India-China Trade: History, Present State and Prospects

The article analyzes the emergence of the modern India-China trade. The authors exa­mine historic foundations of the mutual trade and its growth dynamics. Particular attention is paid to the recent changes in the bilateral trade connected with difficulties in India-China relations and economic problems caused by the global coronavirus pandemic. The article focuses on the commodity structure of the Indian export to China and import from the PRC, with the lack of clearly visible tendencies in annual supply along with a strong trend in purchase being detected. Special importance is attached to the analysis of the technology level of the mutual trade. Prevailing low-technology and medium-technology level products in the Indian export are assessed, and it is stated that the share of high-technology level goods is growing slowly. At the same time, it is underlined that the Indian import from China consists mainly of high value-added products. The authors study the importance of the bilateral trade, concluding that China’s role in the overall Indian trade is greater than visa versa. A range of trade indices are estimated that allow to evaluate the effectiveness of the mutual trade comprehensively. A relatively low intensity of India-China commercial ties is emphasized, and an average level of intra-industry trade, as well as high complementarity of India-China export and import are pointed out. The article also analyzes the trade in services the volume of which is almost impossible to assess due to the lack of statistical data. The authors identify the main problems impeding the effective trade development, including trade imbalances, namely the high trade deficit and une­ven export and import structure, the closed nature of the both countries’ markets, high tariff and non-tariff barriers and India’s trade dependence on China. Regarding the prospects of the trade, the authors examine the Indian policy aimed at overcoming the imbalances, identify the factors that promote bilateral interaction and assess the possibility of creating a free trade zone between India and China.