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Explainer | Why India’s growing economic reliance on China makes it hard to quit
- Recent hostilities between the two powerful neighbours have ratcheted up tensions and seen calls in India for a boycott of everything Chinese
- But the pair’s huge trade flows, New Delhi’s exports push and rising Chinese investment in India, among other things, doesn’t make severing ties easy
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India’s economic ties with China run deep, making the recent escalation in political and trade tensions between the two powerful neighbours all the more worrying for businesses.
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Following a border clash in which several soldiers on both sides were killed, calls have been growing in India for a boycott of everything Chinese. Prime Minister Narendra Modi’s government this week banned the use of 59 Chinese apps. Goods bought from China are being delayed at Indian ports, and authorities are planning to impose higher tariffs and stringent quality controls on shipments.
But trade links between the two countries are strong and reducing India’s reliance on China will not be easy.
“A blanket ban on Chinese imports is not feasible,” said Harsh Pant, a professor of international relations at King’s College London. “It would be a self-defeating proposition.”
Trade Deficit
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The US pipped China to become India’s largest trade partner two years ago, but Beijing continues to remain New Delhi’s biggest source of imports. India’s purchases from China of everything from electronics to key drug ingredients to industrial machinery was just shy of US$70 billion in 2019. The bilateral trade deficit of about US$50 billion was far higher than with any other trading partner.
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