India China Admin Group 3
India China Admin Group 3
PAPER NAME
35 Pages 770.7KB
Summary
INDIA-CHINA TRADE RELATIONS
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SUBMITTED TO:
Ms. Swarita De
Faculty,Economics,ASMSOC, NMIMS Deemed to be University
ADMIN GROUP 3
ABSTRACT 15
This research paper provides a holistic examination of the multifaceted dynamics
between India and China, spanning historical evolution, economic policies, trade
relations, and geopolitical implications. It presents a comprehensive analysis of their
respective trade growth trajectories, emphasizing the pivotal role of economic policies
in shaping their divergent paths. While China's rapid integration into the global market
was fueled by drastic liberalization measures initiated in 1978, India's reforms
followed a gradual, politically influenced path. Import tariffs emerged as a significant
factor, with China's sharp reduction driving an impressive share of global trade, while
India maintained higher tariffs for an extended period. Labor laws and regulations in
both countries are scrutinized, revealing how pro-labor laws in India constrained
industrial development, while China's pro-business approach attracted 58
substantial
foreign investment. Furthermore, the paper explores the influence of India's Small-
Scale Industries (SSI) Reservation Policy, which limited economies of scale and
competitiveness compared to China's large-scale industries.
Infrastructure and education emerge as critical determinants of workforce productivity,
with China's substantial investments in these areas resulting in a more productive
workforce compared to India. The study underscores how language homogeneity in
China (Mandarin) facilitates effective labor allocation, providing a competitive
advantage over India's linguistic diversity. Additionally, India's higher reliance on
agricultural subsidies resulted in a larger portion of its labor force engaged in
agriculture, limiting the workforce available for industrial development.
Moving beyond economic factors, the research delves into the historical context and
sector-specific impacts of India-China trade relations. It explores the recent downturn
in trade volume, emphasizing India's need to reduce its dependence on Chinese
imports. The sector-specific analyses evaluate the impact of trade tensions on
industries such as electronics, pharmaceuticals, renewable energy, agriculture, and
infrastructure. It discusses the challenges faced by these sectors and the opportunities
arising from import substitution and domestic manufacturing.
The global impact section underscores the significance of India and China in the world
economy, highlighting their effects on global supply chains, geopolitics, technology,
energy markets, and international governance. It underlines how any shifts in their
relationship can create ripples across
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the global landscape.
The paper concludes by exploring the potential benefits of resolving trade conflicts
between India and China, including market expansion, economic growth,
infrastructure development, regional stability, and prosperity in the world economy. It
underscores the importance of fostering cooperation and understanding between the
two nations, not only for their own benefit but also as a positive contribution to the
global community.
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In a world where the interplay between India and China has far-reaching implications,
this research paper offers valuable insights for policymakers, scholars, and
stakeholders interested in the geopolitics, economics, and security dynamics of this
critical bilateral relationship. It provides a comprehensive framework for
understanding the intricate web of factors that have influenced their trade growth
trajectories and the potential for collaboration, should trade disputes be resolved.
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INTRODUCTION
The India-China trade wars have emerged as a focal point of global concern, reflecting
the complex interplay of economic, political, and geopolitical forces. This research
project embarks on an extensive exploration of this multifaceted issue, aiming to
provide an in-depth understanding of the causes, consequences, and potential
resolutions surrounding these ongoing trade conflicts.
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The history of economic relations between India and China spans centuries, with both
nations representing two of the world's most significant and dynamic economies. Over
the past few decades, their trade relationship has grown exponentially, driven by
globalization, technological advancements, and complementary economic structures.
However, this trajectory has been punctuated by recurrent disputes, resulting in a series
of trade wars.
This research endeavor seeks to unravel the intricate web of factors contributing to the
India-China trade wars. It encompasses historical context, trade dynamics, policy
interventions, and the broader geopolitical ramifications of this conflict. By examining
the root causes and triggers, we aim to shed light on the underlying tensions and
grievances that have fueled this trade rivalry.
Furthermore, the repercussions of the India-China trade wars extend beyond just the
two 47nations involved. They carry implications for global supply chains, trade policies,
and the balance of power in Asia and the world. This project strives to provide a
comprehensive analysis of how these conflicts have affected the two nations, regional
stability, and international trade dynamics.
In addition, we will explore potential avenues for conflict resolution, taking into
consideration the complex political and economic landscape in which these trade wars
are embedded. By doing so, we aim to contribute to the broader discourse on
international trade disputes and conflict resolution mechanisms.
This research project endeavors to offer a holistic and nuanced perspective on the
India-China trade wars, ultimately providing a valuable resource for policymakers,
economists, scholars, and anyone seeking a deeper understanding of this critical issue
in the contemporary global arena.
