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Trade balance: India v/s China
Wed, 17 Jun Pre-Open

We Indians often find ourselves comparing with our neighbouring dragon economy. You can often find news stories that say that India is slated to surpass China's growth rate in the coming times. We are often baffled by these types of comparisons. China has had three decades of gravity-defying growth. The Chinese economy is way ahead of India on practically every major economic front. So what is the big deal now if India is likely to grow faster than China? The comparison is simply not between equals.

If you want to get a sense of how far apart the two economies are, it would be worth taking a look at the bilateral trade figures of the two Asian economies.

Here is some interesting data that we came across in an article in Livemint. In 2015, India's imports from China are estimated to be worth about US$ 60 billion. This is about 18% higher than the imports in the previous year. You may ask: How about India's exports to China? In 2015, the exports to China are estimated to be worth around US$ 12 billion, a sharp 20% dip over the previous year.

As a result, India's trade deficit with China is expected to widen to about US$ 48 billion in 2015. This would be about 2.3% of India's Gross Domestic Product (GDP).

The wide trade gap underscores many of India's problems such as poor manufacturing capabilities, shortage of skilled workforce, inadequate infrastructure, strict labour laws and so on. Unless these issues are addressed, India's ambition of emerging as a global manufacturing hub will remain a distant dream.

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