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| September 2010 Issue |
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Embellished Truths
The Myth of India-China Economic Interdependence
By Zorawar Daulet Singh
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The spectacular trade trajectory between India and China has dazzled the observer in recent years. Since 1992, two-way trade has increased 200 times to the USD 60 billion target for the year ending March 2011. For two states that are often portrayed as rivals, this is nothing short of remarkable. But for all the euphoria about a globalised system, nation states still care about the relative effects of their economic interactions. The prudent ones learn the art of keeping their books balanced. India it seems has been doing neither, and especially, vis-à-vis China.
Beneath the veneer of embellished data lies an uncomfortable reality. India over the past five years has been drifting into a trading relationship that cannot be called anything but unequal. China is now India’s biggest source of imports, accounting for 11 per cent of its total imports. China also accounted for 18 per cent of India’s overall trade deficit last year.
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India-China booming trade
Source: Department of Commerce, India
China’s share of India’s total trade deficit
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