Viewpoint: India's complex relationship with China

29 JUN,2020 | MEDC


 

The recent developments at the LAC have raised the spectre of an Indian economic backlash. There is now a possibility of India raising barriers on Chinese imports. However, the fact is that border issues have to be separated from economic ones. The goods trade deficit with China, which has steadily increased from $48.5 billion in 2014-15 to $ 53.6 billion in 2018-19 is a legitimate worry for India. The deficit, which is more than 60% of the size of India’s total goods trade of $87 billion with China, is the largest among India’s major trade partners. India is obviously looking to reduce import dependency on China, but the fact is that many key sectors in our economy are not yet ready to wean off China. Over the past decade, the contribution of Chinese imports to Indian exports has increased manifold, and, nationalist sentiment notwithstanding, reversing it is going to take time. India’s dependence on Chinese imports in the country goes beyond finished goods, and passes significantly through raw materials and intermediates. The non-negotiable nature of India’s import dependency on China makes the prospect of unilateral trade actions doubtful in securing its objectives. Such actions, if implemented exhaustively, are likely to end up hurting Indian producers and consumers much more than their Chinese counterparts.In these turbulent times, India needs to widen its circle of friendship. A way out is for India to strengthen its affiliation with the US-led western alliance. However, the contours of a firm affiliation with the US are unclear, and it could drag India into awkward situations. It could place India in a position of permanent hostility to China, risking full-blown confrontations, which we can ill-afford, at least at this juncture. What happened along the LAC is certainly condemnable, but our long-term ties with China need to have their roots based in pragmatism. The geopolitical interests and economic footprints of both India and China have expanded considerably over the years, and they are now going to be the key determinants of the future course of government action for both nations. India and China have always had a complex relationship, and India’s driving force should be the realization that it can achieve global respectability only through statesmanship, and not through domestic compulsions. Both India and China are emerging economies with progressive outlooks, and have large entrepreneurial populations who stand to gain much through the continuation and acceleration of trade and commerce between these two ancient civilizations. Let wisdom prevail. 

*Photo Credit: Google

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