India-China trade hit an all time high record of US$73.9 billion in calendar year 2011, up from US$61.7 billion in 2010, a rise of US$12.2 billion for the year and right on track to reach the US$100 billion milestone by 2015.
China’s exports to India continued to surge cross the US$50billion mark, growing by 23.5 percent over 2010 to log US$50.04 billion, leaving the trade deficit in Beijing’s favour at US$27.07 billion. In comparison, Indian exports to China increased to US$23.4 billion registering a growth of 12.26 percent compared to the previous year.
India which continues to export raw materials, and import finished goods from China, (many of which are made from the same raw materials India exports) has been worried about the growing trade deficit between the two emerging economies. The Chinese officials, acknowledging India’s plea on bridging this gap, have decided to iron out the issue on several accounts, the two countries also plan to discuss the same during the BRICS Commerce meeting in New Delhi on March 28th.
While the world waits for both India and China to pull the global economy out of its doldrums, the two nations have also been raising trade barriers against each other. Although trade has risen significantly in 2011, economy soothsayers predict the year of the dragon will bring increasing upheavals and further increase the trade deficit between the two nations. While bilateral trade and economy will continue to prosper, the export-import gap between the neighbors will not abate too soon.
Although India’s exports of iron ore have dipped in the past year due to the ban on mining and exports in certain parts of India, exports of cotton, yarn and commodities has seen a significant rise. India’s items of export which have seen positive growth rates include, copper (US$2 billion), precious stones (US$1.1 billion), organic chemicals (US$999 million) slat, sulphur, earth, stone (US$514 million) and machinery (US$478 million). Meanwhile, India’s push for infrastructure growth and industrialization has brought increased Chinese equipment and machinery into the country. Chinese workers have worked on ports, highways, power and steel plants in India. Chinese equipment and expertise have also been used in a crude oil refinery, a cable-supported bridge, telecommunication networks and even the glass facade of the new airport terminal in New Delhi.