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LITERATURE REVIEW
Akshadha Sukhija(A011)
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1. The article titled India-China relations: issues and emerging trends written by
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B.M. Jain in the year 2007 majorly talks about the dramatic changes in the Indian
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Chinese relations from the early 1950’s to the present. The early phase of Sino-
Indian relations was marked by a close and warm friendship, but it started
deteriorating because of border disputes. The period following Jawaharlal
Nehru's death in 1964 marked a time of uncertainty in Sino-Indian relations.
During this period, there were attempts to improve relations, but they were also
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strained due to India's assertive actions like the dismemberment of Pakistan in
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1971, conducting a nuclear test in 1974, and the annexation of Sikkim. Chinese
incursions into the eastern part of India in 1986 created tensions, but a full-scale
war was avoided through political diplomacy and mutual restraint. There were
some good moments too as the visit of our then PM, Mr. Rajiv Gandhi to Beijing
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in 1988 marked a historic moment, being the first by an Indian Prime Minister
to China in 34 years, leading to various agreements on cooperation in science,
technology, education, and culture. Confidence-building measures (CBMs)
were also discussed, and subsequent high-level visits further improved Sino-
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Indian relations. The Tibet issue has been one of the major irritants in Indian
Chinese relations
ever since Tibet was forcibly occupied by China in 1950 and declared an integral part
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of its history. Given their potential and capabilities in military, industrial and economic
terms, the nature and pattern of Sino-Indian relations will largely depend on how the
two countries accommodate each other’s legitimate concerns and interests.
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2. The article titled The Road from Galwan: The Future of India-China Relations
written by Vijay Gokhale written in 2021 tells us how the paper looks at the
1
issue, that is when Indian and Chinese troops engaged in a brawl along the
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Galwan river on June 15, 2020 that left twenty Indian soldiers dead while
1
causing an unspecified number of Chinese casualties, through three lenses. The
first is an analysis of the foreign policy changes that have taken place in India
and China since 2008 and the extent to which India and China were factors in
those changes. The second is an analysis of the perceptions that each side has of
the other and the role of the current governments in this process. The third and
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final lens is the emerging contestation in the Indo-Pacific between India, China,
and the United States. There are other lenses through which this relationship
may also be evaluated, such as China’s alliance with Pakistan, but the older
issues appear to have less salience. The more difficult issues appear to flow from
either country’s perception of the other’s geopolitical aspirations.
Aman Mehta(A012)
Research paper 1 Sarangpani and Muthu
In their research talk about the economic implication from the India-China trade war.
India and China were the commercial and industrial centers of the world up until the
17th century but were laid to a state of economic dormancy following western invasions
until very recently. The rise of these two economies from the 1980’s has been one of
the most remarkable growth stories and today, both the countries play a significant part
in global order. Both of these nations combined are home to nearly
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40% of the world’s
population and are important trading partners with each other. China is India’s biggest
trading partner and also the country which India has the highest trade deficit with,
China accounts for more than 14% of India’s imports and contributes to important
sectors like telecom, power and important pharma components. The trade deficit
reduced in 2019-20 from the prior years due to increasing sentiments of nationalism
and protectionist policies in India. India is also looking to increase export of 20
products to China like electronic and aircraft equipment to further reduce the trade
deficit. ‘Boycott China’ policy is ultimately affecting several important sectors of
Indian economy due to India’s own manufacturing limitations. The solution instead
should be to increase India’s export capabilities and compete naturally because India-
China’s economic interests are deeply intertwined, and any adverse scenario will have
far reaching impacts on both the countries. Similar to the US-China trade war, India-
China trade war is also expected to be a lose-lose situation for both sides. India needs
jobs to provide incomes to its citizens and industries are needed to provide the jobs.
Hence, India’s focus should be on developing manufacturing industries to take
advantage of its huge labor potential and strengthen the domestic supply chain network
along with focus on multilateralism with its global trade partners.
of anonymity for the two powers of the old world after freedom from centuries of
western invasions. Today, the two countries hold some of the most important voices in
global politics and are crucial trading partners for each other. Major imports to India
from China have been electronic components, pharmaceutical and military grade
chemicals as well as various kinds of plastics while India’s main products of import to
China include organic 22
chemicals, ores and marine lifeforms. In the first phase of
pandemic lockdowns, trade volume between the two countries shrank by over 3 billion
USD, largely due to shutdown of factories in China amidst the rampaging virus, which
was relatively new at the time. Due to concerns of price hikes in products prices which
were imported from China, the ministry of commerce devised a counter strategy of
imposing duties on major exports from India to China to strike a balance, but the
strategy remained largely unfruitful. The second phase of lockdown proved to be
successful for India as many countries who have otherwise depended on China for
crucial imports, started to turn towards India. China itself imported large volumes of
fuel from India because of excess supply left with India due to internal lockdowns.
