India’s reliance on trade with China continues to be on the rise – irrespective of the political and diplomatic stand-off between the two nations. Even though Prime Minister, Narendra Modi, did shake hands with China’s President, Xi Jingping, in Bali during the G20 Summit, India is trying its best to shake off its dependence on China.
“India and China’s trade has increased by 14. 6 per cent during the first nine months of the ongoing year to reach $103.6 billion,” reiterated China’s foreign ministry spokesperson, Zhao Lijan. The spokesperson also said that China’s trade with South Asian countries nearly doubled from what it was a decade ago. One of the largest contributors to this increase was India. “India has been trying to boost domestic manufacturing and is also trying to buy from other markets, but economies of scale and cost effectiveness give China an edge,” say sources.
India’s currently has a Free Trade Agreement (FTA) with the United Arab Emirates (UAE); has finalised one with Australia and one in the pipeline with the United Kingdom (UK) that will lead to a reduction in trade dependence on China, but it will take a few years before the results begin to show. There is also a trade imbalance as while imports from nations increased, but exports from India have gone down. Last year China’s exports increased by over 30 per cent whilst India’s exports declined by over 35 per cent. India exports raw materials to China but imports primarily finished goods.
Electronic goods and rare earth materials are imported on a large scale from China. The border issue at LAC is one of the biggest reasons for political stand off between India and China with situation getting critical in 2020 when the Galwan clashes took place in which 20 Indian soldiers were killed. India subsequently banned over 200 Chinese apps and also stalled investments. Meanwhile, China says that its economy has benefitted from its friendly neighbours and development partners.
“China’s trade with South Asian countries nearly doubled compared to a decade ago and totalled $187.5 billion in 2021, up by over $50 billion than the pre-COVID number in 2019. In particular, trade between China and India in the first nine months this year reached $103.6 billion, up 14.6 percent year-on-year,” says China’s foreign ministry spokesperson adding that the China-Pakistan Economic Corridor, the Port City Colombo project and the Hambantota Port in Sri Lanka and other connectivity cooperation projects are all making steady progress.
Dependence on Dragon?
India and China’s trade in first nine months of this year reached $103b
In 2021, China’s exports increased by over 30% while India’s exports declined by over 35%
India exports raw materials to China but imports primarily finished goods
