Bilateral trade between India and China has been prominent in the 21st century. Through cooperation and interdependence, the two nations have been able to establish a trade relationship that benefit’s both economies.
China has emerged as India’s largest goods trading partner. This has brought advantages for India such as the availability of low priced products, and an increase in trade deficits with a single country. On the other hand, China is India’s market for most agricultural products and sectors such as pharmaceuticals. These exports are majorly those from the primary sector, which India flourishes in, such as cotton, copper, and other natural products. In return, India imports machinery, chemicals, electronic appliances, and other capital goods. And other technological equipment from China. In fact, research suggests that China accounts for over 15% of India’s imports, and have reached over $70 billion. China is also the third-largest export market for Indian goods. This shows the prominent bilateral trade between the two nations, that has especially been evolving during the 2000s.
Bilateral trade comes with its own advantages and disadvantages. The advantages are primarily associated with the nation’s economic development and growth, and fairness for citizens. With the increased availability of Chinese goods and services in India through trade, Indian citizens have access to goods and services, especially those in the manufacturing and technological sector, that they otherwise wouldn’t have. The availability of these improves living conditions in India, and contributes to its development from a less economically developed country, to progress towards a more economically developed country. It boosts India’s international relations and helps improve its GDP and trade deficits. China also has several advantages due to this bilateral trade agreement. It enjoys access to raw materials that allow increased production and manufacturing of goods and services. The prices for these products are also decreased, so consumers are benefited. China’s economy can also see better development as it exports largely to India. In addition, it allows for the two nations to increase international relations across the world, especially between each other.
On the other hand, however, there are some negative consequences of bilateral trade between India and China, as well, that reduce fairness and development. One example of the same is military conflicts. The Indo- China dispute over Ladakh, that occurred in June 2020, was one such example. More than 20 Indian soldiers were killed in a clash with Chinese Forces, in the region of Ladakh. It was a result of rising tension between the nations, wherein India claimed that China broke an agreement with respect to the Line of Actual Control. This heightened conflicts between India and China, and negatively impacted relations, especially in terms of trade. The Ladakhi region, which is a central trading point for India, is not as significant anymore. The dispute has put restrictions on traders from nations sharing borders with India, on grounds of defence and national security. Orders have been provided to reduce the trade of goods and services, namely in China. This has already caused a downfall in India’s economy, as it heavily relies on Chinese manufactured goods and services, such as electronic appliances, and plastic products. Even China’s economy is likely to be equally impacted by this event.
Bilateral trade between India and China is shown to have a crucial impact on both nations GDP; it has influenced India and China’s economies in a positive manner, but has also caused inevitable conflicts and disagreements, severely changing fairness and development for the two nations. It is important to evaluate these before taking any measures to restrict trade due to nationalistic emotions.