However, many small-scale India companies whose cashflows suddenly turned worse
due to the extremely sudden pandemic were left vulnerable to Chinese takeovers
because China had existing reserves and their recovery was faster than other nations.
To safeguard India’s economic interests amidst growing pressures, the Indian
government has decided to increase their FDI stake in countries which share a border
with the Indian mainland, these measures have made it very difficult for China to
suppress India through geopolitical relations and trade restrictions. After the pandemic,
India’s primary focus should be to subsidize domestic industries which will help
become Indian industries to remain self-sustainable and globally competitive, India
can also try to take opportunity opening up due to worsening US-China relations and
become an important trading ally for the US and become hub for major US companies
like Apple instead of China. India should also look towards a controlled partnership
agreement with China and acquire monopoly in exporting and importing certain
materials to and from China.
Ananya Khattar(A013)
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1. The article titled India-China relations: conflict and cooperation in Indo-pacific
region written 7
by Balwinder Singh in the year 2018 highlights the importance
and shifting balance of power in the region and the strategic interests of both
countries. However, their bilateral relations have been strained due to various
issues, including territorial disputes, economic competition, and strategic
alliances with other countries. It is crucial for both countries to find ways to
settle their strategic interests and enhance cooperation in various fields of mutual
interest such as economic cooperation, regional stability, cultural exchanges,
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cooperation on global issues, tourism and travel and scientific and technological
collaborations.
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But there are more differences than convergences as China is
threatening India’s core security and strategic
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interests in the Indo-pacific.
Trump administration (USA) is supporting India to contain Chinese domain in
Indo-pacific region. Further the China-Pakistan alliance poses challenges 45for
India, as it strengthens Pakistan's military capabilities and potentially affects the
balance of power in the region. Additionally, the growing partnership between
China and Russia could potentially limit India's influence in the international
arena. The two nations need to sort-out their differences and enhance
cooperation in various field of mutual interests.
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2. Chris Ogden a senior lecturer in the article the double-edged sword: reviewing
India-China relations
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in the year 2022 explores the historical evolution and
current dynamics of India-China relations. The relationship between the two
countries is characterized by a complex interplay of convergence and
divergence. While there are shared interests in areas such as mutual
development, modernization, and a multipolar world order, there are also
tensions arising from11 territorial disputes, national security concerns, and
regional competition. As such, India–China relations can be considered to
resemble a ‘double-edged sword’, whereby elements of their interaction can be
regarded as having concurrent benefits and liabilities. The article emphasizes the
need for dialogue, cultural exchanges, and a shift away from zero-sum thinking
to enhance stability and realize the potential of the Asian Century.
Anchita Prithani(A014)
1. Research
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Paper 1-
ttps://www.journalofpoliticalscience.com/uploads/archives/2-2-1-316.pdf
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Introduction:
- India and China are ancient civilizations, populous nations, and fast-growing
economies. They have historically coexisted peacefully except for a period of
nationalist tension from 1958 to 1978.
- Both countries have a border that spans 4,500 kilometers, primarily in northern
India and Tibet, with the Himalayas serving as a natural barrier.
- India is a democracy with a focus on free expression, while China is a communist
dictatorship with limited independence.
- The paper emphasizes the importance of collaboration and mutual interdependence
in a globalized world.
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Trade Patterns:
- India and China have significant markets and play a vital role in the global
economy.
- China's economy has grown through manufacturing and foreign trade, while India's
growth
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is more service-oriented.
- China has maintained a steady economic growth rate of about 10%, compared to
India's 7%
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over the last decade.
- China has been the world's largest exporter, while India's foreign trade share is
smaller.
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- In the last decade, India's exports have risen rapidly, with China becoming its
largest trading partner.
Bilateral
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Trade Patterns:
- Bilateral trade between India and China has grown rapidly over the last two
decades. 48 13
- In 2001, China's share in India's total trade was 3.5%, but it became India's largest
trade partner in 2008-09.
- 9Trade imbalances have increased significantly, resulting in a growing trade deficit.
- In 2012, it was estimated that India-China trade would cross $60 billion in 2010 and
$125 billion in 2012.
- The trade deficit has increased significantly over the years, reaching $46.6 billion in
2016.
In conclusion, the paper underscores the need for a comprehensive strategy to address
the trade imbalances and foster greater cooperation between India and China. It also
points to the potential for collaboration and investment opportunities between the two
countries.
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2. Research Paper https://mpra.ub.uni-
muenchen.de/84156/1/MPRA_paper_84156.pdf
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India and China have a long history of cultural exchange and friendship, despite the
geographical barrier of the Himalayas. Both countries share common economic and
political challenges, with high populations, poor economic bases, and imbalanced
regional development.
