China becomes India’s top Trade Partner

China has again become India’s top trading partner in the year 2020. The reason was that India was still dependent on the import of heavy machines, telecom equipment and home appliances from China.

Highlights

  • The provisional data from the trade between both the countries in the year 2020 stood at $77.7 billion.
  • However, the trade had decreased as compared to the 2019 trade total of $85.5 billion.
  • The imports of heavy machines etc outweighed India’s efforts to cut down its dependence on trade.
  • As a result of which, the bilateral trade gap of India with China was $40 billion in the year 2020.
  • Total imports from China stood at $58.7 billion which was more that India’s combined imports from U.S. and U.A.E.
  • The data further highlights that, India was able to lower the imports from its Asian neighbors despite there were demand disruptions amid the coronavirus pandemic.

Background

Prime Minister Narendra Modi had banned several Chinese apps and slowed the approvals on investments from China in a bid to make India self-reliant following a deadly clash with China at the Galwan Valley in the disputed Himalayan border.

India-China Relation

The relationship between both the countries has varied over time. Both the countries have sought economic cooperation with each other despite having several conflicts like border disputes and economic nationalism. The modern relationship between India and China began in 1950 when India ended the formal ties with Republic of China (Taiwan). It then recognized People’s Republic of China as legitimate government in the mainland China. Both the countries are two major regional powers in the Asia region.  They are also the fastest growing major economies. The growth in diplomatic and economic arena  has further increased the importance of the bilateral relationship between both the countries.

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