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Closer ties for India & China

This past weekend Indian Prime Minister Narendra Modi attended the two-day long 18th Shanghai Cooperation Organisation (SCO) summit, his 4th trip to China since he entered office. This will be India's first participation in the summit as a full-time member of the organization: India, along with Pakistan, became the full-time members during the Astana summit in June 2017.  With 8 members (India, Kazakhstan, China, Kyrgyzstan, Pakistan, Russia, Tajikistan, Uzbekistan), the SCO represents approximately 42 percent of the world’s population, 22 percent of the worlds land area and 20 percent of global GDP. For the past several years, India and China have been important engines of regional and global economic growth and fostering a strong economic partnership between the two countries, stability-oriented macroeconomic policies and reduced barriers to trade and investment, is seen as a driving force for future growth and to be globally beneficial.



However the two countries have had a rocky relationship over the last few years, but, when it comes to pragmatic matters like economic opportunities and technology, the two have been able to seek common ground. Notable progress has been made through the recent establishment of two IT corridors, allowing Indian tech companies to have free access to the Chinese market and vis a vis for Chinese companies. Earlier in the year, Prime Minister Modi met with President Xi in China: It was a meeting to solidify cooperative bilateral ties between the two. Both parties agree that friendly India-China relationship is important for growth and global peace, such that it promotes a multi-polar globalized world.



India may be skeptical of the broader belt and road plan, in particular The China-Pakistan Economic Corridor but it remains keen to engage in some aspects of it, such as the Asian Infrastructure Investment Bank and the chance to bring Chinese investment into the country. A nation hungry for investment, Modi’s India is keen to find ways to catch up with its richer Asian neighbour. China is India's largest trading partner. As of 2017 the volume of bilateral trade between India & China stands at US$84.5 billion. This figure excludes bilateral trade between India & Hong Kong which stands at another US$34 billion.



Chinese imports from India amounted to $16.4 billion or 0.8% of its overall imports, and 4.2% of India's overall exports in 2014. The 10 major commodities exported from India to the China were :

  1. Cotton: $3.2 billion
  2. Gems, precious metals, coins: $2.5 billion
  3. Copper: $2.3 billion
  4. Ores, slag, ash: $1.3 billion
  5. Organic chemicals: $1.1 billion
  6. Salt, sulphur, stone, cement: $958.7 million
  7. Machines, engines, pumps: $639.7lmillion
  8. Plastics: $499.7 million
  9. Electronic equipment: $440 million
  10. Raw hides excluding furskins: $432.7 million


Chinese exports to India amounted to $58.4 billion or 2.3% of its overall exports, and 12.6% of India's overall imports in 2014. The 10 major commodities exported from China to India were:

  1. Electronic equipment: $16 billion
  2. Machines, engines, pumps: $9.8 billion
  3. Organic chemicals: $6.3 billion
  4. Fertilizers: $2.7 billion
  5. Iron and steel: $2.3 billion
  6. Plastics: $1.7 billion
  7. Iron or steel products: $1.4 billion
  8. Gems, precious metals, coins: $1.3 billion
  9. Ships, boats: $1.3 billion
  10. Medical, technical equipment: $1.2 billion


Ultimately India’s adjustment of policy towards China is a tactical one: it cannot get enough financial support and investment from G7 countries to develop its infrastructure. The OBOR initiative has shown that China has both the willingness to invest and infrastructure development capability India needs. India-China relations will be highly significant to global economics in the next quarter of this century: a narrowing of the current power gap between the two Asian giants will only assist in this.





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