China began its economic reforms in the late 1970s, while India initiated reforms in
the late 1980s. Both have been striving to modernize their economies, reduce poverty,
and engage in international trade and investment. However, China has seen faster
economic growth, driven by factors like high savings, foreign direct investment (FDI),
literacy rates, and proximity to Hong Kong.
Trade liberalization and openness can enhance growth in both countries, as seen by
their increased exports-to-GDP ratios and growing trade.
India and China are considered significant players among developing nations, with
strong economic and political influence. The two countries have been moving towards
peaceful relations, focusing on economic cooperation rather than historical disputes.
Numerous scholars have debated whether India and China will continue to cooperate
or become rivals in the long run. Some emphasize economic cooperation, while others
warn of potential rivalry, especially in their pursuit of regional dominance.
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Andre Barretto(A015)
Research paper 1
Munish Malhotra
Points of summary
1. Policies of Trade - China quickly integrated into the global market after enacting
drastic liberalisation policies in 1978. India's reforms, in comparison, were carried out
gradually, partly as a result of agreements with communist parties. China's share of
global trade increased quickly as a result of its large reduction of import tariffs. Up
until the mid-2000s, India's tariffs were higher than China's, and its changes were also
less drastic.
2. Labor Laws: Up until the middle of the 2000s, India's pro-labour regulations were
stricter than China's pro-business laws. Chinese businesses were free to set their own
rules about pricing, wages, and hiring practices, whereas Indian businesses were
subject to limitations. Due to its rigid labour laws, India's industrial development was
hampered by foreign investment.
Research paper 2
Bhattacharya, Swapan K.; Bhattacharya, Biswa N.
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An Overview of Bilateral Trade between China 23
and India:
The first page provides a thorough summary of bilateral commerce between China and
India, highlighting the significant increase in trade volume over time. India a China are
important trading partners, with India mostly buying manufactured goods from China
and exporting raw materials. In order to improve mutual economic cooperation, the
text addresses several obstacles, including trade imbalances and regulatory
impediments, and emphasises the necessity of balanced trade policies.
RESEARCH OBJECTIVE
1. History and15Reasons:
- Investigate the historical context of trade relations between India and China,
highlighting significant milestones and key developments.
- Identify and comprehensively analyze the reasons behind the trade war and
political factors contributing to it.
2. Trend Analysis:
- Conduct a systematic trend analysis of India-China trade patterns over the years,
exploring fluctuations in trade volumes, major trading sectors, and the evolution of
trade agreements.
3. Impact on Indian Industries:
- Assess the impact of the trade war on various Indian industries, including but not
limited to manufacturing, technology, agriculture, and services.
- Analyze how trade tensions have influenced production, investments, and
competitiveness within these sectors.
4. Sector-Specific Impact:
- Examine how the trade war has affected specific sectors, such as technology,
agriculture, pharmaceuticals, and steel, in terms of exports, imports, and market
dynamics.
5. Global Effects:
- Investigate the broader global repercussions of the India-China trade war,
including its influence on international trade agreements, supply chains, and global
economic stability.
6. Benefits of Resolving the Conflict:
- Identify the potential advantages for both India and China if the trade war is
resolved, encompassing economic growth, improved trade relations, and
collaborative opportunities.
RESEARCH METHODOLOGY
1. Literature Review:
- Each team member will review a minimum of two research papers related to the
India-China trade wars. This will provide in-depth insights into the existing literature,
identify gaps, and facilitate a better understanding of the topic.
2. Secondary Sources:
- Utilize secondary sources, including government publications, economic reports,
and reputable news articles, to gather comprehensive information on the India-China
trade war. These sources will provide diverse perspectives and data to support the
research.
3. Historical Context:
- Study the historical context of India-China trade relations, focusing on significant
15
India and China were the major superpowers of the world and there has been evidence
found of56 enormous trading volumes between the countries in the olden times along the
parts of silk route which extended from China to the middle east through India. Opium
trade was widespread in the 19th century
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when the British exported opium made in
India to China in exchange for tea. India was also the first non-socialist country to
establish trade ties with the PRC, agreements agreed during the time of USSR are still
relevant today, although after many major and minor amendments. Modern day India-
China relations have been fortified through Joint economic group and Business
council. These engagements have been majorly helped by various 17 bilateral visits
between the country’s major political leaders in the 80’s, 90’s and 00’s. In 2003, India
and China signed the declaration on principles for relations and comprehensive
cooperation and also mutually decided to appoint special representatives. These trade
relations have become very diversified in the past decade where both India and China
have emerged as two of the most influential powers in global politics due to their huge
17
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populations and fast increasing economies. A total of 16 agreements were signed in
various key sectors such as railway, space cooperation and establishment of industrial
parks. Although these relations have not always been positive, these two countries have
constantly clashed with each other in a series of conflicts due to varying objectives and
differing ideologies and strategies for growth, they have tried to supress each other
through a variety of political, economic and armed manoeuvres. Despite these clashes,
India-China trade relations were on the continuous uptrend until 2023 where for the
first time, the trade volume fell by 0.9 percent in the first half of the year. After every
economic tussle between the nations, India has resorted to reducing imports as a form
of economic backlash. But India should be worried about the reverse happening to it,
India is massively reliant on China for important products and the trade deficit between
the countries is massively tilted towards Beijing. Even during calls of boycotting
Chinese products, people have not really been able to do that because of a lack of viable
substitute and huge underdevelopment in the domestic industries, even the government
measures towards it. After the recent pandemic which proved to be a massive setback
for both the countries, both have adopted new strategies for the future in order to assert
global dominance. In these conditions, partnership between India and China would be
good but is not considered a necessity.
