The U.S. and China in India’s Foreign Economic Policy: In Quest of Balance for Maintaining Strategic Autonomy

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Abstract


The paper investigates trade and investment relations between India and its two major trading partners, viz. the U.S. and China in the 2000-2010s. On the basis of mixed method research with equal use of quantitative and qualitative, as well as historical and statistical methods, the authors estimate the possibilities for expanding interstate interactions and the difficulties the countries might face. By comparing the scale and particulars of the product structure of Indo-American and Indo-Chinese trade, the authors reveal that intra-industry trade between India and the United States is at a fairly high level, which, in turn, is not typical for the trade between India and China, which is mostly inter-industry due to the sluggish cooperation of Indian and Chinese entrepreneurs. The authors assess the intensity of the Indo-American and Indo-Chinese bilateral trade between 2000-2018 by means of indices of intensity of India’s exports and imports to / from the USA and China, as well as indices of intensity of exports and imports of its partners to / from India. The obtained results outline the upward trend of the share of Indian exports to the U.S. relative to other countries, which indicates that India is successfully conquering the U.S. market, and Indian goods are becoming increasingly competitive. Meanwhile, the volume of Indian-Chinese trade remains on a much lower level than it could be expected with the current share of India in the world trade. In the meantime, neither for the United States nor for China, India is a dominant partner. The article also investigates major obstacles hindering the development of both Indo-American and Indo-Chinese bilateral relations. The obtained results enable the authors to predict that in the short- and mid-term economic cooperation between India and its leading partners is likely to strengthen, with India keeping striving for standing neuter while building the two most crucial vectors of its foreign economic policy.


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Table 1. India — China Bilateral Trade in 2010s

Indicator

2007/2008 financial year

2015/2016 financial year

2016/2017 financial year

2017/2018 financial year

2018/2019 financial year

bln USD

%[32]

bln USD

%

bln USD

%

bln USD

%

bln USD

%

Exports

10.9

6.7

9.0

3.4

10.2

3.7

13.3

4.4

16.8

5.1

Imports

27.2

10.8

61.7

16.2

61.3

16.0

76.4

16.4

70.3

13.7

Turnover

38.1

9.2

70.7

11.0

71.5

10.8

89.7

11.7

87.1

10.3

Balance

–16.3

 

–52.7

 

–51.1

 

–63.1

 

–53.5

 

Source: calculated and compiled by the authors according to: Economic Survey 2009/10 // Government of India. Ministry of Finance. Department of Economic Affairs. Economic Division. February 2010. P. A94, A99; Economic Survey 2010/11 // Government of India. Ministry of Finance. Department of Economic Affairs. Economic Division. February 2011. P. A94, A99; Economic Survey 2016/17 // Government of India. Ministry of Finance. Department of Economic Affairs. Economic Division. February 2017. P. А113, А121; Economic Survey 2019/20 // Government of India. Ministry of Finance. Department of Economic Affairs. Economic Division. February 2020. P. А120, А121, А129, А130.

 

Table 2. India — USA Bilateral Trade in 2010s 

Indicator

2007/2008 financial year

2015/2016
 financial year

2016/2017
financial year

2017/2018 financial year

2018/2019 financial year

bln USD

%

bln USD

%

bln USD

%

bln USD

%

bln USD

%

Exports

20.7

12.5

40.3

15.4

42.2

15.3

47.9

15.8

52.4

15.9

Imports

21.1

5.0

21.8

5.7

22.3

5.8

26.6

5.7

35.6

6.9

Turnover

41.8

8.1

62.1

9.7

64.5

9.8

74.5

9.7

88.0

10.42

Balance

–0.4

 

18.5

 

19.9

 

21.3

 

16.8

 

Source: calculated and compiled by the authors according to: Economic Survey 2009/10 // Government of India. Ministry of Finance. Department of Economic Affairs. Economic Division. February 2010. P. A94, A99; Economic Survey 2010/11 // Government of India. Ministry of Finance. Department of Economic Affairs. Economic Division. February 2011. P. A94, A99; Economic Survey 2016/17 // Government of India. Ministry of Finance. Department of Economic Affairs. Economic Division. February 2017. P. А113, А121; Economic Survey 2019/20 // Government of India. Ministry of Finance. Department of Economic Affairs. Economic Division. February 2020. P. А120, А121, А129, А130.

Fig. 1. US — India and India — China Grubel — Lloyd Index on major product groups, 2000—2018
Source: calculated and designed by the authors according to: US — India Trade Relations // Congressional Research Service. February 2020. URL: https://fas.org/sgp/crs/row/IF10384.pdf (accessed: 20.02.2020); UN Comtrade Database. URL: http://comtrade.un.org/data/ (accessed: 12.03.2020).

 

Fig. 2. India — US bilateral trade intensity index
Source: calculated and designed by the authors according to: UN Comtrade Database.
URL: http://comtrade.un.org/data/ (accessed: 12.03.2020).

 

Fig. 3. India — China bilateral trade intensity index
Source: calculated and designed by the authors according to: UN Comtrade Database.
URL: http://comtrade.un.org/data/ (accessed: 12.03.2020).

 

About the authors

Natalia Valerievna Galistcheva

Moscow State Institute of International Relations (MGIMO University)

Author for correspondence.
Email: galistcheva@yandex.ru
ORCID iD: 0000-0001-7377-6625
Moscow, Russian Federation

PhD, Dr. of Sc. (Economics), Head, Department of International Relations, School of International Relations

Elena Vakhtangovna Nebolsina

Moscow State Institute of International Relations (MGIMO University)

Email: e.nebolsina@inno.mgimo.ru
ORCID iD: 0000-0003-0738-4660
Moscow, Russian Federation

PhD in Economics, Associate Professor, Department No. 2 of the English Language, School of International Economic Relations

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Supplementary files

Supplementary Files Action
1.
Fig. 1. US — India and India — China Grubel — Lloyd Index on major product groups, 2000—2018

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2.
Fig. 2. India — US bilateral trade intensity index

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3.
Fig. 3. India — China bilateral trade intensity index

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