The China / India Trade Balance Shifts

According to The Times of India, for the first 10 months of this year, China "has notched up a trade surplus of $3 billion against India as compared to a trade deficit of $946 million that it suffered in the same period in 2005." According to one source in the article, India is interested in exploiting cheaper labor in parts of China. Quoting a Beijing-based businessman, the article notes "Indian companies have been most aggressive in sourcing low-cost goods from China. Most of the businessmen visiting China are only looking for sourcing opportunities."

Given the massive boom that both the Chinese and Indian economies are seeing -- and the need for trade between both nations to fuel even further growth -- it will be fascinating to watch how the balance of trade between both global economic powers unfolds in 2007. Incidentally, on the technology development side, I've personally observed that skilled IT labor is materially less expensive in China than India, although English skills are typically lacking in engineering and technical resources in the country.

Jason Busch

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