Indo China Trade: Is India On The Receiving End?
Chinese goods have swamped the world. Where ever you go around the world you would find Chinese goods at your table. From paper clips to staplers, from shoes to clothes, from upholstery to furniture everything seems to be coming from China. That indeed is a good news for China and as many economists suggest the export of such items is the basis of China’s newly found economic superiority in which it is almost parallel to the United States. China must get credit for uplifting millions of people from abject poverty to a decent lifestyle in the past few decades.
However, it is also a fact that China is still a developing country. It masks its poverty behind its glittering cities and its huge infrastructure projects but the fact remains that millions of its citizens are still living in poverty. This brings us to a very moot question who is ahead and who actually gains in the world trade. When it comes to India and China trade, indeed the Chinese have an export surplus while India is a net importer of Chinese goods. The import from China to India is increasing with every passing year. In fact, the list of import items in India is also increasing. The Chinese mobile companies are doing the brisk business in India and the crackers you bought probably came from China!
India imports $61.3 billion worth of Chinese products while it exports just $10.2 billion worth of goods to China. From -$37.2 billion in 2011-12, trade deficit has widened in the last six years to -$51.1 billion. Does it make India lose to China or should India ban or become protective of its industry by putting tariff barriers as some of the economists suggest?
It would be wrong to presume that the net importing country is on the receiving end. Imports are the purpose of trade. Sometimes countries import because they cannot produce that item at home or can’t do it cheaply. For instance, China is aggressively marketing solar cells and now controls almost 80 percent of the Indian market. But it does so by selling the solar cells 10 percent cheaper than the Indian solar cells. This way India gets cheap solar energy and China wins as it gives employment to its workforce.
Thus, India China trade is a win-win situation for both these Asian giants. Now reversing this trend through tariff barriers or otherwise would be counterproductive as it would not only make the things dear in the home market but also alarm the Chinese companies who are waiting in wings to set up their shop in India. Of course, it would indeed be rationalistic on India’s part to screen the imports and disallow those items which are completely unnecessary and hurt the small industries like kites, toys etc.
**India Export Import Data; Post 2004 as per notification no 128/2004
does not have names of Indian
companies.
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