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As we have seen previously, India China trade deficit has been heavily in favour of
China and through the trend analysis, we observe that these numbers have not seen
major fluctuation even after rising national sentiments of boycotting China in the late
2010’s, we have seen little to no effect in terms of percentage trade deficit reduction.
Trade deficit had only soared in favour of China as the decade went by. The
government has to provide necessary incentives to domestic companies to replace the
products which are currently being imported.
A similar pattern can be seen in the overall trade deficit and trade volume patterns,
India needs to reduce its dependence on China or else there can be massive
repercussions for the Indian economy if China tries to impose serious trade restrictions
on the country like never before, any other substitute will likely cost much more and
the only feasible solution going forward is to bolster domestic manufacturing base.
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Decrease in Exports: The strained relations between India and China have led
to a decrease in Indian exports to China. Indian industries that heavily relied on
the Chinese market, such as the smartphone and electronic manufacturing
sectors, have seen a decline in their exports.
Impact on Specific Industries: Some industries, like pharmaceuticals and
certain agricultural products, have been adversely affected by regulatory barriers
imposed by China. For instance, delays in approvals for Indian pharmaceutical
companies have hampered their exports to China.
Dependency on Chinese
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Inputs: Many Indian industries are highly dependent
on Chinese imports for raw materials and components. The disruption in the
supply chain, especially during the border tensions, has led to production delays
and increased costs in industries like electronics, automotive, and
pharmaceuticals.
E-commerce and App Ban: India's ban on several Chinese apps has created
opportunities for Indian app developers and the tech industry. Domestic startups
and platforms have seen growth in user base and investments.
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Consumer Boycotts: Consumer sentiment plays a role, and there have been
calls to boycott Chinese products. This has led to changes in consumer
preferences, affecting industries where Chinese products were dominant.
7. Export Diversification:
8. Geopolitical Risks:
Uncertainty and Risks: The ongoing border tensions and diplomatic relations
create geopolitical risks that can impact industries. Uncertainty can deter foreign
investments and influence business decisions.
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In conclusion, changes in India-China trade relations have had a significant impact on
various Indian industries. While some industries have faced disruptions and challenges
due to reduced exports and supply chain dependencies, others have found opportunities
in import substitution, domestic manufacturing, and export diversification. The long-
term impact will depend on the evolution of these trade relations and how Indian
industries adapt to the changing landscape. It's important for Indian industries to
remain agile and resilient in the face of evolving trade dynamics.
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India and China, two of the biggest and fastest-growing economies in the world, have
intricate economic ties spanning numerous industries. Their economic connections
have been stronger throughout time, affecting many different areas in both nations.
This article examines the sector-specific effects on trade relations between China and
India, highlighting important industries that have experienced rapid growth, difficulties
encountered, and opportunities for future cooperation.
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Manufacturing is one of the most important trade sectors between China and India,
especially in the electronics and consumer goods industries. China, also referred to as
the "world's factory," has been one of India's main suppliers of electronics, cell phones,
and other devices. China now enjoys a significant trade surplus as a result, and India's
consumer market is expanding as well. However, issues with intellectual property,
market competition, and product quality have presented challenges for this industry.
One important area where India and China are collaborating together is in the
pharmaceutical industry. China
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is a supplier of raw materials and active pharmaceutical
ingredients (APIs), whereas India is a significant exporter of generic medications.
Research and development collaborations have the ability to spur innovation and lower
healthcare expenditures for both nations. Difficulties include the necessity for
expedited authorization for cross-border pharmaceutical trading and variations in
regulations.
As both nations struggle with environmental issues, green technologies and renewable
energy have emerged as key areas 53
of collaboration. India has a sizable market for
renewable energy solutions, while China, a global leader in the production of solar and
wind energy, has the know-how. Cooperation in research, technological transfer, and
clean energy programs might have a big impact on both countries' efforts toward
sustainable development.
