China’s economic slowdown has had a peculiar impact on its trade with India. It is buying less from India but is selling more than before. The January-August 2022 trade data confirms this trend. China’s share in India’s exports has come down from 6.5% in January-August 2021 to 3.5% in January-August 2022. Its share in India’s imports remains broadly the same at about 15%.
Exports
India’s exports to China during January-August 2022 were $16.5 billion, a decline of 50.7% y-o-y. India’s global exports had a positive growth of 17.9% during this period. The major products, which registered a growth in exports to China, were light petroleum oil ($1.6 billion, 595%), shrimp and prawns ($694 million, 29%), broken rice ($634 million, 131%), sulphur ($322 million, 248%) and ferro alloys ($261 million, 9.27%). Figures in brackets show the value of exports and export growth, respectively.
But the export of many products to China declined. These include iron ore ($878 million, -73%), cyclic hydrocarbon ($325 million, -58.4%), refined copper ($ 319 million, -63%), human hair ($253 million, -28.8%) and unwrought aluminium ($239 million, -67.3%). Most exports are primary materials feeding China’s factories. With industrial growth coming down, China needed less of these. This broadly explains the decline in the export of many products.
Imports
India’s imports from China in January-August 2022 were $70.7 billion, a growth of 23.6% y-o-y. India’s global imports grew by 28.5% during this period.
65% of India’s imports from China is limited to three product groups — electronics (30% share), machinery (20%) and organic chemicals, including APIs (15%). Here are some products whose imports grew big during January-August 2022: mobile phones, telecom equipment, parts ($4.57 billion, a growth of 14.7%), solar cells ($4.3 billion, 110%), laptops, PCs ($4.3 billion, 16%), laptop memories, ICs, parts ($3.6 billion, 16.8%), lithium ion battery, etc, ($1.4 billion, 103%).
Why are India’s imports growing despite a slowdown in China? We are critically dependent on China for articles of everyday use as well as for industrial products such as mobile phones and laptops, components, solar cell modules, ICs and more. Lithium-ion battery imports surged more than 100% during JanuaryAugust 2022 y-o-y. The adoption of electric vehicles will increase this steeply.
Here are a few more products along with the value of India’s imports from China during January-August 2022: textiles and apparel ($1.7 billion), fertilisers ($1.2 billion), antibiotics ($895 million), glassware ($590 million), furniture ($534 million), paper and board ($469 million), shoes ($236 million), toys ($163 million). The list of such products that can be produced in India is long. India must eschew the lure of low-value-added products and invest in deep manufacturing. For EV batteries, we must produce lithium-ion cells; for laptops, we must make circuit boards; for cellphones, we must make components and not merely outer shells of the final product.
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