The Chinese economy has grown exponentially in the last four decades. It is still one of the fastest growing economies in the world. The economic growth of the country has been largely dependent on exports. It is the largest trading nation in the world with huge trade imbalances with countries across the globe. The trade war and the wave against globalization are threatening the economic prospects of China. Most of the western liberal democracies have seen pro-protectionist movements against free trade. The huge trade deficits with China and their currency manipulation seem no longer acceptable to people and governments around the world.
India has very large trade deficit with China. The government took many steps to increase exports and asked the Chinese government to lower the import tariffs on Indian exports. New Delhi pointed out that Beijing needed to make serious efforts to lower trade barriers for rice, meat, pharmaceuticals and IT products from India to make a difference to the trade imbalance. The Chinese government took some steps after the pressure from Modi government. The efforts are showing result as exports grew by 31 percent at 17 billion dollars while the imports 8 percent to 70 billion dollars. Therefore the trade deficit reduced to 53 billion dollars in the fiscal year 2019.
“Despite substantial volume of imports from China, of late, India’s import growth from China shrunk from 24 percent during April to January 2018 to (-) 5 percent during April-January 2019,” said the PHD Chamber of Commerce and Industry Secretary General Mahesh Reddy.
Despite the huge trade deficit that still exists, it is poised to ease out in coming years. Given the change in economic policies in India which have been trying to bridge this huge trade gap. China has been under pressure from around the world to adopt friendly policies for foreign imports to ease out the asymmetric trade balances.
In a statement at the WTO, India had cautioned the trade giant nation that the huge trade gap needed to be bridged with positive actions. In its statement during China’s trade policy review, India had pointed out that China needed to make efforts to ease Indian exports to the nation. Rice, meat, pharmaceuticals and IT products from India were the main subjects.
Over the past decades China has been expanding its footprint in India. However, with new policies in place and firm resolve by the government, India has been successful in soothing out the huge trade imbalance with China.
The Indian pharmaceutical sector can find a huge opportunity in China, with the expansion of the Chinese health program. Prime Minister Narendra Modi’s synergy with President Xi will surely aid this huge advance in the India-China trade which will further ease out the mammoth trade imbalance between the two Asian giants.
