Moneycontrol
Last Updated : Jun 30, 2020 01:18 PM IST | Source: Moneycontrol.com

India China standoff | China's state-run daily estimates up to 50% drop in trade between countries

China is India’s one of the leading trade partners and constitutes 9 percent of India’s total export and 18 percent of total merchandise imports.

China's state-run newspaper Global Times has estimated a 50 percent hit on trade volumes with India as a result of the two countries' bitter, unending standoff in the Eastern Ladakh's Galwan valley, coupled with challenges posed by coronavirus pandemic.

Put in numbers, this translates to as much as $46.35 billion, or over Rs 3.42 lakh crore, of business loss at current prices if we go by 2019 trade data released by General Administration of Customs of China measuring trade volumes between the two countries at $92.84 billion.

The report in the daily blames Indian nationalism for the loss of business for both the countries apart from the coronavirus pandemic.

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It says, "Following the recent deadly border clash between China and India, increased nationalism has been instigated among Indian citizens by certain politicians and media in India. In addition to a campaign to boycott Chinese products among Indian residents, the country's ports have reportedly put extra customs checks on cargoes from China since June 22, including massive components and parts needed by India-based producers, as well as products of Apple, Cisco and Dell."

"Under such circumstances, bilateral trade between China and India is likely to drop one third on a yearly basis in 2020, and could even dive by 50 percent," the report adds.

The report goes on to state that investors should be careful before investing in India, "With rapidly rising uncertainties in bilateral relations, China's investments in India deserve increased comprehensive reassessment and Chinese investors should be fully cautious toward the risk of the expanding nationalism in India."

To put it in perspective, China is India’s one of the leading trade partners and constitutes 9 percent of India’s total export and 18 percent of total merchandise imports.

The import dependency on China for a range of raw materials (APIs, basic chemicals, agro-intermediates) and critical components (Auto, Durables, Capital goods) is skewed. To give a flavour, out of the respective imports, 20 percent of the auto components and 70 percent of electronic components come from China. Similarly, 45 percent of consumer durables, 70 percent of APIs and 40 percent of leather goods imported are from China.

You can read about India's import dependence on China in this analysis from our research team:

How dependent is India on China? Here is what trade data reveals

Border tensions escalated between India and China when the Chinese army laid claim over Indian territory in the Galwan valley after an incursion.

Lately, China has put forth a proposal where it has asked Indian forces to step back if India wants China to retreat - a demand which India has termed untenable.

Amid border tensions, the Centre on Monday night banned 59 Chinese apps saying they are engaged in activities which are "prejudicial to the sovereignty and integrity of India, defence of India, security of state and public order".
First Published on Jun 30, 2020 01:18 pm
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