A Study On The Influencing Factors Of Sino - Indian Trade Friction

With the development of economic globalization, China’s foreign trade continues to maintain a rapid growth rate, and the trade surplus is rising. China has not the largest trade surplus in the world until the year 2015.At the same time, the flows of trade friction China facing makes great harm to China`s foreign trade. Now China and India both are large emerging economies, they will have bright prospects for cooperation, and China has become India`s largest trade partner. But with the deepening cooperation of bilateral trade, India uses trade remedy measures on China more and more frequently, and the amount of money involved in the trade friction is increasing, which causes heavy losses on China`s export trade. In addition, India is of strategic importance to China`s economy and political diplomacy, so we need to make a deep research on what kind of factor lead to frequent trade friction between China and India, and to find appropriate means to respond it,which can reduce the negative impact on bilateral trade.According to the research of India trade protectionism, many scholars put forward different viewpoints and research methods. Based on the existing literature and theory the status of trade friction between the China and India are analyzed in this dissertation, combined with the trade development of the two countries. The analysis shows that, in a very long time, the volume of trade between China and India has been continued to rise. China has kept surplus position in Sino-India trade most of the year. Categories of goods trade between China and India is mainly about labor-intensive goods. Trade between the two countries has been in an unbalanced state for a long time, and an apart of the goods China exports have been competing with the local products. According to the above analysis, the development of the two countries may explain the competition between products leads to the trade friction in a way. In other words, Competition between China’s commodity exports and Indian local products impacts the local industry development which caused India to implement trade protectionism measures. On the other hand, starting from the perspective of Sino-India trade friction course, we find that India`s trade remedy measures are mainly about anti-dumping, products involved are mainly concentrated in the chemical industry and mechanical and electrical industry. These two categories products just have higher competition coefficient, which leads to these two industries have been hit hard in the trade friction.In the empirical test, according to the measured data, we use negative binomial regression model to make a test. The result shows that India’s inflation rate, unemployment rate, party`s elections and China’s accession to WTO are not only significantly variables, but they are also consistent with expectations. It shows that India’s inflation rate, the unemployment rate will have a significant positive effect on the trade friction. China becomes a WTO member and India political election also play a role in the trade friction. Due to an amount of the data is difficult to quantify, this dissertation also analyzes the non empirical factors include economic and political ones.At last, some constructive suggestions about government, industries and enterprises are made in this dissertation. Government should communicate with India to enhance the political trust and make India grant market status to China, set up trade friction warning system and technical standard system for export products. Industry sectors should promote industrial upgrading, implement the strategy of diversification of exports, standardize the order of export industry to avoid vicious competition and provide effective legal advisory services for enterprises. Enterprises should increase outward direct investment to reduce the frequency of foreign trade friction, establish a good brand image of China to improve the competitiveness of the products, change the export products competitive strategy to realize the diversification of competition. Enterprises should also know about the regulations of India`s trade remedy and keep a positive attitude in dealing with trade friction.