Trade and Development Review, Vol 12, No 1 (2019)

Indo-China trade in the period of trade liberalization: a study on the composition, nature and balance of trade

Subhasis Santra, Joydeb Sasmal

Abstract


The nature and composition of bilateral trade between India and China has changed during the last three decades. Both these countries exported primary and resource based products to each other in 1988. With the passage of time China has made a drastic change in its export basket to India. At present majority of its exports comprise of sophisticated and technology intensive products. India’s exports to China, on the other hand, are still dominated by primary and resource based products. India has been suffering from trade deficit with China in almost all the years after liberalization. A number of policies were adopted by both these countries for a better performance in their bilateral trade balance. The econometric analysis of this paper reveals that policies adopted by China like FDI policy; tariff rate policy and exchange rate policy have been more effective to determine the trade flows between India and China rather than the policies adopted by India.

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