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Economic ties are one of the biggest positive drivers of India-China relationship but the high imbalance of trade in favour of China remains a matter of concern. Discuss along with measures to reduce trade deficit for India. (15 marks)

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Economic ties are one of the biggest positive drivers of India-China relationship but the high imbalance of trade in favour of China remains a matter of concern. Discuss along with measures to reduce trade deficit for India. (15 marks)

Approach:

Model Answer :

India and China enjoy robust economic ties which have progressively increased over the years. China is among the top five trading partners of India. It has been hailed as among the biggest positive drivers of a relationship that is often beset with difficult political problems.

Trade imbalance:

In 2017-18, India’s exports to China touched $33 billion while imports were of $76.2 billion, leading to a huge trade deficit to India of about $43 billion. The large trade imbalance in favour of China, which imports from China much higher than Indian exports to China is a matter of much concern. Various factors causing this trade imbalance include:

Some measures to reduce trade deficit for India:

During the 11th session of India-China Joint Group on Economic Relations(JEG) in 2018, the Trade Ministers of two countries agreed to increasing bilateral trade between the two countries in a balanced and more sustainable manner. India must ensure this becomes a reality especially considering that China is under pressure already due to its trade war with China.

Subjects : International Relations

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