Apart from Japan, there are two other economies surrounding China whose GDP exceeds $3 trillion, namely India and ASEAN.
In 2022, India's GDP reached $3.39 trillion, while ASEAN's GDP was $3.7 trillion, with India's GDP accounting for 92% of ASEAN's total GDP.
However, despite this, ASEAN is one of China's largest trading partners, while India does not rank among China's top five trading partners.
By 2023, the total trade between China and ASEAN reached 6.41 trillion RMB, equivalent to $909.6 billion.
In comparison, the total trade between China and India was only $136.22 billion, accounting for only about 15% of China-ASEAN trade.
Why is this so?
Firstly, the region bordering India and China is mainly China's Tibet Autonomous Region, which has a sparse population and is the province with the smallest GDP and population in China.
In 2023, Tibet Autonomous Region's GDP was 239.3 billion RMB, with a population of only 3.66 million, hence limited trade demand.
Moreover, the poor border transport severely constrains land trade between China and India.
In contrast, ASEAN countries mainly border China's Yunnan, Guizhou, and other regions.
Although these provinces rank relatively low in terms of GDP, their GDP is much larger than that of the Tibet Autonomous Region.
In 2023, Yunnan's GDP reached 3 trillion RMB, and Guizhou's GDP was 2.1 trillion RMB, totaling 5.1 trillion RMB, which is 21 times that of Tibet.
With a population of 46.9 million in Yunnan and 38.52 million in Guizhou, the total population is 85.42 million, 23 times that of Tibet.
Therefore, the scale and convenience of overland trade between China and ASEAN are obviously greater than that between China and India.
Secondly, there is a higher degree of economic complementarity between China and ASEAN countries.
China is the world's largest industrialized country with the highest industrial capacity, hence it requires markets as well as energy and raw materials.
The total area of the ten ASEAN countries is 4.5 million square kilometers with a population of 670 million.
Though the population is smaller, the larger area implies more potential for energy resources, and the smaller population means relatively lower internal consumption and more surplus.
Therefore, ASEAN is relatively easier to export energy and raw materials to China compared to India.
Despite the smaller population, the GDP per capita in ASEAN exceeds $5,500, more than twice that of India.
The per capita purchasing power is much higher than that of India.
For example, in 2022, ASEAN's car sales were 3.37 million, while India's were 4.72 million. ASEAN accounted for 71.4% of India's sales, but ASEAN's population is only 47% of India's.
Thirdly, India's industrial strength is relatively weak, and premature deindustrialization has occurred, with the share of manufacturing value-added in GDP much lower than in normally developing countries.
This has resulted in relatively weak export capabilities for Indian industrial products, directly affecting India's trade level.
In 2022, India's GDP reached $3.39 trillion, equivalent to China's in 2007.
However, in 2007, India's total trade was $1.17 trillion, while China's reached $2.17 trillion, $1 trillion higher than India's.
Lastly, India has always regarded China as a strategic adversary, thus setting many obstacles in trade with China.
Due to the huge gap in industrial levels between the two countries, the cooperation model should be that China occupies the mid-to-high end while Indian enterprises provide supporting services for China.
However, India is not willing to develop such a structure, limiting cooperation between the two countries.
Therefore, more industrial transfers and supporting industries have turned towards ASEAN from China, affecting not only the total trade between China and India but also India's overall trade volume.
Kommentare