A Study On Sino - Indian Trade Imbalance

China and India are two big countries, both in terms of population and economy scale. According to the world GDP ranking in 2015, China was second with $10.86 trillion and India was seventh with $2.06 trillion respectively. "China dragon" and "the Indian elephant" are running faster, which attracted the attention of the world. Especially in the face of the world economy hard recovery, India’s GDP growth reached 7.3% in 2015 which is reversing the overall trend and China’s GDP growth fell to 6.9%, this is the first time that India surpassed China in GDP growth. After the 1990 s, the bilateral trade between China and India has grown rapidly, especially in the 21 st century. The bilateral trade volume rose from only $ 1.163 billion of 1995 to $ 70.579 billion in 2014, and the average annual growth rate is nearly 30 %. Although these figures are encouraging, but it is undeniable that the Sino-Indian bilateral trade volume between the two countries is still small with respect to the both economy. In 2013 China and India proposed plans of rising the Sino-Indian bilateral trade up to $ 100 billion in 2015, but the data of bilateral trade in 2015 from the Chinese Ministry of Commerce was $ 71.64 billion, apparently did not reach the target, which is mainly caused by the Indian trade imbalance. India as a trade deficit with China is especially sensitive for imbalance, blame China for this frequently and lead to bilateral trade friction constantly. Those actions are not conducive to bilateral trade expansion. In the Indian side view, except for the boundary issue, the trade imbalance is also an important factor affecting Sino-Indian political mutual trust. Therefore, studying the cause of Sino-Indian trade imbalance is of great significance to further enhance bilateral trade, promote the economic growth and push forward bilateral relations.In this paper, the author try to analyzing the Sino-Indian trade imbalance by experimental and empirical method, find out the factors caused the imbalance and offer political recommendations for solving the Sino-Indian trade imbalance. This paper is divided into six chapters, the first chapter is made of previous studies and review; the second chapter is about trade imbalance theories including traditional trade theory, the theory of intra-industry trade and related investment theory; the third chapter introduce the current trade imbalances situation generally; the fourth chapter is empirical analysis to identify what led to the Sino-Indian trade imbalance; the fifth chapter is further analysis of the factor caused the imbalance based on the empirical conclusion; the sixth chapter puts forward the policy suggestions to solve the Sino-Indian trade imbalance considering the cause of the Sino-Indian trade imbalance and challenges to solve the trade imbalance; finally combining the latest situation, the author analyzed simply the historical opportunity and the prospect for China and India to solve the trade imbalance and to expand bilateral trade.In this paper, the basic conclusion is: the trade imbalance between China and India has a tendency to expand, the main factors influencing the Sino-Indian trade imbalance is the use of FDI, China’s FDI for India, commodity structure and low level of. Combined those factors affecting the Sino-Indian trade imbalance with the challenges to improve the trade imbalance, the author proposed that we could solve the trade imbalance dynamically by promoting cultural communication, strengthening mutual trust, deepening the intra-industry trade, promoting the complementary cooperation between China and India and expanding China’s investment to India.