doesn't have much that China wants, to be blunt."

What China does want is raw materials. So India sends iron ore to China, and China hands back finished products -- like battery-operated dolls.

Michael Kugelman follows Asia at the Wilson Center. He says toys are just a tiny part of what China sends to India. It also sends essential items -- like ships and equipment for power plants -- all things India needs to keep its economy humming along.

Michael Kugelman: "These are pretty important in their own right for India's development and its growth, not to take away from the utility of toys."

Which is why, with India's economy slowing, he says the country should welcome the flood of Chinese goods.

Christopher Werth reported from India with a grant from the International Reporting Project in Washington DC.