TRADE SURPLUS!!!! WHAT'S THAT?

Since 2020, India is pushing hard to decrease the trade deficit via promoting exports. We all panic when the trade data arrives and later, we forget. But one thing no one ever thinks of is who pays for the trade deficits which fall into billions and billions of dollars? I know Santa is definitely not the one who is going to pay. Then who? 

None other than, us. That's right. We, the taxpayers of India. We, the middle class of India. A shocking data recently showed up on my desk. 64% of the Rs 14.83 Lakh Cr of GST collected by the GOI comes from the bottom 50% of the population. Only 3% of the GST collection comes from the top 10%. Either the top 10% has halted their consumption or they have found out a way to evade GST as well. But today, let's talk about the trade deficit. 

When a country imports more goods than they export, a trade deficit is created. Vice-versa, a country having a trade surplus exports more goods than what they import. 

Clashes between the Indian army and the Chinese soldiers in the Galwan Valley led to boycotting Chinese goods. Since then, imports from China have taken a major hit. Rather, India has become a net exporter to China. 


Sounds too good to be true, doesn't it? I wish this was the case. But the case is exactly the opposite. India's imports from China are on a continuous rise. Since 2008, China has had a trade surplus with India. We can blame the 0% customs tax that Mr. Manmohan Singh's government applied on the imports of goods from China back in 2008 but that's way too old. China is really strong and smart. Now don't get me wrong. I love this country as much as you all do, probably more. But as a tax-paying citizen, I will raise my voice against this because, ultimately, I am the one paying for these deficits. In fact, you are all paying for these deficits as well. 

Trade between India and China touched an all-time high of $139.54 billion in 2022 while the New Delhi trade deficit with Beijing crossed the $100 billion mark despite frosty bilateral relations. To make you all aware how big this number is, India's yearly oil imports stand at $100 billion. Back in 2021, trade between India and China touched a new high of $125 billion. China's exports to India climbed 21.7% to $118.5 billion. During 2022, China's imports from India dwindled to $17.48 billion, a year-on-year decline of 37.9%. This is exactly the opposite of what India is trying. 

This is a serious concern. The trade deficit in 2021 with China stood at $69.56 billion as India's imports from China witnessed an increase of 46% to reach $98 billion. The trade between the two countries continued to boom despite border tensions. According to an official brief on trade deficit on the Indian Embassy website in Beijing, "the rapid expansion of India-China bilateral trade since the beginning of this century has propelled China to emerge as India's largest goods trading partner by 2008".

Since the beginning of the last decade, bilateral trade between the 2 countries has recorded exponential growth. On average, India-China trade grew by 75%. Also, on the global trade front, despite the weakening of US and European demand and the COVID-19 controls leading to periodic shutdowns of several cities including Shanghai, China posted a trade surplus of $877.6 billion. That's approximately 2X India's forex reserves. As per the customs data, China's overall exports in 2022 rose by 7% and imports rose by 1.1%. China's overall exports increased to $3.95 trillion. India's GDP stands at $3.8 trillion. 

Let's keep our hate aside for a moment. I know what they did to our soldiers was uncouth, but let's look at it from a learning perspective. I truly admire the way China does business. Deng Xiaoping once said that it doesn't matter whether a cat is black or white as long as it catches mice. The country is in lockdown, and their profits are still increasing. I just marvel at their brilliance.

FUN FACT 

5 most important metals required to manufacture a battery are manganese, nickel, lithium, cobalt, and Graphite. Australia has a monopoly in lithium production. South Africa has a monopoly in cobalt production. The Republic of Congo has a monopoly is nickel production. These metals need to be refined so as to get to the purest form. Guess which country has a monopoly in refining all of these rare earth metals? CHIAN CHINA CHINA 

We can go on and on upon this, but it would just be a waste of time. China is a true dragon. The question arises, is India a true royal Bengal tiger? When will this trade deficit decrease? Is Mr. Modi government capable of reducing this deficit? Is the government fooling us with fake numbers? I don't know but I know this for sure, that the higher the trade deficit, the higher is the rate at which the rupee will depreciate. When I try to paint a picture of how the rupee would look in 2047, I get 2 contrasting images. One is the rupee trading at 30 against the dollar and let's not spoil your weekend by blurting out the second number.