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China and India:BRICS partners yet competitors BRIC is a term referring to the economies of Brazil, Russia, India and China. It originated from Jim O'Neill of Goldman Sachs who predicted that these four countries would be the fastest growing market economies in the twenty-first century and that by 2050 they would be amongst the wealthiest economic powers South Africa was added to the group in 2010 resulting in them being known as BRICS economies It should be stressed that the five BRICS economies are not a formal trading organisation like the European Union, although their leaders to meet annually to discuss global economic issues of common concern and relevance. of the five countries. China and India in particular compete with each other in world markets, India Is following China in ombarking on a policy of growth in its manufacturing industries, it is also a major exporter of agricultural goods to neighbouring countries in southeast Asia. Table 1.1 below shows that India has experienced the highest rate of consumer price inflation of at BRICS economies since 2008. It has also experienced a rapid deterioration of over 30% in its terms of wade. There are serious doubts over whether Indian products really can compete with those from China in world markets Table 1.1: Consumer Prices Index (CPH) for BRICS economies, 2012-15 (2008=100) Brazil 2012 1245 1300 147.7 1100 2014 1402 156.5 Russia 2013 131.8 145.2 163.8 1138 131.0 2015 1552 1803 1844 India China South Africa 174.1 116.1 130.0 117.7 145.4 SOBRICSS Patio Fig. 1.2 below shows how China's terms of trade have changed from 2012 to 2018, 120 1154 Terms of 110 trade 105 Index (2012100) 100 95 904 2012 mun 2013 2014 2015 2016 Fig. 1.2: China's terms of trade index, 2012-16 (Using Table 1.1, compare the rate of inflation for China and India between 2012 and 2015 12! 0 Explain two possible reasons why the CPI might not be an accurate measure of inflation in a BRICS economy such as India 14 (b) Explain one possible aggregate demand reason and one possible aggregate supply reason for the differing rates of inflation in the BRICS economies since 2012 141 (c) Using Fig 12. mcribe how China's terms of trade changed from the high point in 2015 to the end of 2010 121 O Expain one possible reason for this change. 21 (d) With the help of the information, discuss what is likely to be the most important factor that will determine how successfully India can compete with China when trading in world markets. 161
China and India: BRICS partners yet competitors BRIC is a term referring to the economies of Brazil, Russia, India and China. It originated from Jim O'Neill of Goldman Sachs who predicted that these four countries would be the fastest growing market economies in the twenty-first century and that by 2050 they would be amongst the wealthiest economic powers. South Africa was added to the group in 2010 resulting in them being known as BRICS economies. I should be stressed that the five BRICS economies are not a formal trading organisation like the European Union, although their leaders to meet annually to discuss global economic issues of common concern and relevance. of the five countries, China and India in particular compute with each other in world markets. India is following China in embarking on a policy of growth in its manufacturing Industries; it is also a major exporter of agricultural goods to neighbouring countries in southeast Asia. Table 1.1 below shows that India has experienced the highest rate of consumer price Inflation of al BRICS economies since 2008. It has also experienced a rapid deterioration of over 30% in its terms of trade. There are serious doubts over whether Indian products really can compete with those from China in world markets. Table 1.1: Consumer Prices Index (CPD for BRICS economies, 2012-15 (2008=100) Brazil Russia India China South Africa 2012 124.5 136,0 147.7 110.9 123.9 2013 131.8 145.2 1638 113.8 2014 140.2 156.5 174.1 116.1 2015 155.2 180.8 184.4 117.7 145.4 131.0 130.0 Source: BRICS Jove Statistical Publications Fig. 1.2 below shows how China's terms of trade have changed from 2012 to 2016 120 1151 Torms of 1101 trade 1051 Index (2012100) 100 95 904 2012 2013 2014 2015 2016 Fla. 1.2: China's terms of trade Index, 2012-16 ( Using Table 1.1, compare the rate of inflation for China and India between 2012 and 2015 121 CI Explain two possible reasons why the CPI might not be an accurate measure of inflation in a BRICS economy such as India 14 (b) Explain one possible aggregate demand reason and one possible aggregate supply reason for the differing rates of Inflation in the BRICS economies since 2012. 14 (c) Using Fig 12. describe how China's terms of trade changed from the high point in 2015 to the end of 2016. 121 (1) Explain one possible reason for this change. 121 (d) With the help of the information, discuss what is likely to be the most important factor that will determine how successfully India can compete with China when trading in world markets. [6]