In my last post, Fort Payne, Alabama Shows How to "Git ‘Er Done" When Challenged by Cheap Imports from Low-Cost, Overseas Labor, I covered a story regarding a U.S. town adapting well to the challenge that global trade and low-cost offshore labor poses to them. I saw this article and I thought it would make a great follow-up, and highlight what’s going on while the United States’ debates whether freer trade or more trade barriers is the key to maintaining the United States’ economic excellence. I say "excellence" in the place of "dominance" because, as this news flash shows, there are two other would-be superpowers that may soon share the limelight with us.
This news came to my attention by way of SpendMatters (Jason Busch, SpendMatters author, cited World Trade Magazine and India’s Economic Times). Anil Gupta, of India’s Economic Times, writes in his article, The Future of India-China Trade:
First, trade between the
two countries has grown very robustly. Each country’s aggregate
international trade is expanding by 23-24% annually. In comparison, India-China
trade grew at a 50% rate during 2002-2006 and will increase by a further 54%
during 2007 to reach $37
billion.
Second, after
adjusting for partner GDP (i.e., bilateral trade divided by the trading
partner’s GDP), India’s trade with China is greater than that with
Japan, the US, or the entire world. After similar adjustments, China’s
trade with India is only slightly below that with Japan, the US, or the entire
world.
Third, China already is
(or will shortly become) India’s number one trading partner. From
China’s side, India already is one of its top ten trading partners. Also,
China’s trade with India is growing much faster than with any of the other
nine. Thus, India is rapidly becoming an increasingly important trading partner
for China.
Fourth,
India’s overall international trade is significantly below that of
China’s, in terms of both absolute figures (for 2006, $306 billion vs
$1,760 billion) as well as relative to GDP (34% of GDP vs. 65% of
GDP).
Fifth, even if the growth
rate in India-China trade slows down to 25% annually (a conservative projection)
from the current rate of over 50%, bilateral trade between them will be almost
$75 billion in 2010 and $225 billion in 2015, i.e., as large as China-US trade
just three years ago. These are very large numbers. Political and business
leaders need to start getting ready now for this radically different
world.
There is still a lot left to unfold that could positively or negatively impact trade between these two countries. China and India are dancing around various trading partnership deals (India-China Free Trade Agreement, India granting China Market Economy Status) which could foster increased trade. In contrast, continued growth in trade depends upon these two countries not getting caught up in quibbles over trade issues and protectionist attitudes.
Currently, the United States, at large, seems to be debating clamping down on international trade (demonstrated by those with protectionist attitudes in Congress and certain presidential candidates) and those that promote increased trade between the U.S. and other countries (also demonstrated by certain members of Congress and the current administration). While we think about these issues, we may want to take note of the growth in trade and relationship-building taking place between the two most likely candidates for shared, superpower status in the next 50 years.
For my two cents, (which isn’t as valuable in the global currency markets as it was one year ago), perhaps more open attitudes towards trade and more towns adjusting like Fort Payne, Al (e.g. increased focus on innovation, education, and higher-skilled jobs), are our best bet at maintaining the lead we’ve worked so hard to gain over the last 50 years.