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Food processing and agricultural items make up another important area of commerce
between China and India. India imports fruits and soybeans from China and exports
grains, tea, and spices. Trade restrictions pertaining to market access and quality
requirements, however, provide difficulties. The growth potential of this industry can
be increased by enhancing agricultural cooperation, exchanging best practices, and
removing trade barriers.
China is the primary source of raw materials needed for India's large-scale
infrastructure projects. Imports of machinery, steel, and cement is essential to India's
building sector. Cooperation via joint ventures, knowledge transfer, and infrastructure
development could increase quality and efficiency and change the urban landscape in
both countries.
The impact of many sectors that are important to both economies on trade relations
between China and India is complex. Despite the difficulties, there are countless
chances for cooperation and development that should not be missed. India and China
may improve trade barriers, improve regulatory frameworks, and promote innovation
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The possibility for India and China to work together in a variety of areas could change
the dynamics of trade both regionally and globally as the world economy changes.
These two economic titans can overcome obstacles and realize the full potential of their
trade relations, which will benefit not just their countries but also the larger global
economy, by working strategically together and having a common vision for the future.
other nations.
4. Energy Markets:
· Impact: China is a significant importer of oil and natural gas from
countries around the world, including those in the Middle East. Any
disruptions in its economic growth due to trade tensions can impact global
energy markets.
· Analysis: A slowdown in the Chinese economy can lead to fluctuations
in oil prices and affect the energy-exporting countries.
5. Technological Competition:
· Impact: India and China are both investing heavily in technology and
innovation. Their competition can drive technological advancements that
impact global markets.
· Analysis: As both countries innovate and compete in emerging
technologies like 5G, AI, and biotechnology, the global tech landscape
can change.
6. Global Governance:
· Impact: Both India and China are members of international organizations
and forums. Their cooperation or conflicts can affect the functioning of
these institutions. 15
· Analysis: Differences between India and China in international forums,
such as the UN, WTO, or climate change negotiations, can impact global
governance and policies.
7. Investment Flows:
· Impact: Chinese investments in India, and vice versa, have implications
for global capital flows. Investments by Chinese firms in various
countries are closely watched.
· Analysis: National security concerns have led many countries to
scrutinize Chinese investments. This may influence global investment
trends and foreign direct investment policies.
8. Economic Ripples:
· Impact: Changes in India-China trade relations can affect the global
economy. For instance, a significant downturn in either country's
economy can have cascading effects.
· Analysis: Global financial markets, multinational corporations, and
investors are closely watching46 the economic health of both nations, as
their economic stability is tied to the health of the global economy.
India and China, the two most populous countries in the world and rising economic
giants, have a complicated trade relationship that has occasionally been tense. Their
economic relations have been put to the test by recent conflicts and disputes, which
have an impact on many industries 42
in both countries. But overcoming these problems
can lead to major advantages for the global economy as well as for China and India.
This essay examines the potential benefits of resolving the trade dispute between China
and India, highlighting the favourable effects for global collaboration, economic
growth, and stability in the area.
India and China's cross-border investment may increase if trade tensions are reduced.
When combined, the vast resources and experience of both nations can result in the
creation of joint enterprises, infrastructure projects, and technological partnerships.
Chinese investments in energy projects, highways, and railways in India have the
potential to have a major impact on the country's economic growth. Similar to this,
Indian proficiency in software development, medicine, and renewable energy might
draw Chinese investment, resulting in win-win situations and the expansion of
infrastructure.
For regional stability in Asia, trade relations between China and India must remain
steady. In regional alliances such as the BRICS group and the Shanghai Cooperation
Organization (SCO), both nations hold key positions. By fostering an environment of
trust and collaboration, trade disputes can be resolved, allowing these groups to
effectively tackle regional issues like poverty, climate change, and terrorism. Stable
economic relations also lessen the chance of geopolitical conflicts, promoting harmony
and cooperation across many domains.
There are numerous and extensive advantages to settling the dispute in trade relations
between China and India. Among the many benefits are increased investment, global
wealth, stability in the region, economic progress, and better cross-cultural
understanding. India and China can realize their combined potential and change not
only their countries but the world at large by cooperating to resolve disagreements.
GOVERNMENT INITIATIVES
Indian government policies toward China have evolved over the years in response to
changing geopolitical dynamics, bilateral relations, and regional concerns.
3
Here is an
overview of some key Indian government policies toward China: India has adopted a
two-pronged policy for dealing with China.
The first prong involves continued engagement, both bilaterally and in multilateral
forums such as BRICS, SCO and the Russia-India-China trilateral, in order to maintain
overall stability, deepen economic ties, and foster diplomatic cooperation on regional
and international issues. Thus, during the Doklam crisis, India not only insisted on a
diplomatic settlement based on a return to the status quo ante but did not let the crisis
come in the way of scheduled bilateral visits and meetings despite China’s state-
controlled media warning India of a repeat of the 1962 war and more troubles.
