Table: India-China Trade Deficit in 2022-2023
| Type of Trade | Amount (in billions) | Percentage Change |
|---|---|---|
| Total two-way trade | $135.98 | +8.4% |
| Indian imports from China | $118.5 | +21% |
| Indian exports to China | $17.48 | -38.1% |
| Trade deficit | $101.02 | +45% |
Note: Figures released by the General Administration of Customs (GAC) in Beijing on January 13, 2023. The break-up of imports in 2022 was not immediately released. Source: Chinese Customs data and General Administration of Customs (GAC) in Beijing.
Table of Contents
The Takeaways from India-China Trade Deficit Data
The data on the India-China trade deficit in 2022 shows both positive and negative implications for India.
On the positive side, the increase in imports of Chinese goods by over 21% reflects a recovery in demand in India and also indicates that the Indian economy is importing more intermediate goods. This can be seen as a positive indicator of growth and development in the Indian economy.
However, on the negative side, the fall in India’s exports to China in 2022 has led to a significant trade deficit of over $101 billion, which is the highest ever. The growing dependence on imports from China for a range of key goods is also a worry. This raises concerns about the trade imbalance between the two countries, which can have an impact on India’s economy in the long run.
Overall, India needs to focus on increasing exports to China while also reducing its dependence on Chinese imports. The government could work towards enhancing India’s domestic manufacturing capacity to produce more goods locally and reduce reliance on Chinese imports. Additionally, efforts to increase exports to China and diversify the export basket could be undertaken.
Impact of India-China Trade Deficit on Indian Borders
The activity of China increased along the Indo-China borders with China giving new names to areas within the Indian territory. The Indian government is perhaps giving the wrong message, instead of decreasing the volume of trade with China on the contrary India’s dependence on China further increased. China is giving the right message to India by reducing its imports from India. India’s behavior of rewarding the aggressor will pose a serious challenge to Indian sovereignty. To put the number of 101 Billion dollars in perspective let us look at an example.
India’s first bullet train will be launched in 2026-2027 with a total cost of $14 Billion. China is already ahead of India when it comes to infrastructure development. By creating a deficit with China, India has funded the construction of 5-7 bullet trains across the LAC. The defense budget of China is $225 Billion. It implies that revenue earned from India is close to 45% of China’s budget. A serious discussion at the policy-making level is the need of the hour. From a strategic viewpoint, India has a greater danger from China than from Pakistan.
The growth of China lies in its vast amount of natural resources, trained and drained labor, development of critical technology, and becoming self-reliant. China or for that matter any nation knows that all the natural resources come from the land. Therefore a stronger country knowingly picks a dispute with another country in the hope to grab some land. The choice of picking a dispute with another country also depends on its history and political ideology. China is by nature an expansionist regime. It follows the policy of debt trap, creating new islands to control marine resources, and picking up territorial disputes.
It is a proven fact and Tibet’s annexation was one of the biggest steps it took to consolidate its territory.
