How reliable is India’s China trade data?

Experts were baffled when trade data from India and China showed a mismatch of $12 billion. China said its trade with India touched $103 billion in the first nine months of 2022. But India said that its bilateral trade with the Asian giant stood at $91 billion. Yes, you heard that right: $12 billion dollars, unaccounted.

Data from China’s General Administration of Customs showed that the country’s exports to India stood at $89.99 billion till September. According to India’s figure, the imports from China were worth $79.16 billion. This shows a gap of over $10 billion.

Similarly, a gap of $2 billion was noted in the data on exports from India. India’s data showed exports to China worth $12 billion, while China’s corresponding data showed a figure of $13.97 billion. According to a financial daily, China pegged the trade deficit between the two countries at $75.67 billion. India says it was $67.17 billion, bringing the difference to over $8 billion.

Experts point out that in bilateral trade, the export numbers for one country hardly ever match. Bishwajit Dhar, Economics Professor at the Jawaharlal Nehru University, Delhi, explains.

Bishwajit Dhar, Professor, Economics, Jawaharlal Nehru University says, trade figures in bilateral trade hardly match. Exports are done on the face value of the products or Free on Board. Imports include CIF (Costs, Insurance and freight) values

However, the FoB-CIF discrepancies cannot account for the kind of discrepancies that have surfaced in the recent trade data. Experts say that this gap is caused by systemic corruption, primarily the act of under-invoicing of shipments.

Dhar of Jawaharlal Nehru University says, traders on both sides are not reporting the true value. Trade values can be under-reported or over-reported.

However, Dr Jayant Dasgupta, former Indian Ambassador to the WTO, thinks that while under-invoicing can surely be a factor, it might not be enough to account for such a huge difference. Instead, he points to yet another possibility.

While imports are collected on the basis of entry into Indian ports, export data is collected on the basis of products leaving China, he says. There will be a slight delay in calculating the two data

Whether it be a gap in calculating the imports and export data, or systemic malpractice, what kind of regulatory measures can be taken to put a check on these? Dhar says, the G20 should take initiative.

India is likely to take up G20 presidency soon, he says adding that India should impress G20 members to increase their efforts.

Dasgupta disagrees though. He says, it’s not the domain of G20. It should be dealt by world customs organisations. Customs authorities should discuss and mutually come up with a solution

Perhaps a more digital response can work? Dasgupta says, India should move to a system of complete automation. Data should be captured correctly. There should also be a reconciliation component.

Either way, a permanent solution to such a bilateral trade issue is needed so that data disparity does not arise in future.