China-India relations

With its weaker economy, an Indian boycott of Chinese goods makes no sense

Neeta Lal says the current patriotic campaign to avoid ‘Made in China’ only takes attention away from the real problem of a serious bilateral trade imbalance

PUBLISHED : Friday, 04 November, 2016, 12:21pm
UPDATED : Friday, 04 November, 2016, 7:59pm

A campaign to boycott Chinese goods swept India in the midst of Diwali, the country’s festival of lights, when markets brimmed with these low-priced items (toys, furniture, lighting fittings and such like) catering to the country’s 24-million-strong middle class.

Social media has erupted in crusades urging Indians to shun Chinese products. Honouring the public mood, traders have boldly displayed “No Chinese goods sold here” boards outside their shops. Drawing the ire of the Indians is China’s open support for its “all-weather friend” Pakistan, following recent attacks in Kashmir by Pakistani terrorists, which killed hundreds. Also rankling Indians is Beijing’s continued opposition to New Delhi’s bid for membership of the Nuclear Suppliers Group and a United Nations ban on Masood Azhar, chief of the Pakistan-based Jaish-e-Mohammed, who has masterminded a slew of terrorist attacks on Indian soil.

How Chinese goods became a victim of Pakistani militants

The common sentiment is: why should Indians buy Chinese products when China is abetting Pakistan’s proxy war on India and is never empathetic to the Indian cause at global forums? The anti-China sentiment has reportedly resulted in a 30 per cent decline in the sale of Chinese goods, leading a miffed Chinese embassy in New Delhi to issue a statement saying that the biggest losers of the boycott will be Indian traders and consumers. It added: “China is more concerned that the boycott will negatively affect Chinese enterprises to invest in India and the bilateral cooperation, which both Chinese and Indian people are not willing to see.”

India’s commerce minister has stated that a blanket ban is not a “feasible option”. It is impractical, given China’s deep and penetrating access to the Indian market. Indian imports from China include electronics (worth US$20 billion), nuclear reactor and machinery (US$10.5 billion) and chemicals (US$6 billion).

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India and China have shared a love-hate relationship since the mid-20th century. Vigorous economic engagement has acted as the common glue to help the two Asian neighbours tide over fraught political and border issues. The promise of economic prosperity has kept bilateral ties stable and somewhat peaceful. Consequently, bilateral trade has galloped from US$2.9 billion in 2000 to US$71.6 billion in 2015, with China also becoming India’s largest trading partner and its fourth-largest export market. Prime Minister Narendra Modi pushed for greater business integration with China at the recent BRICS summit, too.

India and China have shared a love-hate relationship since the mid-20th century

Given these dynamics, is a boycott the most prudent way to protest against Beijing’s India policies? Rather than a blanket ban, what is needed is a greater push to correct the bilateral trade skew. In 2015-16 alone, India’s exports to China accounted for US$9 billion, whereas imports amounted to US$61.7 billion, creating a huge deficit of US$52.7 billion.

New Delhi and Beijing realise that economic engagement is vital for both countries. India’s 1.25 billion people provide China with a valuable market for its products, an opportunity all the more precious given the general despondence in Western markets following Brexit. In addition, India requires Chinese investment to build infrastructure.

Besides, economic engagement needs to be discussed outside the political and diplomatic space. Rather, India would do well to emulate the Chinese model to ramp up its own exports figures and whittle down the bilateral trade deficit. China introduced rapid market reforms in the 1980s, established special economic zones, and ushered in land and labour reforms to create a fertile ecosystem to raise production capacity.

Politics be damned, Chinese and Indian economies are closer than ever before

In this regard, Delhi can also bring to Beijing’s notice the difficulties faced by India’s IT companies in getting clearance from Chinese authorities. Even Indian pharmaceutical companies, which are recognised by the US Food and Drug Administration and the EU, get stuck in a bottleneck when doing business with China. What is Beijing doing to address these issues?

Patriotic emotional outbursts are great for cathartic relief, but India will need to build its economic muscle and strategic power before it says a petulant “no” to Chinese products.

Neeta Lal is a New Delhi-based senior journalist