Indo-China trade: Trends, composition and future

India and China have long tradition of trade and contact, and are among the youngest cultures in the world. They are one of the world’s largest economies to grow fast. After liberalization, both progressed quickly. The recent rapid growth of bilateral trade is one of the main events in international trade and economics. India has grown out to be one of China’s top 10 trading partners, while China is one of India’s top three trading partners.As the economies and export make up, as well as high rate of growth and political will, bilateral trade will grow and have a significant impact on global trade and the economy. The loop now seems full, looking at India and China’s rapid development in recent years as well as numerous potential predictions. For the most part, China and India’s growth levels over the last fifteen years have outperformed global average growth rates. In 1990-2007, China developed at an average pace of approximately 10 percent each year, relative to the world economic growth trend of three percent in India, at the average rate of 6 percent per year.

The friendship between India and China is a long one. The popular silk route was Nathu La Pass. In the early 20th century, trade via Nathu La Pass accounted for 80 % of total border trade between China and India. Since the 1962 Sino-Indian War, trading relations suffered. Prime Minsters’ visits, starting with Indian Prime Minister Rajiv Gandhi in 1988 followed by the visit by Chinese Prime Minister Li Peng in 1991, started significant steps in establishing confidence and promoting trade.The Trade Agreement for Most Favored Nation (MFN) was signed by India and China in 1984. The border trade re-opened in Mumbai and Shanghai in December 1992 after more than thirty years. The Nathu La Pass trading was suspended in 1962 after the 1962 Indo-China War, after 44 years of closure on 6 July 2006. Both countries have made efforts in recent years to improve relationships and foster economic ties.The two countries had remarkable development in their bilateral trade and still there were other possible future prospects untapped by the Journal of Applied Economic Sciences 130.

India and China’s recent performance

In recent decades, China has done very well.In 2018, its GDP reached a level of USD 13.608 trillion and the GDP growth figure was over 6.567 percent. China’s industrial production exports have created significant concern.A large part of Chinese GDP comes from international trade, and thus the economic performance largely depends on the global economy. A world import slowdown has had a positive impact on China’s exports and on the economy as a whole. International trade expansion has been the key feature of the country’s increased prominence in the international economic environment, with annual average trade growth rates three times as high as the world.In 2019, China became the first largest trading nation afterthe United States and Germany.In general, China’s exports of goods account for approximately 90 percent of its total exports, which is a little over 80 percent substantially higher than the global average. Its exports of services constitute just fewer than 10% compared to 20 percent global average.

The recent economic dynamic in India has led many people to compare it to China and expect an equally dramatic integration in international markets. India, however, is much less impressive about trade expansion.. In 2018, its GDP reached a level of USD 2.719 trillion and the GDP growth figure was over 6.811 percent.India has largely exported in recent years: pearls, precious and half-precious stones and jewels (16% of all expenditure), fossil coal , oil and wax (12%); motor engines, parts and equipment’s (5%); nuclear power plants, boilers, machines and hydraulic devices (5%); medicinal goods (5%); organic chemicals (4%). India’s main export partners are: the U.S. (15% of total exports), the United Arab Emirates (11%), Hong Kong (5%), China (4%), Singapore (4%) and the UK (3%).

Recent trends in Indo-China Trade

During the last few years, trade between Indo-China has grown very fast. Over the years the trade in Indo-China has displayed no development. First, India’s trade with China is greater than that of Japan, the US or the entire world after adjusting for the partners’ GDP, i.e. bilateral trade divided by the partners’ GDP. Secondly, China is one of India’s top three trading partners, while India is one of China’s top ten trading partners. Moreover, China’s exchange with India among its top ten trading partners is rising more steadily, and so is India.Thirdly, International trade balance is steadily in China’s favor, which may cause the New Delhi politicians worry.

Composition of Indo-China trade

The big Indian exports to China consist primarily of key commodities.

Future of Indo-China trade

India and China are two countries with the fastest rising level of exportation and nearly a third of mankind. The major developing countries are India and China, and our strategic relationship is of global importance. As the economic development of their economies persists even as the mutual exchange is a limited fraction of their capacity for interaction, exchange between these two countries is one of the key features of foreign trade in the 21st century.

The effect on world trade and economy would be important. Adapting to the emergence of those two Asian Giants is becoming more and more important for the developed countries and the developed countries must target their demand more and more.

Conclusion

India and China are two of the world’s largest economies with the fastest growth rate. After the liberalization process, both countries have shown significant growth. Bilateral cooperation between the two countries is one of the most recent and significant facets. During the last six-seven years, bilateral exchange has increased significantly. China is now one of India’s top three trading partners, while India has become one of China’s top 10 trading partners. With respect to global scale, the structure of the population, exports, and development levels, the capacity of bilateral trade development remains untapped. Bilateral cooperation would have a huge impact on the global economic and security scenario.

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