The top leadership in India and China might be talking about addressing the bilateral trade deficit issue but experts in China have warned that the imbalance is set to increase amid falling trade between the two countries.
According to data released by China’s General Administration of Customs, in the first four months of the year, China-India trade declined 6.2 percent year-on-year.
“Chinese exports increased 3.6 percent and imports decreased 24 percent, yielding a trade surplus of $8.83 billion, according to China's General Administration of Customs,” state-run China Daily reported.
The report added that In 2012, bilateral trade dropped 10.1 percent, and China's exports went down 5.7 percent while its imports plunged 19.6 percent, leaving a trade surplus of $28.87 billion, compared with $27.17 billion in 2011 and $20.08 billion in 2010.
In the short term, the balance will be difficult to restore, experts told state media on Tuesday, adding that the blame was on India as its export potential to China was limited.
The warning from Chinese experts came even as state-run continued its paean on China-India common goals and cooperative partnership.
“They (India and China) now have a common goal in sight -- to build a stronger Asia and a more prosperous world. In a multipolar world, major powers need to learn to accommodate each other. China and India have a good chance to set an example to the rest of the world.
We cannot choose neighbors, but we can choose what kind of neighborhood we would like to live in,” state-run Xinhua said in Tuesday commentary.
But economic experts sounded a note of caution about the trade imbalance between the countries.
“India's trade deficit with China is expanding. In the short term, that's hard to resolve. The imbalance is mainly because India has limited exports to China, while Chinese manufactured goods have a competitive advantage in the Indian market,” Liu Xiaoxue, a researcher on South Asian studies at the Chinese Academy of Social Sciences, told China Daily.
The trade imbalance is rooted in India's trade structure," Hu Shisheng, director of the Institute of South and Southeast Asian and Oceanian Studies at the China Institutes of Contemporary International Relations, said.
“India's trade deficit with China will not be reversed in the foreseeable future. Any change depends on whether India can export products that meet the demand of the Chinese market,” Hu added. “In fact, the trade deficit is likely to increase because India needs more Chinese manufactured products, and China diversified its sources for imports of raw material.”
“India has trade deficits with major manufacturing countries due to the depreciation of the rupee in recent years, its poor export advantages and robust import demand, especially for mechanical equipment, amid its economic transformation. But the trade deficit with China is remarkable,” Hu said.