Trade Competitiveness And Complementarity Between China And India

This paper analyzes the competitiveness and complementarity of the trade between China and India. We collect the data from UN COMTRADE on both China's and India's international trade, including export and import, during a ten-year period from 2000 to 2009. For the measurement of competitiveness and complementarity, we conduct empirical studies employing the methods of Revealed Comparative Advantage and Trade Complementarity Index on commodity sectors and categories classified according to Standard International Trade Classification, Revision 3. We compare the resulting statistics and find out both competitiveness and complementarity exist in the trade between China and India. After more detailed analyses, we conclude that the complementarity is much greater than the competitiveness. We also provide suggestions for future policy makings. These suggestions contain the macroeconomic aspects such as the reform of industrial structure and establishment of free trade zone as well as the microeconomic aspects such as the increase of enterprises'direct investments in India and boost products' competitiveness through transforming them from labor-intense and resource-intense ones into capital-intense one. Both governments should take efforts on improve the international trade conditions between China and India; therefore could benefits from further trade growth.