Connecting Regions of Asia.

‘Turning Point ‘ In Sino-Indian Trade ?


Given a likely 20 percent drop in India’s imports from China in 2020, the trade between China and India may have reached a turning point, according to a report published on Nikkei’s Chinese website on Wednesday.
Data from China’s General Administration of Customs (GAC) showed that China’s exports to India totaled at $59.05 billion in the first 11 months of 2020, a fall of 13 percent compared with the same period of the previous year. Even though India’s exports to China increased 16 percent from January to November, the overall trade volume between the two countries was down 7.4 percent year-on-year. 
The GAC is due to release the country’s full-year trade data on Thursday, but the overall picture for bilateral trade in 2020 is unlikely to see much change.
Yet, it is still too early to jump to conclusions about a turning point in China-India trade. While an important caveat explaining decreased Indian imports from China is the border friction that has seen the Modi government trying its best to curb sales of Chinese products in Indian market, another important factor is the COVID-19 pandemic. 
The fast spread of the coronavirus has hit the Indian economy hard, inhibiting the demand of domestic manufacturers for Chinese parts and the consumption need for Chinese goods.
Still, the resilience of China-India economic and trade relationship should not be completely dismissed. It is true that the Modi government has pushed for a self-reliance strategy to support domestic industrial development, but that doesn’t necessarily mean decoupling from Chinese supplies that are integrated into the local market. 
Without the supplies of Chinese equipment and appliances, the living cost for Indian households will inevitably rise, while less import of industrial intermediate goods from China may affect local manufacturing, to the detriment of India’s industrial growth. 
If the Modi government continues its push to oust Chinese products and Chinese apps, it would do no good for any party – not the Chinese exporters, nor the Indian economy.
It remains to be seen whether the trend of declining imports from China to India will continue, given lingering uncertainties of bilateral relations. After all, the China-India relationship is at a crossroads, with no sign of major improvement in the near term. 
But that doesn’t represent a turning point in China-India trade relations from a long term perspective, and there is still a lot of potential for bilateral trade. For instance, the Indian government has always been annoyed with its trade deficit with China, which is mainly due to the economic structural differences between the two economies. And China has been trying to expand imports from India to reduce the deficit and ease trade frictions.
The possibility for China-India trade to return to an upward trajectory still exists, but realizing it requires efforts from both sides.

Courtesy – Global Times

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