India has also sustained efforts to enhance its military and deterrent capabilities as the
second prong of policy.
There is an emerging third prong in India’s China policy in the form of new external
balancing effort. The evolution of India-US relations in particular but also of India’s
relationships with Japan and Australia as well as the quadrilateral cooperation among
them indicates a growing convergence in their views regarding stability in the Indo-
Pacific region particularly with respect to China’s intentions in laying territorial claims
to more than 80 per cent of the South China Sea as well as to the sovereign territories
of India and Japan.
Non-Alignment (Post-Independence
25
to the 1960s): In the early years after Indian
independence in 1947, India35
pursued a policy of non-alignment and sought to maintain
neutrality in the Cold War. India was one of the
33
founding members of the Non-Aligned
Movement (NAM). During this period, India established diplomatic relations with the
People's Republic of China in 1949.
Sino-Indian War (1962): The 1962 Sino-Indian War marked a significant shift in
India's policy toward China. The conflict resulted in India's defeat and loss of territory
in the northeastern border regions. India adopted a more cautious and vigilant approach
toward China in the aftermath of this war.
Economic Engagement (1990s to 2000s): India began to engage more closely with
China on economic and trade fronts. Both countries saw potential benefits in economic
cooperation and trade. India-China trade relations expanded significantly during this
period.
54 36
Look East Policy (1990s): India's Look East Policy, later termed the Act East Policy,
aimed to strengthen India's ties with Southeast Asian nations, including
16
those with
whom China had been expanding its influence. This policy sought to enhance India's
presence in the Asia-Pacific region.
Border Disputes and Military Standoffs: In recent years, India's approach to China has
been marked
16
by tensions and border disputes, most notably in the Galwan Valley in
Ladakh. India has taken a more assertive stance in response to these disputes, while
also seeking diplomatic resolutions.
Diversification
22
of Trade and Investments: In response to growing tensions, India has
sought to reduce its economic dependence on China. This includes implementing
stricter scrutiny of Chinese investments and promoting domestic manufacturing under
initiatives like "Make in India."
30
POLICY RECOMMDATIONS
11
As has been evident across the last 75 years of their international interactions with each
other, India–China relations are beset by a complex and 1
ever-evolving melange of
interests that across time have converged and diverged. It seems the two nations stand
at a crossroads in the seventieth year of bilateral relations. They can go down one of
four paths: a downward spiral toward armed confrontation; armed coexistence;
coexistence with cooperation and rivalry; and partnership. Partnership looks unlikely
at present, but here are some recommendations that can be taken up by each
government and make it best out of each economy.
1
Dispute border: Both sides should treat the military escalation with equal
seriousness. Even after the resolution of the present standoff in eastern Ladakh,
both sides may be in a prolonged period of armed coexistence as a new normal.
As the forces on both sides are likely to be relatively balanced, it would be
advantageous for both to return to the agreements and understandings from 1993
onward and improve 4
upon them. Clarifying the LAC is a crucial step in this
effort. Unless
8
the Line of Actual Control (LAC) is clarified, as Modi suggested
in 2015, it is difficult not to have periodic incidents like in Depsang in 2014 and
Chumar in 2015. Also, there is no point in asking the Special Representatives
designated to discuss the border issue, to intensify their work. What is needed4is
action by the respective leaderships of China and India. Both sides need to
urgently revitalise their peace keeping mechanisms on the border. They have
layer upon layer of confidence building measures, yet they are not available to
avoid crises.
1
International relations: The two sides would need to accommodate the
legitimate interests of the other side on key partnerships: China’s with4 Pakistan
and India’s with the United States. These may not be desirable, as terrorism
emanating from Pakistan remains a problem for India. As a friend of Pakistan
and an important 8military partner, India feels that China should do more to
restrain Pakistan, but in the current circumstances neither will give up its
partners, and both India and China could talk through a modus vivendi on the
red lines of concern.
1
Trade: India has flagged the unsustainable trade imbalance at the front and
canter of the relationship, and this has gone unaddressed. China will need to
work on resolving the trade deficit with India. At any rate, decoupling will
happen selectively, in the same way and for the same reasons that China is
choosing to decouple from the United States. A balanced trade and economic
31
relationship might
4
lay a solid foundation for future relations, given the size of
both economies India and China need to resolve their problems on the economic
front because the potential for their relationship is high, but the performance as
of now is well below par. An immediate area of attention is in that of the trade
balance which is heavily skewed against India. But many Indian products like
pharmaceuticals, Information Technology products and non-basmati rice are
blocked from the Chinese market. China needs to open up its markets to Indian
goods.
