Where China-India economic partnership will go if the economies in the America, Europe and Japan tank– effects on outsourcing
Sunit Aggarwal
Apr. 11, 2005

India and China are on the “IT High” with a hope that American dollar and European Euro will makes the Asian tigers richer and more prosperous.

But American, European and Japanese economies are ready to tank. Each of these zones have their own reason for the economic problems. Oil prices are a common problem – not the only problem. The rush to India and China was in a hope to fight hidden deflation in the Western world and Japan. There was also hope that India and China will buy from America and Europe.

As the economies in West and Japan gets depressed with explicit deflation and interesting commodity inflation from artificially increased money supply as well as temporary demand from China and India, the demand for IT will not only diminish but will actually disappear. America, for example is getting hurt at its core by outsourcing. Sooner or later things will reverse. The biggest question is ehat will happen then to China and India?

According experts, China and India in that circumstances will try to trade with each other and still keep going. But the fun of enjoying artificially price-increased American Dollars and Euros will be gone.

Chinese Premier Wen Jiabao said on Monday that China aimed to boost bilateral trade with India to $30 billion annually from the present $13 billion. “We have jointly adopted a five-year-plan for economic cooperation and trade and decided to start a joint feasibility study for a bilateral free trade agreement," Wen said at a business conference in New Delhi.

"We also decided on an objective that by 2008, two-way trade volume a year should increase from $13.6 billion to $20 billion or more and by 2010, make it $30 billion," he said.

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