China-India trade: How much power does India have to control trade with China

Economic Advisor to the Prime Minister of India. Asima Goyal said that India has to take strong steps in trade with China in the context of the border situation.

In an interview with the BBC in Delhi, he said that India is benefiting from trade with China, but it has to tighten its position in this regard, India has to get equal opportunities to enter the Chinese market.

“It’s time to tell China to behave,” he said. Goyal is a professor at the Indira Gandhi Institute of Development Research in Mumbai.

The speech of this advisor of Narendra Modi clearly echoes the statement of the US Trump government on China. But does India have the capacity to do so?

Anti-China sentiment in India has been high since the death of 20 Indian soldiers in a clash with Chinese troops in Ladakh in mid-June.

There have been calls from various quarters to boycott Chinese products. In the midst of public anger, the Narendra Modi government has banned more than 150 Chinese software apps in two phases. China has tightened restrictions on investment. The import of color TVs from China has been banned.

Economic Adviser to the Prime Minister “India needs to take steps in this regard. Because the security of information is very important, and the emotions of buyers must take precedence. “

China is now India’s largest trading partner, but accounts for two-thirds of the current trade balance of about $10 billion a year.

Trade between India and China stood at $96 billion in 2018. But the balance is against India. That year, the trade deficit was $5 billion.

There are complaints that there is dissatisfaction within the Indian government about this deficit. After the beginning of the extreme animosity over the border, the discontent has now raised its head.

How much power does India have?

But the government’s stance on trade with China has hardened. Goyal said, in reality, how much power does India have now? Is it possible to impose its own conditions on China?

Jayati Ghosh, an economics professor at Delhi’s Jawaharlal Nehru University (JNU), told BBC Bangla that she did not think India had the power to impose any conditions on China.

“” “China is now India’s largest trading partner, but for China, India is not.” “” As much as trade with China is important to India, its dependence on that trade is not as important as India’s market to China. “

The latest figures on China’s exports show just that. In 2018, China’s exports to India were $65 billion, but in the same year, China exported goods worth $85 billion to a small country like Vietnam. Their exports to Japan were $14.8 billion, and China’s export earnings from the United States were $55.8 billion.

Moreover, India has become dependent on China for power plant boilers, factory heavy machinery, industrial raw materials, mobile phones, electric fans in neighbourhood shops and children’s toys.

ড. Jayati Ghosh said 90 per cent of the raw materials for the emergency sector like the pharmaceutical industry come from China. It cannot be stopped suddenly. You can stop importing toys, but what is the alternative to factory machinery? The import of TV from China has not stopped, but the price will increase a lot. “

According to him, it may be possible to reduce this broad-based dependence on China, but “it will take time.” “

There are no signs of trade

That is why, despite the strong anti-China sentiment, the ban on Chinese apps and Narendra Modi’s slogan of “self-reliance,” there is still no sign of any major threat to trade between the two countries.

On the contrary, in the last three months, trade with China has increased compared to the same period last year, and the most interesting thing is that India’s exports have increased more than China.

According to Chinese government data, India’s imports from China fell by 24.7 per cent between January and June compared to the same period last year, but India’s exports to China increased by 6.7 per cent. India’s exports to China in April were $2 billion, which increased to $4 billion in July.

The main reason for the increase in India’s exports to China, especially in the last three months, is that the export of cast iron from India has increased several times. According to China’s customs department, cast iron imports from India between January and June amounted to 20 million tonnes, compared with 8 million tonnes in the whole of 2019.

Poisons and drugs – both in China

Economists believe that the government’s reluctance in India is mainly a manifestation of anger over the border situation. In fact, the Indian government knows how lucrative the market of neighboring China is and there is no alternative to many Chinese products in front of them.

Dr Faisal Ahmed, a China expert at the FORE School of Management in Delhi, told the BBC’s Hindi language section: “India’s restrictions on Chinese goods and investment are mainly a manifestation of resentment and anger at the border. “

“According to him, if China is India’s” “poison,” “then its” “medicine” “is also China.”

Vivek Kaul, an economist in India, said that all the recent statistics on bilateral trade show that no matter what politicians and businessmen say in front of the people, they are working for their own interests at the ground level.

মি. Kaul believes that Indian businesses and industry owners feel that trade with China is now the best option for them.

But the question is where this relationship will go in the future. Will India, like the US, raise tariffs on many imports from China so that imports from China are no longer attractive?

A lot will depend on what happens at the border.