India and China have been trading partners for a long period of time

  • The two Asian neighbours have been reliant on each other in order to meet the demand of their respective populations
  • India’s key exports to China include organic chemicals, mineral fuels, cotton and related products, iron ores, as well as plastic items
  • Almost all major product categories have recorded strong growth in recent years

However, the recent border tensions between the two nations cast a major shadow over their trade relations

  • India decided to place curbs on imports from China, while also banning certain mobile apps that are owned by Chinese firms
  • China has also retaliated by announcing additional tariffs on certain Indian products

Despite these issues, India’s exports to China are not showing any signs of slowing down

  • Between April and September 2020, India’s exports to China have increased by as much as 26.3%. This indicates that the demand for Indian products in China continues to remain extremely high
  • This situation is also likely to continue in the future, as the two countries try to resolve the issues that have hurt their relations

This blog discusses the continued rise in India’s exports to China and assesses the short-term future

India’s Exports to China are Rising

Between April and September 2020, India’s total exports to China stood at $10.6 billion. During the same period last year, these exports were just $8.4 billion

  • These figures indicate a growth rate of 26.3%, which is remarkable considering the fact that we are in the middle of a pandemic
  • It is also important to note that India’s imports from China are also falling at a rapid pace

The above figures show that India has successfully narrowed down its trade deficit with China

  • India continues to focus on increasing its overall exports, while also reducing its dependency on Chinese products
  • The Indian government has also taken some important steps in this regard. Two of their most important programs are Make in India and Self-Reliant India. Both these programs appear to be having a positive impact on India’s exports to China
  • Another reason why India’s imports from China are declining is that there has been a slowdown in Chinese factories
  • The overall manufacturing output in China has slowed down due to the COVID-19 crisis

India will hope that it manages to increase its exports to China even further, as it aims to improve its balance of trade

  • On the other hand, China would like to ensure that its exports to India can be revived in one way or another
  • The two countries are also trying to resolve their border issues at the earliest so that they can improve their relations in the near future

To conclude, it is clear that India’s exports to China are rising on a consistent basis. Institutions such as Euro Exim Bank offer customized support to traders in the form of financial instruments and bespoke trade advisory services. Euro Exim Bank offers financial instruments such as Bank Guarantees and Letters of Credit (LCs). Further information about Euro Exim Bank and its key product offerings is available here