China-India trade can be bridge against protectionism

By Swaran Singh Source:Global Times Published: 2018/3/20 23:38:39

Illustration: Luo Xuan/GT


A long military standoff at Doklam between June and August and other continuing irritations were seen as defining the nature of China-India relations during 2017. However, Chinese customs figures reveal how positive countercurrents had been wafting all along without being noticed.

Now, as various high-level bilateral visits seek to transform the tone and tenor of their interactions, the trade figures for 2017 promise to once again make bilateral trade the main engine for strengthening the economic partnership. This may also facilitate China's promised investments into Prime Minister Narendra Modi's "Make in India" vision.

China-India bilateral trade in 2017 rose an impressive 18.63 percent year-on-year to $84.44 billion. For the whole of the last decade, their trade had been stagnating at about $70-75 billion, in spite of their official target to reach $100 billion by 2015.

The last decade also saw a constant decline in India's exports, making the bilateral trade one-sided with a whopping trade deficit emerging as a most formidable and unresolvable knot triggering anxieties in India. This is what makes an impressive 40 percent increase in India's exports to China last year a shot in the arm for those propagating and trusting in the Chindia formulation.

It is equally important to elucidate some interesting variance in figures related to China and India. While Chinese customs data show the trade deficit increasing by 8.55 percent to reach $51.75 billion, India's figure for the fiscal year 2016-17, which ended on March 31, 2017 was $51 billion, which shows a decline. This variance in their official figures flows from China treating the calendar year as the financial year while India treats April-March as the financial year. What is important is that this alludes to a possible decline in their trade deficit during the second half of last year.

Perhaps the huge success of Bollywood film Dangal in China last year aptly symbolizes this positive side of the Chindia story. As for factual analysis, these show India's zinc exports marking the highest increase of 802 percent reaching $240 million followed by copper exports registering growth of 116 percent, reaching $2.15 billion and taking India's total exports to $16.34 billion. This makes China the 24th-largest destination for India's exports while India is the seventh-largest export destination for China.

It all begun in the early 1990s when bilateral trade was the strongest and most agreeable pillar of China-India rapprochement, and the curve shows a sharp increase from the late 1990s. Its significance as the catalyst in building mutual trust lies far beyond the statistics. This is especially true of their border trade that began in the early 1990s and has been such a great relief to their people in remote border regions, whose mutual transactions had been disrupted by border disputes and the war of 1962.

Today, in the face of the unprecedented economic rise of China and also India, their economic engagement has given birth to the term "Chindia" with deep global implications. This also lies at the "core" of Chinese Foreign Minister Wang Yi's new formulation of "one-plus-one" of China and India becoming "equal to 11" and trade figures for 2017 make this all the more convincing.

Chinese exports continue to be highly competitive and electrical machinery and equipment make up nearly one-third of China's total exports to India. Given that India's nuclear power generation contracts with France and the US continue to be in jeopardy, an assured supply of Chinese electrical machinery and equipment become critical for giving shape to India's ambitious power generation projections. So, resolving the trade deficit may have begun but it still has its challenges.

In view of their ever-expanding global role and responsibilities, however, both have to build a better understanding of each other's strengths and limitations. This is a must if China and India have to withstand onslaughts of Brexit rattling the EU and US President Donald Trump's "America First" creating anxieties among US friends and allies.

This can facilitate their coming together to address US protectionist policies and avoid undercutting each other in harnessing global opportunities by coordinating their role in taking major initiatives.

The author is professor of the School of International Studies at Jawaharlal Nehru University in New Delhi.


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