Posted: September 23, 2014
By: Amitendu Palit
Chinese President Xi Jinping’s visit to India was noticeable for not having been accompanied by the declaration of a bilateral trade target. While ex-premier Wen Jiabao’s visit in December 2010 was followed by the announcement of a bilateral trade target of $100 billion by 2015, no such numbers were put out this time.
Avoiding a target might have to do with the fact that bilateral trade (merchandise) has not increased from its peak of $73.4 billion in 2011-12. The last two years have had trade hovering around $66 billion. As a result, achieving the target of $100 billion by 2015 appears almost impossible. This will be the first time since Zhu Rongji’s visit in 2002 that the declared trade target will remain unfulfilled.
Despite the sluggish growth, China remains India’s topmost trade partner. Most analysts, given India’s obsession with the trade deficit, usually accept this grudgingly. It is impossible to come across discussions on China-India relations that do not refer to the bilateral trade deficit.
The paranoia over the trade deficit with China could have been justified if India were a net exporter of goods to the rest of the world and its trade with China was an exception. The structure of India’s trade with China is not exceptional in any way. India buys much more from the rest of the world than it sells, and is a net importer of goods. It runs trade deficits with 16 of its top 25 trade partners.