IAS Gyan

Daily News Analysis


14th July, 2022 International Relations

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Context: India-China trade is on course to cross USD 100 billion for the second consecutive year as it has gone up to USD 67.08 billion in the first half of this year amid a big surge of Chinese exports.



  • China's exports to India have gone up to USD 57.51 billion, up by 34.5 per cent last year while Indian exports to China fell to USD 9.57 billion, a decline of 35.3 per cent compared to last year, according to the trade data released by China's General Administration of Customs (GAC).
  • The trade deficit at the half-year mark stood at USD 47.94 billion.
  • Last year, the India-China bilateral trade hit a record high of over USD 125 billion crossing the USD 100 billion mark in a year when the relations touched a new low due to standoff by the militaries in Eastern Ladakh.
  • China's exports to India last year went up by 46.2 per cent to USD 97.52 billion while India's exports to China grew by 34.2 per cent to USD 28.14 billion.
  • The trade deficit for India grew by USD 69.38 billion in 2021.
  • In May, China insisted that it is still India's biggest trade partner in 2021-22 as per its figures, referring to reports that the US has unseated it to take the top slot and attributed the "disparity" to different methods of calculating the trade volume by New Delhi and Beijing.

Issue of convergence in India-China relations:

  • India-China relations have now acquired a strategic and global dimension and their cooperation is critical for tackling global issues such as Climate Change, terrorism, protectionism, free trade, global financial order
  • Both countries should work together
    • To safeguard the legitimate rights and interests of developing countries
    • Safeguard multilateral trading system and advancing the WTO reforms
    • Speed up negotiations on the Regional Comprehensive Economic Partnership Agreement (RCEP).
  • China stated that "Sino-Indian ties" could be the most "important bilateral partnership of the century
  • Two countries agreed to coordinate their development programmes in Afghanistan in the areas of health, education and food security
  • India is critical for global success of 5G,where China’s Huawei is the leader.


Issue of concerns in India-China relations:

  • Belt Road Initiative: India has objected this, since its inception on grounds of violating its sovereignty pointing to China Pakistan Economic Corridor.
  • India’s support to China on global issues has not led to Beijing’s reciprocation for instances: China opposed India’s permanent membership to UN Security Council and entry into NSG.
  • India faces trade imbalance heavily in some favor of China. In 2017-18, trade deficit has gone wide to US$62.9 billion in China's favor.
  • Two countries failed to resolve their border disputeand steadily established military infrastructure along border areas Indian media outlets have repeatedly reported Chinese military incursions into Indian territory
  • China has expressed concerns about Indian military and economic activities in the disputed South China Sea. Same way India is also concerned about rising Chinese activities in Indian Ocean.
  • China's strong strategic bilateral relationswith Pakistan and other neighboring countries like Nepal and Bhutan is cause of concern as these countries act as buffer states.


Measure taken so far:

Political Relations

  • In 1993, Agreement on the Maintenance of Peace and Tranquility along the Line of Actual Control (LAC) on the India-China Border Areas was signed to bring stability and substance in bilateral ties.
  • In 2008, two countries have also extended their strategic and military relations.
  • MoU was signed to open an additional route for Kailash Mansarovar Yatra through Nathu La.
  • India and China have also established a High Level Dialogue Mechanism on Counter Terrorism and Security
  • To facilitate exchanges between Indian states and Chinese provinces, States/Provincial Leaders Forum was established


Commercial and Economic Relations

  • China will establish two Industrial Parks in India and expressed their intention to enhance Chinese investment in India
  • India extended e-visa facility to Chinese nationals
  • Trade and Economic Relationship are shaped through various dialogue mechanism
  • Joint Economic Group led by the Commerce Ministers of both sides
  • Strategic Economic Dialogues led by the Vice Chairman of NITI Aayog and the Chairman of National Development and Reform Commission of China


Cultural Relations

  • India and China have entered into an agreement on co-production of movies
  • Yoga is becoming increasingly popular in China. China was one of the co-sponsors to the UN resolution designating June 21 as the International Day of Yoga


Education Relations:

  • India and China signed Education Exchange Programme (EEP), which is an umbrella agreement for educational cooperation between the two countries.
  • Chinese students are also annually awarded scholarships to study Hindi at Kendriya Hindi Sansthan, to learn Hindi


Indian Community:

  • Presently around 35,500 Indians are staying in China, students and working professional form a major part of it.
  • PICFA" Pondicherry India China friendship association is an NGO dedicated for developing people-to-people relation between India and China in areas of education, culture and tourism.


Way Forward:

Managing relationship with China has become the biggest test for Indian foreign policy

  • Trust deficit is a critical issue in Sino-Indian bilateral relations. In order to solve this problem, track II diplomacy can play a more active role. For e.g. BCIM (Bangladesh–China–India–Myanmar) economic corridor is an outcome of track II dialogue.
  • There is a need to control negative publicity in the relationship. Deeper engagements between the media persons of the two countries can help in improving image of the two countries.
  • Improvement of the India-China relations require rational voices, A comprehensive and substantial study of each other’s national and social conditions is need to be done by scholars to strengthen cooperation.
  • Cultural industry, including tourism, entertainment, publications, internet service sectors, needs to be targeted to reduce the trade deficit.
  • There is need to increase the frequency of talks at highest levels multilateral meets such as East Asia Summit (EAS), the Shanghai Cooperation Organisation (SCO), Conference on Interaction and Confidence-Building Measures in Asia (CICA), BRICS and G-20.
  • India and China should seek an early settlement of the border issue, before the final settlement of the boundary question is reached we should jointly maintain peace and tranquillity in the border areas.


Conclusion:  India-China should stick to ethics of the Panchsheel (Five Principles of Peaceful Coexistence) and must strengthen coordination on international and regional affairs through more regular and high-level political engagement. Through enhanced physical connectivity and economic integration, both countries can act as an engine of growth for the entire subcontinent.