Online Quiz Test

China, India and the promise of the power of two

GS1 Poverty & Developmental Issues GS 2 Government Policies & Interventions


  • China and India share significantly more interests than they do differences.

China and India coming together

Representatives of developing countries:

  • China and India, as two neighbouring and ancient civilisations with a combined population of 2.8 billion, are examples of developing countries and emerging economies.

Crucial period of modernisation for both:

  •  Both India and China are undergoing national rejuvenation and a crucial period of modernization in which obstacles must be surmounted and problems must be resolved.

China’s path of modernization:

  • Modernisation is advancing in China on all fronts. Here, the path to modernization focuses on high-quality development and is based on Chinese practises.
  • It entails the modernization of a vast population in which there is:
  • Common prosperity for all,
  • Material and cultural-ethical progress,
  • Harmony between humanity and nature, and
  • Peaceful development.


    •  In a recent meeting with India’s External Affairs Minister and the Chinese Foreign Minister, he stated that the development and revitalization of China and India represent a boost to the force of developing countries; it is one that will change the destiny of a third of the world’s population and have an impact on the future of Asia and beyond. This will open up new opportunities for all nations, particularly those in the region.
    •  This echoes what India’s Minister of External Affairs stated in 2022, that the Asian Century will occur when China and India join forces.
China’s focus areas

  • Steady growth:
    •  China’s economy grew by 3% in 2022, and 12,06 million urban jobs were created. China’s gross domestic product grew at an annual rate of 5.2% over the past five years and 6.2% over the past decade. China’s economic power is steadily ascending to ever-greater heights.

People’s well-being: 

    •  As a result of persistent efforts over the past eight years, China has historically eradicated absolute poverty, lifting nearly 100 million rural residents out of poverty.
    •  More than 70 percent of government spending went towards ensuring the welfare of the populace. There are 1.05 billion people covered by basic retirement insurance, an increase of 140 million.
    •  The standard of living continues to improve in new ways.

Opening up:

    • China’s total goods trade volume surpassed 40 trillion yuan in 2022, registering an annual growth rate of 8.6%.
    • China’s actual use of foreign capital increased by 8%, and the nation remained one of the most attractive destinations for foreign investors.
    •  The overall level of tariffs continues to decline, falling from 9.8% to 7.4%. China’s doors to the rest of the world are widening.

Win-win cooperation:

    •  During the period 2013-2021, China’s contribution to global economic growth averaged 38.6%, which was greater than the contribution of all G7 nations combined (25%).
    • Since 2021, when Chinese President Xi Jinping proposed the Global Development Initiative (GDI) in a speech to the United Nations General Assembly, more than 100 countries have expressed their support, and more than 60 countries have joined the Group of Friends of the GDI.




China-India trade


  • The bilateral trade volume between China and India will reach $135,984 billion in 2022.
  •  The Chinese market is accessible to India, and Chinese investments have created jobs for the Indian population and contributed to India’s economic growth.


Tariffs and non-tariff steps:

    • As trade imbalances concern policymakers, India is considering tariffs and non-tariff measures to reduce imports of non-essential consumer and electronic goods, including those from China.
    •  Limited participation for industries:
  • A portion of the industry believes that certain requirements, such as the need for local experience, limit their participation in the Chinese procurement process.
    • China’s dumping practices:
  • India’s domestic industry has suffered material injury due to dumping. Against this, India has imposed antidumping duties on a few Chinese products.
    • Geopolitical constraints:
      • India is also suspicious about the strong strategic bilateral relations between China and Pakistan. The border dispute between the two countries is also causing hindrances.

Indian Government’s steps to reduce the trade deficit & way ahead

  • Buyers – Sellers meets:
  •  The Indian government has taken numerous steps to assist exporters by facilitating Buyer-Seller meetings between potential Chinese importers and Indian exporters in an effort to increase exports of sugar, oil meals, Indian rice, and grapes.

Promoting domestic manufacturing:

  • The government has implemented a variety of schemes and programmes to assist domestic industries in competing effectively with imports.
  • Make in India, Digital India, Software Technology Parks, Electronics Hardware Technology Park Scheme/ Export-Oriented Unit Scheme, and Special Economic Zone Scheme provide support for promoting domestic manufacturing in the country.


  • The Foreign Trade Policy:
  • The Foreign Trade Policy 2015-20 includes mechanisms such as the Merchandise Exports from India Scheme, the Advance Authorisation Scheme, the Export Promotion Capital Goods Scheme, and the Interest Equalization Scheme to facilitate the competitiveness of exports by businesses.
  • The government routinely engages in proactive policy and procedural modifications so that businesses can adapt to the dynamic international trade environment.
Trade Deficit

  • About: 
    • A trade deficit occurs when a nation’s imports exceed its exports over a given period of time.
    • It is also known as a negative trade balance (BOT).

Advantages of Trade Deficits:

·        It permits a nation to consume more than it generates. In the short term, trade deficits can assist nations in avoiding product shortages and other economic issues.

·        It exerts downward pressure on a nation’s currency in a regime of floating exchange rates. Domestic currency depreciation also makes exports cheaper and more competitive on international markets.

·        Trade deficits can also result from a country’s attractiveness as an investment destination.

Disadvantages of Trade Deficits:

    • o It can facilitate a sort of economic colonisation.
    • If a nation consistently runs trade deficits, citizens of other nations will acquire funds to purchase the nation’s capital.
    • This may involve making new investments that increase productivity and generate employment opportunities.
    • However, it may also involve the acquisition of existing companies, natural resources, and other assets.
    • If these purchases continue, foreign investors will eventually own nearly all of the country’s assets.
    •  Trade deficits are significantly more dangerous when exchange rates are fixed.
    • Under a fixed exchange rate regime, devaluation of the currency is impossible, trade deficits are more likely to persist, and unemployment may increase substantially.


Daily Mains Question

The Asian Century will happen when China and India come together. Examine. What can India learn from China’s path of modernization?