6
Understanding: Better understanding of each other’s regional initiatives through
open dialogue is important to build trust. The Indo-Pacific vision is as much a
developmental necessity for India as the BRI may be to China. Part of building
trust must be an open discussion on each other’s intentions in key regions—
South Asia and the northern Indian Ocean and East Asia and the western
Pacific— as well as respect for each other’s special positions in the western
Pacific and northern Indian Oceans.
Trust: Public trust in China has been deeply damaged and is unlikely to recover
for some time. Indians believe that China took advantage of the pandemic to
bully India. Ways to rebuild public trust need to be identified.
10
. Coordinating geoeconomic plans: Acknowledgment of India’s multilateral
aspirations by China is overdue. If China can accommodate India’s role, there
may be ample scope for both to collaborate on a range of issues from global
health and climate change to standard setting in new technologies. It is as much
in India’s interest to ensure that the rules for the digital revolution are not merely
2
written by those who dominated the world in the previous two centuries.
Lacking in finance capital and industrial resources, India cannot undertake the
sole burden of lifting South Asia from underdevelopment and low
interdependence, especially given the growing domestic claims within the
country itself. If Indian requirements in the subcontinent are to advance
connectivity (both within and between South Asian states) and deepen the
developmental process, China’s engagement can be nudged or leveraged in
directions that also advance India’s long-term interests. Building constructive
regional partnerships are unavoidable and China is one 2
of the key players that
need to be engaged more strategically by India. Much of the viability of
logistical networks and energy projects is linked with India’s economy and
access to its large market. For example, hydropower projects developed by
China with India as the main eventual market could be a form of trilateral
cooperation. Another instance is China’s construction of a new terminal at the
32
CONCLUSION
In conclusion, this comprehensive research paper delves into 20the economic policies,
trade relations, and diplomatic strategies that have shaped the complex and dynamic
relationship between India and China. The juxtaposition of these three distinct
conclusions highlights the multifaceted nature of this critical partnership and
underscores its global implications.
The comparative analysis of India and China's economic and industrial policies
showcases how different approaches to reform and regulation have led to significant
disparities in their economic trajectories. China's swift liberalization and infrastructure
investments have propelled it to a dominant position in the global market, while India's
more gradual reforms and labor regulations have posed challenges to its industrial
growth. This divergence is a testament to the profound impact of domestic policies on
economic outcomes.
The exploration of the potential benefits of resolving the trade dispute between these
two Asian giants underscores the far-reaching consequences of a harmonious trade
relationship. It extends beyond bilateral ties to encompass global collaboration,
economic growth, and regional stability, emphasizing the interconnectedness of
nations in today's world.
In sum, this research paper illuminates the intricate tapestry of India-China relations,
revealing the economic, diplomatic, and geopolitical threads that interweave these two
nations. As the authors, we advocate for a future where these Asian giants harness their
21
combined potential for the greater good, where their shared commitment to peace,
stability, and prosperity not only shapes their destinies but also influences the broader
Asian and global landscape. In an era where collective solutions to global challenges
are paramount, the time for cooperation is now, and the promise of a brighter and more
cooperative future beckons not only for India and China but for the entire international
community.
34
References
Gokhale, V. (2021). The Road from Galwan: The Future of India-China Relations. Carnegie India .
Anil, A. (2020). Impact of COVID-19 on India-China Trade. Centre for Public Policy Research, 12.
Ayyub, S. (2012). Indo-China trade relations:present trends. IIM Journal.
BHATTACHARYA, S. K., & BHATTACHARYAY, B. N. (2007). GAINS AND LOSSES OF INDIA-
CHINA TRADE COOPERATION – A GRAVITY MODEL IMPACT ANALYSIS. CESIFO
WORKING PAPER.
Dar, A. A., & Mehta, D. (2020). A study of India China trade relations. International Journal of
Political Science and Governance.
India–China relations: issues and emerging trends. (2023, january). Retrieved from Researchgate:
https://www.researchgate.net/publication/366928274_India-
China_relations_issues_and_emerging_trends
MALHOTRA, M. (2017). AN ANALYSIS OF INDIA – CHINA TRADE AS A CASE STUDY FOR H-
O THEOREM. Indian Journal of Economics & Business, Vol. 2 No. 2 (July-December,
2017).
SARANGAPANI, D., & D. M. (2020). ECONOMIC IMPACT OF INDIA-CHINA. International Review
of Business and Economics.
Singh, B. (2018). India-China Relations: Conflict and Cooperation in Indo-Pacific Region. Journal
of Political Studies.
The Double- Edged Sword: Reviewing India–China Relations. (2022). India Quarterly.
35
Work Allocation
A011: Akshadha Sukhija: Literature review and Indian and global impact.
A015: Andre Barretto: Literature Review, sector specific impact and benefit of
resolving the conflict.
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