The India-China trade, which in recent years rose sharply despite bilateral tensions over the border dispute, showed the first signs of a slowdown in years falling by 0.9 per cent in the first half of this year.
This came as China’s overall foreign trade declined by about five per cent as its economy struggled to recover from Covid blues.
China’s exports to India in the first half of this year totalled $ 56.53 billion compared to $ 57.51 billion last year registering a decline of 0.9 per cent, according to the data released by Chinese customs on Thursday.
India’s exports to China during the same period totalled $ 9.49 billion compared to $ 9.57 billion last year.
The trade deficit in the first half of 2023 too declined significantly to $ 47.04 compared to $ 67.08 billion last year.
Last year was a bumper year for India-China trade as it touched an all-time high of $ 135.98 billion despite the continued chill in the bilateral ties over the military standoff in eastern Ladakh in May 2020.
The total India-China trade in 2022 overtook the $ 125 billion mark a year earlier by registering an 8.4 per cent increase.
New Delhi's trade deficit with Beijing crossed for the first time a $ 100 billion mark despite frosty bilateral relations. The trade deficit for India stood at $ 101.02 billion in 2022 crossing the 2021 figure of $ 69.38 billion. The slowdown of India-China trade in the first half of this year came as China's total trade including imports and exports fell nearly 5 per cent from a year earlier in dollar terms. While exports slipped 3.2 per cent and imports declined 6.7 per cent.
Also, China's exports tumbled 12.4 per cent in June from a year earlier amid weakening demand following increasing interest rates by central banks to curb inflation as the Chinese economy struggled to stage post-Covid recovery. Chinese customs data released Thursday showed imports slid 6.8 per cent to $ 214.7 billion. The disappointing data is yet another indicator of China’s sputtering post-pandemic economic recovery, which has lost momentum in the second quarter, analysts told the Hong Kong-based South China Morning Post.
“The latest data in the developed countries shows consistent signals of further weakness, which is likely to put more pressure on China’s exports in the rest of the year,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
“China has to depend on domestic demand. The big question in the next few months is whether domestic demand can rebound without much stimulus from the government,” Zhang told the Post.
Shipments to the Association of Southeast Asian Nations, which is China’s largest trade partner and one that provided major support to its export sector earlier this year, fell by 16.86 per cent compared to a year earlier.
Exports to the European Union, declined by 12.92 per cent year on year and the United States tumbled 23.7 per cent from a year earlier to $ 42.7 billion.
China's trade surplus with the US narrowed by 30.6 per cent to $ 28.7 billion, according to the customs data.
However, exports to Russia in June increased by 90.93 per cent compared to the same month last year.
China’s imports also fell by 6.8 per cent in June from a year earlier to $ 214.7 billion, down from a fall of 4.5 per cent in May.
Releasing the data, General Administration of Customs spokesman Lu Daliang said China would be facing more pressure to boost the stable growth of foreign trade in the later half of the year.
“Inflation is still prominent in developed world economies, geopolitical conflicts are still taking place and there is not enough drive for immediate growth in global demand,” The Post quoted him as saying.
Lu added that China’s economy is resilient and revitalising and that the foreign trade sector would still head towards a positive direction in the longer term.