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India-China standoff: As war of words heightens, a look at trade between two countries in 10 charts
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India-China standoff: As war of words heightens, a look at trade between two countries in 10 charts

Kishor Kadam • August 4, 2017, 19:49:09 IST
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Trade, not war, is the way ahead for China and India. These charts prove that.

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India-China standoff: As war of words heightens, a look at trade between two countries in 10 charts

Doka La standoff has kicked off a trade war between India and China. There are many instances that prove the trade war is currently on. China is concerned about India’s investigation against 12 Chinese products over the last six months, while India is stonewalling the acquisition of an Indian company by a Chinese firm. As Dinesh Unnikrishnan of _Firstpos_t writes , these instances are more than enough for us to conclude that a trade war is already on between the neighbours. It may not be an all-out battle yet, but it has begun. [caption id=“attachment_3894303” align=“alignleft” width=“380”] ![Representational image. AFP](https://images.firstpost.com/wp-content/uploads/2017/08/india-china-flags-afp1.jpg) Representational image. AFP[/caption] And this is not good news, for a trade war is as bad as an armed confrontation. A trade war affects the economy, its people’s financial security. While Chinese economy is facing rough weather, India is also not in the pink of health. There are widespread job losses. While the informal sector has been hit hard by demonetisation and GST implementation, the formal sectors such as IT industry are hit by protectionism in the western markets and technological advancement. This probably is the reason why external affairs minister Sushma Swaraj on Thursday told Rajya Sabha that the solution to the Doka La standoff with China should be solved through diplomatic talks and trade rather than going to war. She also expressed confidence that India’s attempts at diplomatic talks would lead to a peaceful solution. Clearly, peace at the border matters a lot. For only that can bring more trade. Here’s a look at how trade between two the countries have evolved over the last 10 years:

Merchandise exports to China ($billion) Infogram

Over the past 10 years, India’s merchandise exports to China have been volatile. It ranged between $9 billion and $18 billion. The peak was $18 billion recorded in 2011-12. In 2015-16, however, it fell to a nine-year low of $9 billion in 2015-16. In the last financial year, the exports witnessed an improvement to $10.2 billion. Commerce and industry minister Nirmala Sitharaman said recently in the Lok Sabha that efforts are being made to increase overall exports to the country by diversifying the trade basket with emphasis on manufactured goods, services, resolution of market access issues and other non-trade barriers.

Merchandise exports to China (YoY % growth) Infogram

In 2007-08, India’s merchandise exports to China saw a record 30.6 percent rise on year. In the three fiscals from 2009-10 to 2011-12 the growth was consistently above 20 percent. However, the exports declined drastically in 2012-13 by 25.1 percent due to base effect. There was a similar decline of 24.5 percent in 2015-16.

Merchandise exports to China (% share to total exports) Infogram

However, exports to China as a percent of total exports by India is on a declining trend in the recent years. The figure peaked at 6.7 percent in 2007-08. In 2009-10, also the share was higher at 6.5 percent. But after that it started declining gradually and stood at 3.7 percent in 2016-17.

Merchandise imports from China ($billion) Infogram

Over the past 10 years, India’s merchandise imports from China have seen an exponential increase of 251 percent from $17.48 billion in 2006-07 to $61.29 billion in 2016-17. In comparison, India’s exports to China has risen a meagre 22.5 percent during the same period.

Merchandise imports from China (YoY % growth) Infogram

In 2007-08, India’s merchandise imports from China rose a record 55.3 percent on year. In comparison, India’s total imports that year rose by 35.5 percent. The second biggest rise was in 2010-11 when the growth was 41.1 percent. Over the past 10 years, Chinese imports witnessed decline, that too marginal, only four times – in the range of 5.5 percent to 0.7 percent.

Merchandise imports from China (% share to total imports) Infogram

Imports of Chinese goods  as a percent of total imports by India have grown from 10.8 percent in 2007-08 to 16 percent in 2015-16 and 2016-17. Until 2013-14, the share remained in the 10-11 percent range. It increased to 13.5 percent in 2014-15 and then to 16 percent the next two years.

India’s merchandise trade with China ($billion) Infogram

Over the past 10 years, India’s merchandise trade (exports and imports together) with China soared 177 percent from $25.8 billion in 2006-07 to $71.48 billion in 2016.17. The highest amount of trade happened in 2011-12 when the aggregate figure stood at $73.39 billion. In the 10-year period, China was No. 2 trading partner for India for five years after the United Arab Emirates and No.1 for the balance five years.

India’s merchandise trade with China (YoY % growth) Infogram

The percentage growth in India’s merchandise trade with China fell from peak of 47.4 percent in 2007-08 to just 1.1 percent in 2016-17. It has to be noted that the percent growth in India’s total trade with all countries had slipped from 32.9 percent to meagre 2.7 percent during the same period.

India’s merchandise trade with China (% share in total trade) Infogram

Over the past 10 years, trade with China as a percent of India’s total trade has more or less remained steady. It moved in a narrow range of 9.2 percent in 2007-08 to 10.8 percent in 2016.17.

Trade deficit with China (in $billion) Infogram

India’s trade deficit with China has shown a tremendous rise of 458 percent from $9.15 billion in 2006-07 to $51.09 billion in 2016-17. It had the highest growth of 77.8 percent in 2007-08. In 2016-17 the trade deficit declined marginally by 3 percent. The wide deficit is because India’s imports from China is five times more than its exports to that country. (With inputs from Rajesh Pandathil)

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India China Rajya Sabha Lok Sabha GST parliament exports imports Demonetisation Trade war External Affairs Minister Sushma Swaraj merchandise trade
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