India’s trade reliance on China and EU rising: UN trade body

Subject: Geography

Section: Indian Phy geo

Context:

According to report by the United Nations Conference on Trade and Development (UNCTAD),
India’s trade reliance on China and the European Union is rising as global trade is witnessing a marked shift along geopolitical lines.

More on news:

The UNCTAD estimates, based on national statistics, showed that India’s dependence on China and the European Union (EU) grew by 1.2 per cent while its reliance on Saudi Arabia slid by 0.6 per cent.
This comes in the backdrop of major supply chain reset following the pandemic and the Russia-Ukraine war that had sent food and fuel prices to record highs.
This came despite India’s efforts to cut reliance on China by implementing its flagship Production-Linked Incentive (PLI) scheme and Quality Control Orders (QCOs) largely to limit entry of cheap Chinese products.
UNCTAD’s estimates showed a major shift in trade due to the ongoing Russia-Ukraine war.
While Russia’s trade dependence on China surged by a record 7.1 per cent, its reliance on the EU slid by 5.3 per cent.
The US managed to cut reliance on China by 1.2 per cent in 2023 and increase its trade dependence on the EU and Mexico.

Trends seen in trade:

During the last two years, the geographical proximity of international trade has remained relatively constant, showing minimal nearshoring or far-shoring trends.
The report showed that global trade declined in most sectors, except for pharmaceuticals, transportation equipment, and road vehicles, particularly, electric cars.
Among the sectors where the value of trade declined by more than 10 per cent during 2023 are apparel, chemicals, energy metals, office equipment, and textiles.

Dependance of an economy:

The dependence of an economy on another is calculated as the ratio of their bilateral trade over the total trade of the dependent economy.
Change is computed as a four quarter average of this ratio relative to the same period in the previous year.