Trading with China and India

There has been a rapid rise of goods and services exports from large emerging economies in recent years, in particular, Chinese manufactured goods and Indian business services. In 1980, goods trade between the OECD and India and China was relatively small, representing in total only 2% of total OECD trade.

These shares followed a relatively flat growth path until the early 1990s. Since then, trade with China has grown strongly, especially OECD goods imports. China’s share of total OECD goods imports grew from 2% in 1990 to 10% in 2005, with more than half of that growth occurring since 2001. Indeed, China is now one of the world’s leading exporters, largely but not only from foreign-owned firms, and with products of increasing sophistication.

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Goods trade with India has also risen since 1980, but at a much slower pace than with China. However, where India’s trade has grown markedly is in services, yet to a share of world services exports of still only 2.3% in 2005. This is slightly less than half of China’s share and much smaller than the 15% US export share. India’s share of services imports nearly equals its export share. Though the OECD share of world services trade fell from 78 to 75% between 1995 and 2005, OECD countries are still by far the largest exporters and importers of services.

©OECD Observer No. 264/265, December 2007-January 2008