China is known as the world’s factory for a reason over the past several decades. Let’s find out why!
Chinese trade has expanded at a breakneck pace in 1995 the value of China’s imports and exports of goods totaled $280.9 billion or 3% of global trade by 2018 its total trade in goods had jumped to $4.6 trillion or 12.4% of global trade.
While these are the global figures of China, let’s take a deep dive into India-China trade. So, without any further delay let’s find out what China imports from India?
India lacks when it comes to exporting goods. China on the other hand is the leader of exports in the world. The Chinese exports to India in 2019 amounted to $74.72 billion whereas India’s exports to china amounted to $17.95 billion in 2019. The trade deficit between India and China in 2019 was $56.77 billion. Despite having such huge trade deficit, people tend to forget that India’s overall import with china is 14.37% making China the largest source of our imports whereas exports to china from India accounts for only 5.47% making it the third largest importer of India behind USA and UAE.
Currently, Iron ore accounts for 53% of exports to China from India. Iron ore is the most important good; that is required for basically building anything be it a tall building, a c-link bridge or even factories. India does well when it comes to export of iron ore but certainly it cannot rely on only iron ore for decreasing the trade deficit.
Next main commodity that China imports from India is cotton yarn. India is the world’s largest exporter of cotton yarn and China is in that list of importers of yarn as well around 12% of the total exports to China comes from cotton yarn. One of the biggest commodities that India exports to the world is petroleum. and China is the world’s largest importer of petroleum. But, the exports in petroleum have seen some major declines in the past couple of years. Currently, Petroleum accounts for 9% of total exports to China.
China is also the biggest importer of refined copper in the world. It is mainly used as a raw material for various electronic equipment’s. India’s copper export to China accounts for 6.3% to total export. Goods such as granite, puffery, basalt, sandstone, and other monumental or building stone accounts for 5.35% of total export to China.
Next, vegetable oils and fats account for 3.7% for exports. Coming as a surprise, India exports human hair, wool, or other animal hair prepared for use in making wigs. This accounts for 2.27% for total exports to China.
Next up is pharmaceuticals. India is one of the leading exporters of medicines and during this pandemic, India is going to play an important role in making the vaccines available to the world. While China has a strong pharmaceuticals industry, it still isn’t as good as India’s.
We Indians love gems and jewels but we are not the only one with this liking. China likes them as well and India does export these precious gems and jewels to China. Other items in the list are auto engine, components and automobiles agricultural products like grains, tobacco, oil-seeds, marine foods, electrical equipment, etc.
India is not perfect and lags behind in trade. In simple terms: We import a lot and export very less. In order to increase our GDP and face the economic slowdown caused by COVID-19, India needs to ramp up its exports. China is among India’s biggest trading partners but we buy more and sell less. This needs to change if we want to replace China as the world’s factory. India needs to take some big steps. India holds the potential to replace china as the world’s manufacturing hub.