China’s tariffs cut plan will help India narrow trade deficit

By Liu Xiaoxue Source:Global Times Published: 2019/12/23 22:13:40

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China's new import tariffs cut plan that starts from January 1 will definitely benefit India in narrowing its trade deficit with China. India should learn from China's resolve and endeavor to expand its opening-up despite necessary short-term pains.

India has been making efforts to boost exports to China, especially pharmaceuticals, food and agricultural products, and some of them are included in the 850 items on the tariff cut list released by the Customs Tariff Commission of the State Council announced on Monday.

In fact, the average tariff level China levied on Indian goods was already much lower than India's tariffs on Chinese goods even before this plan. It's understandable for India to protect its domestic industry, but it's equally imperative for the economy to understand its trade deficit stems from a deeper structural problem, and can only be resolved with further progress in opening-up.

More importantly, India should realize that its opening-up progress will inevitably come with certain short-term pains that will pay off eventually. A wait-and-see approach will only prolong the structural problem and its domestic industries will never be ready.

Even if India is not ready to join a free trade agreement like the Regional Comprehensive Economic Partnership (RCEP) for now, it should step up efforts to explore alternative approaches with China to promote bilateral trade.

China has already been taking measures to open its pharmaceuticals and agricultural products to India. India should accept China's relative strength in manufacturing, and even if China were to open the sector as India wants, the 50 billion yuan deficit will not be filled up.

When China joined the WTO, the country also faced some short-term challenges, which seemed to deal a heavy blow to some domestic industries at the time, but the challenges were all overcome later. It's time for India to learn from China's experience and take concrete steps to boost free trade.

The author is an associate research fellow at the National Institute of International Strategy of the Chinese Academy of Social Sciences.


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