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Published on: June 3, 2020, 8:37 p.m.
Defang the dragon
  • Illustration by Panju Ganguli

By Business India Editorial

Even as the fight against Coronavirus is extracting a heavy toll on human lives and resources the world over, the anger against China is growing. The anger stems from the fact that irrespective of the origins of the virus, China has gone about suppressing information about it. Given the opacity that characterises China, it is only natural that the country arouses suspicion on such a global scale. All along, since our diplomatic ties picked up, India has had to contend with a militarily belligerent and economically expansionist China as a neighbour. Sure China has had similar issues with its neighbours like Japan and South Korea.

It has had a running trade spat with the United States as well. But the face-off between the US and China is a fight between the world’s two largest economies. There is no eyeball to eyeball confrontation between the two or their militaries, as is the case with India and China. Should this happen between friendly neighbours?

It is clear that our policy of trying to alternately stare down our northern neighbour and smile at him isn’t working. We need to take it on boldly. But if we have to outsmart China, it can only be done economically, not militarily. The cost of a military option will be too high, no matter what the outcome. Xi Jinping and the Chinese Communist Party will be able to brazen it out. But Narendra Modi and the BJP will have a serious political problem if there are war casualties, particularly after the relentlessly mounting Corona virus-related death toll.

India and China share a border more than 3,440km long and have overlapping territorial claims. The two sides also have a history of armed conflict in 1962. Their border patrols often bump into each other, resulting in physical scuffles. There are several reasons – but competing strategic goals lie at the root. In the latest instance, thousands of Chinese troops have forced their way into the Galwan valley in Ladakh, several kilometres inside what had been regarded by India as its territory. The move came after India built a road several hundred kilometres long connecting to a high-altitude forward airbase which it reactivated in 2008, obviously to boost its capability. But China does not like India to act like an equal in protecting its strategic/territorial interests.

After the 1962 war, for over 30 years our economic ties with China were the bare minimum. It is only in the last 20-25 years that trade links with China have boomed. India has now become a significant trading partner touching a reported turnover of $95 billion in 2018. Chinese companies have captured our markets for phones, electronic parts, APIs for the pharmaceuticals industry, etc. And they are making significant investments in our start-ups. At the same time, there are huge non-tariff barriers against our products like pharmaceuticals and Indian IT companies. Also, China is exporting almost two-thirds more than it imports.

Modi has had several one-on-one meetings with Xi both in India and China to take our ties forward. Yet China continues to act antagonistically. It regularly denies us entry to the Nuclear Suppliers Group and needles us on Kashmir. As for its policy of unsettling the border, this forces us to deploy forces at high altitudes at considerable discomfort and cost.

Officially, our government is maintaining that it will go by established mechanisms to resolve the border standoff and has politely ruled out a mediatory bid by Trump (for whatever it was worth). But if the provocation goes on, Modi should not waste any time in telling Xi whenever the opportunity presents itself that this has to stop. He should say that people in India have had enough. That such behaviour is not expected between friends. And either we are friends or we are not!

If Xi does not agree, then we have to rethink our options systematically, starting with paring down our trade links. Already there is a movement building up for reducing our dependence of Chinese hardware and software. Surely, we can live without the low-technology Chinese stuff like toys, lanterns, Diwali lights, crackers, talking deities and other trinkets flooding our markets.

Yes, there will be some cost if import barriers are scaled up. But it will be much cheaper in the long run. Indian consumers and industry will move towards finding alternative trade sources. And industry will move towards becoming self-reliant in double-quick time. An effective strategy would be to take advantage of the skyrocketing cost of production, led by rising wages, in China. If India can reduce its cost of capital, and fix other niggles, it can easily prise away investments from China.

Indeed, it is time to put the BJP’s version of Hindi – Chini bhai bhai to test!

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