Why China becomes India’s largest trading partner by 2020 despite geopolitical tensions between India and China?

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China has again regained its position as India’s biggest trading partner in 2020. Despite of bitter relation both the countries have among each other, the statistics clearly led to this news. According to the provisional data provided by the India’s Ministry of Commerce, the trade between both the countries was approximately of $77.7 billion in 2020. Although the figure is quite low from 2019 comparatively.

The position was taken from US. As per the information, China continued to be India’s biggest trading partner in the first half of the financial year 2020-21. US had maintained this position from 2018-2019 but due to the pandemic restrictions, the trade was highly affected and that is when China replaced US. Whereas UAE remains at third position when it comes to the trading partnership with the country. But what is more compelling is how China managed to get here especially when whole India-China relation is on the rocks? The border confrontation between Indian and Chinese soldiers in June 2020, that killed number of Indian soldiers, led Indian administration to constraint trade with China. Centre banned hundreds of Chinese mobile applications including TikTok, UC browser to hit the country economically.

Photo: Prof. Prasenjit K. Yesambare

Prof. Prasenjit K. Yesambare is an economist and Senior faculty in Economics and Finance with a rich experience of more than 19 years in this field. In total 9 Macroeconomic Research Publications, his articles have bene published including Would the Indian economy experience a true rebound post the populist euphoria of Budget 2018?, A saga of falling Rupee and its lasting impact on the Indian Economy, a research paper titled Agriculture Finance Solutions: an integral part of Banking Services among several others. He interacted with Eat News about the China regaining its position and where India-China relation stands today when it comes to trading. He said, ”This development was quite expected and was on the cards. In fact, if we were look at the data for the first nine months of FY21, the Chinese have piled a sizeable chunk of Trade Surplus with India of around $30.1 billion (April to December 2020 period).”

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Photo: ASphotostudio/Envato

He added, ”Therefore, with China being the largest exporter of goods to India and with the US becoming the largest importer for the said period – I personally feel, this Statistical input from India’s Ministry of Commerce stands vindicated beyond doubt.”

India and China stand in position where both the countries are dependent on each other. If India’s dependency on China is for heavy machinery, telecom equipment and other products then China receives organic chemicals and fertilizers in large number from India but this trade has been hit slightly due to the geopolitical tensions. There are trade organizations like the Confederation of All India Traders that have been campaigning to boycott Chinese goods which can impact imports from China in near future. Quoted by Business Today, ”The organization has set a target of reducing imports from China by as much as $13.3 billion by next December.”

India-US trade got affected due to the pandemic restrictions and meanwhile China got the position back. Prof. Prasenjit who is currently working as an Associate Professor and Pre-Grooming Head with the Swayam Siddhi Institute of Management and Research (SSCMR), Mumbai, see this as a win-win situation for both the Asian Economic Powerhouses on the Trade front in near future. ”This development comes under the backdrop of strained Sino-Indian relations owing to a series of unresolved Border issues, therefore should be embraced as a type of reconciliatory gesture. So, both the nations should assimilate a sense of realization – that for the benefit of the Global Economic Order in the Post Covid-19 times, creating a congenial atmosphere for healthy Trade ties is the ideal way ahead”, he said.

On asking, number of Chinese mobile applications got banned in India last year due to the border tensions between both the countries, and seems like it doesn’t affect much to the country’s economy, he said, ”Well economically, in terms of numbers it wouldn’t have a monumental impact on the Chinese economy. However, the ban on applications has definitely dented China’s Economic goodwill and morale in Global space, and it would, therefore, demonstrate extreme caution in the near future – when it comes to adhering to the Indian Protocol on Digital and Cyber Security Norms.”

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While commenting on India offered $1 billion in perks to entice computer makers from China, Prof. Prasenjit said, ”Yes. Somewhere, New Delhi might be thinking of restoring the broken Trade ties with the Chinese that have been chiefly strangulated time and again by simmering discontent at the border.”

According to Prof. Prasenjit K., there is an improvement among Sino-Indian Trade relations. He said, ”There is a marked improvement in the Sino-Indian Tarde relations in the post covid-19 times, with China becoming India’s largest Trading partner relegating the US to the second place. For instance, the Chinese imported goods worth around $15.3 from India while their exports to India were worth $45.4 leaving them with a healthy Surplus of $30.1 billion in the April-December 2020 period.”

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Shefali Ranawat is an Eat News correspondent in India. She want to be the voice of people. Also, she aim to be a war correspondent.


Eat News is a Taiwanese digital media, analyzes current events and issues through column articles, videos, visual aid, and exclusive interviews.

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