India-China Trade Reaches All-Time High
The trade between India and China reached an all-time high of USD 135.98 billion in 2022, even as New Delhi’s trade deficit with Beijing crossed the USD 100 billion mark for the first time, according to data released by the Chinese customs. This marks a significant increase from the USD 125 billion recorded in 2021. Despite border tensions following the military standoff in eastern Ladakh in May 2020, the trade between the two countries continues to boom.
The trade deficit for India stood at USD 101.02 billion, crossing the 2021 figure of USD 69.38 billion. This is the first time the trade deficit, a serious concern constantly expressed by India, has crossed the USD 100 billion mark. In 2021, the overall trade with China totalled USD 125.62 billion, an increase of 43.32 per cent year on year crossing the USD 100 billion mark for the first time. The trade deficit in 2021 stood at USD 69.56 billion as India’s imports from China witnessed an increase of 46.14 per cent to reach USD 97.59 billion. India’s exports to China increased by 34.28 per cent year on year to reach USD 28.03 billion in 2021.
According to an official brief on trade posted on the Indian Embassy website in Beijing, the rapid expansion of India-China bilateral trade since the beginning of this century has propelled China to emerge as India’s largest goods trading partner by 2008. Since the beginning of the last decade, bilateral trade between the two countries has recorded exponential growth. From 2015 to 2021, India-China bilateral trade grew by 75.30 per cent, an average yearly growth of 12.55 per cent.
Officials say that while trade with China thrived on the availability of cheap Chinese goods to India, it has continuously resulted in the spiralling trade deficit India had with any other country. “Our trade deficit concerns are two-pronged. One is the actual size of the deficit. Two is the fact that the imbalance has continuously been widening year after year,” the Embassy brief said. “The growth of trade deficit with China could be attributed to two factors: narrow basket of commodities, mostly primary, that we export to China and second, market access impediments for most of our agricultural products and the sectors where we are competitive in, such as pharmaceuticals, IT/ITES,” it said. Despite placating statements to address India’s concerns, China has not taken any major steps to open up pharma and IT sectors to Indian exports despite widespread demand.
Exports and Imports
On the decline of Indian exports to China, the Indian Embassy brief said “our predominant exports have consisted of iron ore, cotton, copper, aluminium and diamonds/ natural gems”. “Over time, these raw material-based commodities have been overshadowed by Chinese exports of machinery, power-related equipment, telecom equipment, organic chemicals and fertilisers.
Despite frosty bilateral relations and border tensions, the trade between India and China continues to thrive, reaching an all-time high of USD 135.98 billion in 2022. However, India’s trade deficit with China has also reached a new high, crossing the USD 100 billion mark for the first time. India has expressed concerns about the trade deficit and market access impediments for its agricultural products and sectors where it is competitive, such as pharmaceuticals and IT. Despite these concerns, the growth of bilateral trade between the two countries continues to be exponential.
Category: Economy & Banking Current Affairs - 2023