Despite Border Tensions, India's Imports from China Near $100 Billion in 2021

The numbers arrived from Beijing first. China's General Administration of Customs reported that its exports to India in calendar year 2021 came to $97.52 billion, close to $100 billion for the first time. Counting goods moving in both directions, two-way trade reached $125.66 billion, a record, and it came during a year in which relations between the two governments were strained by border tensions.

The Chinese figures point to where the growth came from. The biggest jump was in electrical and electronic goods, smartphones and storage units among them. Industrial goods also surged, including telecom equipment, auto components and machine tools. A third group was specialty chemicals, notably active pharmaceutical ingredients, along with fertilisers such as urea and ammonia sulphate.

India's own data, which is more limited, tells a similar story with a lower total. The Foreign Trade Performance Analysis from the Ministry of Commerce and Industry covers only the first eight months of 2021. It shows sharp increases in crude petroleum and petroleum products, in pearls and precious and semi-precious stones, and in coal, coke and briquettes. Together these items made up about $60 billion of imports from China in that period. Commodity-wise figures for December have not yet been released.

The two countries do not agree on the totals. Provisional figures from the Directorate General of Commercial Intelligence and Statistics put India's imports from China at $87.5 billion and bilateral trade at $114.30 billion. Biswajit Dhar, a trade economist and professor at the Centre for Economic Studies and Planning at JNU, said the gap could stem from leakages in reporting, non-reporting, and under-invoicing by exporters.

Dhar read the surge as a sign that economics and politics run on separate tracks. He compared India's position to that of the United States, which has not reduced its reliance on China as the factory of the world despite worsening political ties. India, he said, has been unable to decouple despite government efforts, and its dependence could grow once manufacturing recovers fully to pre-pandemic levels. China's state-run Global Times made a similar point, calling the record trade proof that New Delhi cannot reduce its dependence on the Chinese market.

Ajai Sahai, director and CEO of the Federation of Indian Export Organisations, attributed the record imports largely to heavy demand from domestic industry for electronic goods, machinery and APIs. Economist Ajit Ranade added that reducing India's reliance on Chinese APIs would take a long time.

Exports ran in the other direction too. According to DGCIS data, Indian exports to China rose to $24 billion in 2021, from $19 billion in 2020 and $17.1 billion in 2019. FIEO also described them as record levels. Sahai said India gained some access to China's agricultural market during the year and is now shipping more non-basmati rice, exotic vegetables, soybeans and fruits.

Even so, the deficit widened. On provisional DGCIS figures, India's trade deficit with China was $61 billion in 2021, against $39 billion in 2020. Ranade noted that the deficit had been narrowing for three years until 2019 and has been rising again. The deficit has long been a contentious issue between the two countries. Ranade argued that exporters should look at the opportunity as well: China alone is a $6 trillion consumer market, and more than fifty countries have significant exports to it. Whether Indian sellers can claim a larger share, and whether December's commodity data confirms the pattern, are the points to watch next.