China's rising exports of key commodities, consumer goods, and services, coupled with robust investment, are fueling burgeoning Sino-Indian trade, which experts believe can help stabilize overall relations between the two neighbors.
China has recently surpassed the United States to become India's largest trading partner for the fiscal year ending March, with total bilateral trade reaching $118.4 billion, according to data from the Global Trade Research Initiative.
This strong trade partnership is seen as a building block for positive bilateral relations. As China is projected to become the world's largest economy and India the third largest, the expansion of their economic engagement is a natural progression, said Swaran Singh, a professor at Jawaharlal Nehru University in New Delhi. This is driven by their large populations, rapidly growing economies, and increasing consumerism among the youth and middle class.
The significant trade volume is attributed to India's import of commodities worth over $100 billion from China, predominantly low-tech consumer products. Chinese cellphone brands, for instance, have gained a substantial market share in India by offering advanced products at affordable prices.
Robert Carnell, chief economist for Asia-Pacific at ING, noted that China's geographical proximity and competitive pricing make it a preferred trading partner for India. While India imports more from China, it exports more to the US, making the total trade volumes almost even, with China having a slight edge.
India's imports from China mainly consist of machinery, electronics, and computers, as the country moves up the global trade value chain. As India continues to develop, the demand for high value-added machinery from China is expected to increase.
Aditi Dave, a business journalist in Mumbai, highlighted that China's rise as India's top trading partner is due to increased imports from China in critical sectors and a decline in trade with the US. Timir Baran Chatterjee, a mentor at TCN Global, emphasized the deep economic interdependence between China and India, particularly in sectors like electronics, machinery, pharmaceuticals, and chemicals.
Despite national security concerns, India's imports from China continue to grow, reflecting the complex yet interdependent economic relationship between the two countries. While the increased trade may not immediately improve overall ties, it is seen as a positive first step towards strengthening economic cooperation.
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