whether china-asean, india- asean trade is up to the potential? · 2017. 5. 11. · • china has...

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Whether China-ASEAN, India-ASEAN trade is up to the

potential?Devesh Roy, Manmeet Ajmani and

Renjini

Motivation

• Two large emerging economies China and India• Spate of regional agreements • Spaghetti Bowl• Emerging economies ASEAN• Question• Has India-ASEAN, China-ASEAN trade been up to the potential?• Potential is derived from a model

3

Timeline of FTA: A comparison

2001

2007

2009

2010

2004

Framework Agreement

Trade inGoods Agreement

Trade inServices Agreement

Trade in investment Agreement

ASEAN-China Free Trade

Area

Framework Agreement

Trade inGoods

Agreement

Trade inServices &

Investment Agreement

ASEAN-India Free Trade

Area

2014

2002

2009

2019

China

Rules of originSensitive products

India

Sensitive products of ChinaCoffee, Pepper, Rice, Soya oil, tobacco, petroleum oil, organic chemicals, machineries

Sensitive products of IndiaCoffee, Tea, Pepper, Natural rubber, palm oil

0.00

50.00

100.00

150.00

200.00

250.00

300.00

Billi

on U

S$

China Export ASEAN China Import from ASEANIndia Export to ASEAN India Import from ASEAN

Export composition of China to ASEAN

38%

11%10%9%

8%

8%5%

4% 2%2%

1%

1%1%

1995-2003 machinerytextilesagriculturemetalschemicalsmineralstransportationmiscelleaniousstonesplastics/rubbersfootwearwood productsraw hides

37%

12%12%

7%

6%

6%5%

5% 3% 3%

2% 1%

1%

2004-2015 machinerytextilesmetalsmiscelleanioustransportationchemicalsagriculturemineralsplastics/rubbersstonesfootwear

Import composition of China from ASEAN

Export composition of India to ASEAN

28%

20%12%

10%

8%

8%5% 4%

2%

1% 1%

1% 0%

2009-2015 minerals

agriculture

transportationchemicals

machinery

metals

stones

28%

16%13%

12%

8%

7%6%

5%

3%

1%1%

0% 0%

2002-2008 minerals

agriculture

metals

chemicals

stones

machinery

transportation

Import composition of India from ASEAN

Research objectivesquestions

• Level of trading up to the potential?

• Since trade potential comes from the model – specification issue to address

• Policy implications of normal trading, under trading and over trading

Preliminary findings based on gravity modelevidence

• Both India and China seems overtrading with ASEAN

• China has much greater trade over the potential based on fundamentals

• In India’s case it is moderate above potential and is more pronounced in case of imports

Indices of competition

• Two indices of competition• Count based index• Value based index

10

00.10.20.30.40.50.60.7

Japan Korea India UnitedStates

Australia

CBI,V

BI In

dex

Agri products

cbi

0

0.5

1

CBI,

VBI i

ndex

Non-Agri products

cbi vbi

Competition of major exporters with China in ASEAN market

Competition of major exporters with India in ASEAN market

Chart1

JapanJapan

ChinaChina

KoreaKorea

United StatesUnited States

AustraliaAustralia

cbi

vbi

Agri products

0.5137935

0.04

0.4491141

0.04

0.4406829

0.04

0.4263964

0.04

0.4179474

0.04

CHINA

Agri productsNon Agri products

yearreporteriso3t_p_descreporternamedeflatedexportvbicbicbivbi

2015AUSagri productsAustralia56727340.130.4853126Japan0.64421950.18cbivbi

2015AUSnon-agri productsAustralia1.08E+070.310.896617Korea0.56351050.17Japan0.8966170.31

2015INDagri productsIndia59307160.140.5488167India0.54881670.14Australia0.8966170.31

2015INDnon-agri productsIndia1.71E+070.330.8942022United States0.49826470.12India0.89420220.33

2015JPNagri productsJapan788883.50.180.6442195Australia0.48531260.13United States0.86982180.3

2015JPNnon-agri productsJapan7.85E+070.330.8997777Korea0.56351050.17

2015KORagri productsKorea, Rep.10752790.170.5635105

2015KORnon-agri productsKorea, Rep.6.67E+070.330.9079

2015USAagri productsUnited States82239100.120.4982647

2015USAnon-agri productsUnited States4.13E+070.30.8698218

CHINA

cbi

vbi

CBI,VBI Index

Agri products

INDIA

cbi

vbi

CBI, VBI index

Non-Agri products

yearreporteriso3t_p_descreporternamedeflatedexportvbicbiAgri productsNon Agri products

