Even as China’s trade data is showing signs of a recovery at the start of the new year, bilateral trade with India has remained in a slump with Indian exports to China falling by more than 30 per cent in February. Overall bilateral trade is down 6.9 per cent in February from a year earlier to $9.6 billion, according to new figures released here on Friday by China’s General Administration of Customs (GAC).
The grim trade figures with India marked a contrast from surprisingly upbeat trade data that showed signs of a recovery, analysts said, with Chinese exports recording a 21.8 per cent increase. Wang Jun, an economist with the official China Center for International Economic Exchanges, told the state-run Xinhua news agency the recovery in exports could be attributed to the strong performance of emerging economies, falling commodity prices and importers in China stocking up before the annual February Chinese New Year holiday. Analysts have also raised the possibility of some exporters exaggerating their figures.
China’s trade with emerging economies—barring India—showed particularly strong growth, rising 22 per cent with ASEAN countries, 31.6 per cent with Russia and 61.4 per cent with South Africa. Trade with India, however, fell 6.9 per cent, with Indian exports down 31.3 per cent, reaching only $ 2.7 billion after two months of this year. One likely reason is falling Chinese demand for iron ore, with overall imports falling 1.5 per cent on account of the new year holiday. However, with export bans in India and China increasingly turning to new markets such as South Africa, a recovery in Chinese demand for ore is unlikely to have a major impact on trade figures.
February’s figures have underscored the continuing slump in bilateral trade, once seen as the most significant driver of relations with China amid other uncertainties. Trade fell by 12 per cent in 2012 to $66 billion, with the deficit reaching a record $ 29 billion and bringing new strains to the trade relationship. Both countries have set a $100 billion trade target for 2015. India has, however, emerged as an increasingly favoured destination for Chinese investment and project exports, with companies involved in $55 billion worth of project contracts in India, according to officials.
Commerce Minister Chen Deming said on Friday China would look to push its overseas investments in the coming year. Addressing reporters along the sidelines of the annual session of the National People’s Congress, he said China's overseas investment in 2012 had risen to $ 77.2 billion, with China becoming the fifth-largest capital-exporting country. “This year, we will maintain growth momentum in capital exports,” he said. He also called on countries to create “a transparent and just environment”, when asked about the recent lawsuit filed by manufacturing giant Sany against the U.S. government, which barred it from acquiring wind farms.
Telecom giants Huawei and ZTE have also faced scrutiny over security concerns, in the U.S., Europe, India and other countries.