Trade gap between India and China grows as commodity prices decline

13 Jul 2022 , 02:55 PM

As imports increased and exports decreased in the first two months of the current fiscal year, India’s trade imbalance with China worsened significantly.

As concerns about a worldwide recession increased, commodities prices fell precipitously, which negatively impacted exports. The reduction was mostly caused by the COVID-19 limitations and sluggish Chinese demand. Exports of iron ore and copper specifically declined.

In April-May 2022, commerce between the two nations increased by just 2 percent compared to the same period last year, while trade between India and the United States increased by a sharp 34%.

According to trade data for April and May, India’s exports to China decreased by nearly 31% to $3.07 billion while its imports increased by 12.8% to $15.39 billion. Exports of petroleum products increased as a result of private refiners increasing their foreign sales to make up for lower domestic sales during those months.

As a result, petroleum products replaced iron ore as China’s leading export. Compared to the decrease in iron ore and copper exports, the value of petroleum product exports increased just little.

Value-wise, India’s shipments of iron ore to China increased as market prices rose. In July 2021, prices reached an all-time high of $220 per tonne. In November, prices dropped below $100 per tonne before rising in the early months of this year. Iron ore is currently trading at roughly $100 per tonne as global prices have once again declined.