India’s trade deficit with China has risen to a whopping $45 billion, with bilateral trade remaining far below the ambitious $100 billion-mark set for 2015 by the two countries.
Data released by the General Administration of Customs (GAC) on Wednesday revealed that bilateral trade was $71.63 billion for 2015.
Worryingly for India, exports to China fell by over 18% last year and were pegged at $13.38 billion. China exported goods worth $58.25 billion in the same period.
The latest figures revealed the nature of imbalance in bilateral trade – while India mostly exports raw materials to China, the latter ships back finished goods.
The trade imbalance in China’s favour has been repeatedly raised at bilateral meets but little seems to have been achieved in addressing the issue in recent years.
It’s just one of the issues – besides the festering border dispute, for one – that’s straining relations between the two countries.
Indian officials here have said Chinese officials appreciate India’s worry about the trade deficit and agreed, for one, to set up a high-level task force to be chaired by the cabinet secretary on the Indian side.
As part of measures to address the issue, the Indian government under Prime Minister Narendra Modi has encouraged Chinese investment into India in sectors such as infrastructure and manufacturing.
Significant Chinese investment is expected in 2016, with the figure being pegged at around $3 billion.
Officials said one focus of the Indian government is to ensure “ease of doing business” in India. Modi sent the message across during his visit to China last year, when he met 21 top business leaders in Shangahi.
Admitting there is a problem, outgoing Indian ambassador AK Kantha told HT that China enjoys a trade surplus with its top 50 trade partners.
“That is why investment from China is being encouraged. Economic engagement with China is going through a qualitative change,” Kantha said.
China’s overall exports in 2015 were 14.14 trillion yuan ($2.15 trillion), down 1.8% from the end of 2014, the first drop since 2010, according to the GAC.
The total import and export volume stood at 24.59 trillion yuan in 2015, down 7% from the same period in 2014. Imports fell by 13.2% to 10.45 trillion yuan, state media said, quoting GAC figures.
“The double decrease in import and export is due to the economic slowdown throughout the world,” said GAC spokesperson Huang Songping.