PESTEL ANALYSIS

Political
Government type:
Nominally MarxistLeninist 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 0-14
15-60
70.14

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 worlds fastest supercomputer
In 2011, China unveiled a prototype train
Technology is becoming cheaper
Telephone system is on worlds 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 chinas 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

Chinas Trade Performance

Actual Previous Highest Lowest Dates Unit Frequency
544.74 454.05 544.74 - 1983 - USD Hundred Monthly
319.71 2014 Million

Since 1995 China has been recording consistent trade surpluses.

From 2004 to 2009 Chinas 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.
Chinas 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 second-
largest 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.