As China’s export contract amid persistently weak global demand and intensifying trade dispute with the US, the country may look up to India to push some of its produce.
Prime Minister Narendra Modi is meeting Chinese President Xi Jinping today and economic priorities for both countries are poised to lead the conversation. As China’s export contract amid persistently weak global demand and intensifying trade dispute with the US, the country may look up to India to push some of its produce. China is also likely to try to convince India to agree on the ambitious market-opening commitments at the Regional Comprehensive Economic Partnership (RCEP), as it seeks opportunities in the other neighbourhood as well.
This will enable China to have a tariff-free entry into the neighbourhood nations and to have easy access to the entire bloc, which includes the ASEAN, Japan, South Korea, Australia, and New Zealand. However, India’s reluctance at RCEP is because almost all industrial sectors ranging from plastics and chemicals to steel and engineering goods are against the lowering of tariffs, especially from China, as they fear a surge in cheap imports.
India’s imports from China have substantially fallen in the last two years. While imports from China to India fell around 8 per cent on-year in FY19, exports from India to China shot up more than 25 per cent during the same period, according to the Ministry of Commerce. This has significantly reduced China’s trade surplus with India, which it would want to regain.
India and China, both economies are undergoing a phase of slowdown but China seems to be struggling much more than India. India’s GDP grew at a 6-year low during April to March, whereas China’s GDP grew at 6.2 percent on-year during the same period, which was the lowest growth rate since the first quarter of 1992. Meanwhile, sales in China declined for unwrought aluminium and products, coal, coke and semi-coke, steel products, refined products, and rice, fell up to 45 per cent in August 2019.