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PESTEL ANALYSIS Political Government type: Nominally Marxist–Leninist single-party state. The People's Republic of China is a single-party state governed by the Communist Party of China. •

tariffs are high, but on decreasing slope.

•

stable political environment

Economic  GDP:- usd$9.24trillion  GDP growth:- 9.5%  Per capita:- $3583.38  Unemployment Rate:- 4.1%  Inflation rate:- 1.5%

Socio-cultural

Age structure (Yrs) 

13.26

16.6

 

70.14



0-14

15-60 60+

  51.27 percent male & 48.73 percent female of the total population.  Literacy rate:- 92.8%  Religions: Buddhism(50%), Taoism (30%), and Chinese folk religions & others(Muslim 1.5-2%,Christian 3-4%)

Environmental  Over reliance on coal which produces acid rain.

 Water shortage  Climate vary from region to region  Natural disasters (floods, earthquakes) Clean energy, low carbon technology

Technological  Internet users:-500 million (2011)  Airports :- 482(2009)  Railway worlds third largest system  Roadway 3583,715km(2007) world second largest  China Telecom alone serves 55 million broadband subscribers  Tianhe-1A world’s fastest supercomputer  In 2011, China unveiled a prototype train  Technology is becoming cheaper  Telephone system is on world’s number one

Legal environment

In order to encourage foreign investment and protect the legal interests of foreign investors, China has established a legal system that is being strengthened by numerous domestic legislations as well as bilateral and multilateral agreements. With reform and opening to the outside world, China is increasingly taking part in many international trade pacts. To fulfill its obligations and commitment as a new member of WTO, China has enacted new laws and constantly revised existing ones to improve its legal environment for investment. At the same time, about 30 government departments have up-dated regulations contained in more than 2,300 documents. With its laws and policies on foreign investment being brought into conformity with requirements of the market economy and international rules, China is gradually creating a legal environment that is favourable to foreign commercial interests.

Evolution of china’s international trade policy

 Before 1978: Fully centralized, dominated by a dozen or so specialized foreign trade companies organized along products lines and based in Beijing  Since 1978: SOE and JV are allowed to deal with their own materials and products  July 1997: Sino-foreign JV are allowed to engaging in international business  Oct.1998: Stated owned research institutes and high-tech enterprises are allowed  July 2001: Private enterprise are allowed, based on application and rectification  2005: has removed all restrictions

Trading Partners of china

Rank

Country

Total trade

1

United States

521

2

Hong Kong

401

3

Japan

312.55

4

South Korea

274.24

5

Taiwan

197.28

6

Germany

161.56

7

Australia

136.37

8

Malaysia

106.07

9

Brazil

90.27

China’s Trade Performance

Actual Previous

Highest Lowest Dates

544.74 454.05 544.74 1983 319.71 2014

Unit - USD Million

Frequency Hundred Monthly

Since 1995 China has been recording consistent trade surpluses. From 2004 to 2009 China’s annual trade surplus has increased 10 times. Yet, as the global demand is slowing down and import of commodities for vast infrastructure projects and consumer goods is growing, there has been a significant decline in trade surplus. In the last few years, the biggest trade surpluses were recorded with the United States, Netherlands, United Kingdom, Vietnam and Singapore. The biggest trade deficits were recorded with Taiwan, South Korea, Australia, Germany, South Africa, Japan and Brazil. This page provides - China Balance of Trade actual values, historical data, forecast, chart, statistics, economic calendar and news. Content for - China Balance of Trade - was last refreshed on Wednesday, December 31, 2014. China’s Current Trade Performance:

• Trade Growth: Over the past decade, Chinese exports have boomed, increasing far faster than GDP growth. The detailed trade data reveal that key “new” technology goods, such as cell phones, LCD screens, and laptops played a critical role in trade growth. • Trade Liberalization: China is perhaps the best example of the positive connection between openness and economic growth. Reforms in China transformed it from a highly protected market to perhaps the most open emerging market economy by the time it came into the World Trade Organization at the end of 2001. • Accede to the WTO: • Trade Pattern • Increase of the inward FDI

Trade Relations  India considers China its largest trading partner • China & India export and import from each other in a huge quantity • India scores only in resource based exports & low technology based exports • China is no. 1 in low technology product, also scores well in medium & high technology

Factors favoring Chinese Exports • Low real wages & near absence of industrial disputes and lockouts in China. • Cross-subsidization of productive/corporate sector by Chinese households through Government controlled financial institutions • Deliberately undervalued exchange rate makes Chinese exports cheaper and imports costlier • Domestic availability of cheaper raw materials through use of export restricting measures like export quotas, export duties, export licensing & minimum export price requirements • Subsidy inherent in the availability of government-acquired land, cheap power and looser environmental standards

Made in China, Sold in India • China is ruling in many markets • India is the hub of diverse business opportunities

– Slowly yet steadily, Chinese products are dominating similar Indian products – Eg: Electronics, crackers, statues, apparels, etc – Eg: In 2010, flooding of the Indian markets with Chinese made statues - welcomed with open arms by the Indian consumers

BENEFITS OF CONDUCTING TRADE WITH CHINA: • Rapid economic growth • Enhances the domestic competitiveness • Increase sales and profits • Extend sales potential of the existing products • Reduce dependence on existing markets • Gains a global market share • Enhance potential for expansion of your business List of Imports by India from China • Mobile phones • Electrical Machinery (47%) • Organic Chemicals and Inorganic Chemicals • Iron And Steel, Iron/Steel Products • Rare Earth Metals • Fertilizers • Impregnated Text Fabrics

• Manmade Filament, Fabric • Silk; Silk Yarn, Fabric • Vehicles • Mineral Fuel, Oil • Aluminum etc

List of Import by China from India • Ores, Slag, Ash • Metals • Organic Chemicals Salt; Sulphur; Earth, Stone • Inorganic Chemicals; Rare Earth Metals • Cotton and Yarn, Fabric • Copper and Articles Thereof • Hides And Skins • Artificial Flowers, Feathers • Tanning, Dye, Paint, Putty • Precious Stones • Fish And Seafood • Plastic Conclusion: By traditional measures, China's economy is the tenth-largest in the world. Studies by the International Monetary Fund (IMF) and the World Bank that compare consumers' purchasing power find China's economy is the third largest, after Japan and the United States, but these figures may be inflated. Nevertheless, China's economy in the 1990s had official growth rates that led other nations. By the late 1990s when Asian countries experienced a sharp decline in

growth, China was still recording 7 to 8 percent growth annually, one of the fastest-growing economies in the world. IMF forecasts predict that China will overtake the United States and Europe to become the world's largest economy. At the end of the century, China was the secondlargest receiver of foreign capital in the world, surpassed only by the United States. China is in the top ten among suppliers of capital to world markets. The biggest investment targets for the Chinese are Canada and Australia for raw materials, and increasingly, Europe as well as the United States.

Potential of India China Border Trade The interaction between the two nations are to be seen in various levels like the political, military, academic, media, sports, culture, and economic. The Potential of India China Border Trade has been another benchmark in the bilateral relationship. China and India under their joint efforts will formally reopen the Nathula trade markets and the border trade pass under the great Potential of India China Border Trade. This is regarded as the most important yard stick for the Sino-India relationship as well as an important event of China-India Friendship Year.