The favourable trade balance that China has enjoyed with India, since bilateral commerce began to boom in the early 2000s, has cumulatively exceeded $1 trillion, according to estimates.
The trade gap has particularly widened in the past decade. In 2021, annual two-way trade crossed $100 billion for the first time, reaching $125.6 billion, with India’s imports accounting for $97.5 billion, pegging the imbalance at close to $70 billion.
Trade ties began to boom since the early 2000s driven largely by India’s imports of Chinese machinery and other equipment, up from $3 billion in the year 2000 to $42 billion in 2008, the year China became India’s largest trading partner.
“China’s trade with India is lopsided and in this period China had a favorable balance of trade that has crossed $1.2 trillion,” said Srikanth Kondapalli,who is Professor in Chinese Studies and Dean of the School of International Studies at Jawarharlal Nehru University. “That is, in pure statistics, Chinese businesses earned that much money [from India].”
While some economists say India’s trade imbalance with China should not be viewed in isolation – for instance, pharmaceuticals that India exports to the world require ingredients that are imported from China – Mr. Kondapalli said an imbalance over an extended period of time posed problems.
Moreover, Chinese commitments to India to import substantially more Indian goods, particularly pharmaceuticals, have not materialised, although Chinese imports of Indian seafood are one area that has recently shown robust growth.
“These surpluses are consistent, and not addressed over a period of time this leads to the problem of a current account deficit for India,” he said.
The imbalance in 2022 is set to surpass even last year’s record figure. In the six months ended June, India’s imports from China surged 34,5% to reach a record $57.51 billion, according to China’s trade figures released in July. India’s exports to China, however, shrank by 35% and accounted for only $9.57 billion of the $67.08 billion two-way trade.
China’s third-quarter trade data, which was due to be released this week but has been delayed because of the ongoing Communist Party Congress, is expected to reflect continued growth in Indian imports. India’s biggest imports last year were electrical and mechanical machinery, chemicals used in industrial production, active pharmaceutical ingredients and auto components. India also imported medical supplies during the pandemic.