2015AUSagri productsAustralia56727340.040.4179474

2015AUSnon-agri productsAustralia1.08E+070.020.6430708cbivbicbivbi

2015CHNagri productsChina1.29E+070.040.4491141Japan0.51379350.04Japan0.64307080.02

2015CHNnon-agri productsChina2.40E+080.020.4719103China0.44911410.04United States0.58254060.02

2015JPNagri productsJapan788883.50.040.5137935Korea0.44068290.04China0.57360050.02

2015JPNnon-agri productsJapan7.85E+070.020.5736005United States0.42639640.04Australia0.47191030.02

2015KORagri productsKorea, Rep.10752790.040.4406829Australia0.41794740.04Korea0.44068290.04




cbi

vbi

CBI,VBI index

Agri products

cbi

vbi

CBI,VBI index

Non- Agri products

Chart1

JapanJapan


ChinaChina

AustraliaAustralia

KoreaKorea

cbi

vbi

Non- Agri products

0.6430708

0.02

0.5825406

0.02

0.5736005

0.02

0.4719103

0.02

0.4406829

0.04

CHINA













CHINA

cbi

vbi

CBI,VBI Index

Agri products

INDIA

cbi

vbi

CBI, VBI index

Non-Agri products












cbi

vbi

CBI,VBI index

Agri products

cbi

vbi

CBI,VBI index

Non- Agri products

Countries competing across products

• Countries competing in different products

• Top panel countries competing with China

• Bottom panel countries competing with India

12

00.10.20.30.40.50.60.7

Japan Korea India UnitedStates

Australia

CBI,V

BI In

dex

Agri products

cbi

0

0.5

1

CBI,

VBI i

ndex

Non-Agri products

cbi vbi

Competition of major exporters with China in ASEAN market

Competition of major exporters with India in ASEAN market

Chart1

JapanJapan

ChinaChina

KoreaKorea


AustraliaAustralia

cbi

vbi

Agri products

0.5137935

0.04

0.4491141

0.04

0.4406829

0.04

0.4263964

0.04

0.4179474

0.04

CHINA













CHINA

cbi

vbi

CBI,VBI Index

Agri products

INDIA

cbi

vbi

CBI, VBI index

Non-Agri products












cbi

vbi

CBI,VBI index

Agri products

cbi

vbi

CBI,VBI index

Non- Agri products

Chart1

JapanJapan


ChinaChina

AustraliaAustralia

KoreaKorea

cbi

vbi

Non- Agri products

0.6430708

0.02

0.5825406

0.02

0.5736005

0.02

0.4719103

0.02

0.4406829

0.04

CHINA













CHINA

cbi

vbi

CBI,VBI Index

Agri products

INDIA

cbi

vbi

CBI, VBI index

Non-Agri products












cbi

vbi

CBI,VBI index

Agri products

cbi

vbi

CBI,VBI index

Non- Agri products

2304 Oil-cake and other solid residues, of soya-bean

2710 Petroleum oils, etc, (excl. crude); preparation202 Meat of bovine animals, frozen

8503 Parts suitable for use solely or principally wi

7103 Precious,semi-precious stones (other than diamond)

7102 Diamonds worked/not worked but not mounted or s

3004 Medicaments of mixed or unmixed products, for r

306 Crustaceans,fresh,chilled or frozen; flours,pel

1202 Ground-nuts, not roasted or otherwise cooked

5201 Cotton, not carded or combed

0

0.2

0.4

0.6

0.8

1

1.2

2304 2710 202 8503 7103 7102 3004 306 1202 5201

% CBI

VBI

Competition of China with India in ASEAN for top exporting commodities

Competition of China with India

In Indonesian market In Malaysian market

In Thailand market In Vietnam market

In Malaysian market

Competition of China with India in ASEAN market

In Indonesian market

In Thailand marketIn Vietnam market

Summary• China has moved fast in trade with ASEAN• India has been a bit of late starter• India trade slightly above potential• But potential itself is probably stunted• China towards manufacturing and high end machinery• India relegated to primary products- negotiations far more difficult then• Index of competititon has been going up even in primary products• Some overlap India China as well

IFPRI

Devesh RoyNASC complex

CG BlockNew Delhi

110012

www.feedthefuture.gov

Slide Number 1MotivationTimeline of FTA: A comparisonSlide Number 4Slide Number 5Slide Number 6Research objectivesPreliminary findings based on gravity modelIndices of competitionSlide Number 10Countries competing across productsSlide Number 12Slide Number 13Slide Number 14Slide Number 15SummaryIFPRISlide Number 18

whether china-asean, india- asean trade is up to the potential? · 2017. 5. 11. · • china has...

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