INDIA CHINA RELATIONS

India China Relations

India China Relations

relations between the US and China and the fluctuating political climate that impacts the relationship typically receive a fair amount of attention, especially each spring when the US legislature debates whether to extend Normal Trade Relations (NTR) status to China. This year was no exception, as China's eligibility was called into question due to its human rights record, huge trade imbalance, acquisition of safeguarded missile technology, and alleged illegal campaign contributions. Nonetheless, this Big Emerging Market continues to attract the attention of foreign investors and traders, if not for any other reason than sheer numbers--l.2 billion consumers, the largest national population in the world.

Gaining access into China's markets has its difficulties, however, as the current $60-billion trade gap between the US and China suggests. Furthermore, despite continued economic reforms, China remains a strictly controlled communist state with inherent barriers to foreign trade, investment, and competition. The lack of market-opening initiatives has contributed to China's inability to join the World Trade Organization for over a decade. Yet, US investment in China has grown each year since 1992 to over $14 billion, ranking the US as one of the largest foreign investors in China, behind Hong Kong and Taiwan.

To their credit, the Chinese government and private industries both recognize that they must make some concessions in order to participate in the global marketplace. Beijing-based China Securities announced in August that it would accelerate the reform of its accounting system to improve the quality of work and the transparency of accounting information in order to bring the system closer to international practices. At the same time, Moody's Investors Service reports that the outlook for China's sovereign credit ratings remains stable, largely due to significant foreign exchange holdings and the government's commitment to reform.

While economic growth has emanated from China's eastern region in recent years, a flourish of new activity is taking place in the country's central region, stretching from the financial center of Shanghai in the east to the vast municipality of Chongqing in the west. The region encompasses over 300,000 square kilometers with a population of 120 million. At the core of the region is the city of Wuhan, which has given rise to a variety of markets including Chinese medicine, farm produce, seeds, and telecom equipment, among others. Wuhan is also a research center for technological development in the central region. According to Chinas Ministry of Foreign Trade and Economic Cooperation (MOFTEC), over 1,800 research results were marketed in Wuhan in the past two years.

A major component of China's ninth Five-Year Plan (1996-2000) calls for upgrading telecommunications technology, including the digitalization of the country's public and private networks, using fiber optic cable and satellite systems, and expansion of mobile communications networks. Manufacturers and suppliers of central office switches, radio transmission apparatus and transceivers, satellite communications equipment, paging and cellular net works, network computer equipment, and CATV equipment are likely to find substantial sales potential in ...