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introduction
The latest data shows that China will once again surpass the United States to become India's largest trading partner in 2023-2024. Total trade between China and India climbed to $118.4 billion.
India's exports and imports to China have increased, with an export growth rate of 8.7%. India's imports and exports to the U.S. have declined, and imports have fallen by 20 percent.
The economic story behind the trade data
The growth of Indian exports to China, especially the 8.7 per cent increase, shows the strong competitiveness of Indian goods in the Chinese market. This growth not only provides a new growth point for Indian enterprises, but also injects new vitality into the diversified development of China's economy. The decline in India's imports and exports to the United States, especially the 20% drop in imports, may indicate a subtle change in the structure of the Indian economy's dependence on foreign trade.
Industrial products account for 98.5% of India's imports from China, which not only highlights the strong competitiveness of China's manufacturing industry, but also reflects the strong demand for Chinese industrial products in the Indian market. Behind this demand is the acceleration of India's industrialization process and the importance of China's manufacturing industry in the global supply chain.
Changes in the structure of trade between China and India
From 2023 to 2024, the new trade pattern between China and India can be described as in full swing. Not only has China regained its position as India's largest trading partner, but trade between the two countries has soared to $118.4 billion.
Let's take a look at the import first, the value of India's imports from China accounts for 15% of India's total import value, and the rise in this proportion not only reflects the popularity of Chinese goods in the Indian market, but also highlights the strong attractiveness of Chinese manufacturing in the Indian market.
Especially in the field of industrial goods, China's share growth is particularly impressive. Today, China's industrial products account for 30% of India's total industrial imports, and this proportion has increased from 21% 15 years ago to 30%, which further confirms the competitive advantage and growing influence of Chinese products in the Indian market.
But this change in the trade landscape has not been without its challenges. India's exports to China are mainly primary products, such as mineral sands and metals, while China's exports to India are mainly high-end electronic products and machinery with high value-added finished products, which has led to a trade imbalance that has caused concern on the part of the Indian side and prompted the Indian government to take a series of measures to reduce the trade deficit with China.
India's strategy includes broadening market access and strengthening two-way investment, but it also faces some difficulties in policy choices. India chose not to join the Regional Comprehensive Economic Partnership (RCEP) out of fear of gaining more market space for Chinese products, a decision that is seen by the industry as exacerbating India's trade deficit.
It is against this backdrop that the arrival of the new Chinese ambassador to India, Xu Feihong, and his speech on the Sino-Indian trade deficit, have opened up new perspectives for the future development of China-India economic and trade relations. Xu Feihong pointed out that the Chinese market is open to all countries equally, open and win-win, welcomes more Indian goods to enter our market, and is willing to help Indian enterprises better integrate into the Chinese market and tap the potential for deeper cooperation.
India's economic strategy
The recent Sino-Indian trade drama has directly pushed India's economic strategy and its challenges to the forefront of international discussion. On the big stage of the 2023-2024 fiscal year, although the trade chorus between China and India is huge and has reached new highs, India's trade deficit with China is gradually widening.
India's exports continue to focus on raw materials such as ores and metals, while China's exports are dominated by high-value-added finished products such as electronics and machinery and equipment. Such differences in trade patterns not only reflect the differences in the status of the two countries in the global industrial chain, but also highlight the urgency of India in enhancing the added value of its own industries.
Although the Indian government has been doing everything possible to make the trade balance more balanced, such as improving market access, attracting investment from each other, and promoting economic exchanges, the road to reform has been bumpy.
China's industrial products, with its irresistible competitiveness, are singing all the way in the Indian market, and India urgently needs to improve its own industrial manufacturing level and create its own fist products in this tide of globalization in order to win a place in the international market.
India has said "no" to participating in the Regional Comprehensive Economic Partnership (RCEP). Behind this decision, in fact, India is worried that Chinese goods are becoming more and more popular on its own territory, and it also wants to build a protective wall for its own industry. However, in this way, the deep embrace of the Indian market and the world economy may be in vain, and Indian entrepreneurs will have to face greater market risks.
In addition, India's trade deficit is also a non-negligible part of its economic strategy. An article published in India's Financial Express pointed out that India has been trying to reduce the trade imbalance, but this goal is not easy to achieve. India needs to find a balance between protecting its own industries and promoting international trade, which requires careful economic planning and strategic positioning.
In this development, China's stance and measures have also had a significant impact on India's economic approach. Chinese Ambassador to India Xu Feihong's speech reflected China's deep insight into India's economic concerns and China's positive stance to further broaden market access and promote trade balance between the two sides.
epilogue
Cooperation between China and India in reducing trade imbalances, increasing market access and promoting mutual investment will play a key role in the development of bilateral relations. With the deepening of economic cooperation between the two countries, the future of China-India trade is full of infinite possibilities.
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