China-India trade relations

A day after Prime Minister Narendra Modi called Pakistan a “mothership of terrorism”, China defended its all-weather ally, saying it is against linking any country or religion with terror and asked the world community to acknowledge Pakistan’s “great sacrifices”. China has also decided to resist India’s bid to designate Jaish-e-Mohammed chief Masood Azhar a terrorist by the United Nations. Miffed by Beijing’s latest actions, some sections of the Indian public have called for a boycott of Chinese goods, interpreting Beijing’s actions as tacit support for Pakistan.  Hyper-nationalists within and beyond the ruling party at the Centre have sought a ban on anything associated with Pakistan, from its serials to Bollywood movies with Pakistani actors. Guilty by association also seems to be the pervading logic behind calls for a boycott of Chinese goods. While Indian filmmakers can be bullied into dropping Pakistani artists, there is little that such spiteful hyper-nationalists can do to ban Chinese products. The Indian government is in no position to cut off trade ties with China. Prime Minister Narendra Modi has thankfully not given into such idiotic demands, as his cabinet seems more intent on improving trade relations with India’s neighbour. The trade deficit between the two nations stands at a whopping $52.7 billion. In 2015-'16, Indian exports to China stood at $9 billion while its imports were worth $61.7 billion. 

Prime Minister Modi met Chinese President Xi Jinping on the sidelines of the BRICS summit in Goa to discuss the trade deficit along with a host of security-related issues. At the India-China Strategic Economic Dialogue earlier this year, both sides agreed to strengthen economic ties through cooperation on sourcing energy from international markets, construction of high-speed railway and development of coastal manufacturing zones. “Chinese investors showed a keen interest in financial investment and participation in large solar park projects in cooperation with the Solar Energy Corporation of India,” said a release of the minutes of the meeting. Besides expressing concern about the growing trade deficit, New Delhi sought to secure China’s cooperation in developing infrastructure in India. In a bid to increase the share of manufacturing sector to 25 percent of GDP from the existing 16 percent by 2025, the Modi government has urged Chinese companies to open manufacturing units in India. The Centre has also asked the Chinese government to provide greater access to its goods while providing faster clearance for Indian rice and pharmaceuticals. 

To cut a long story short, China remains India’s biggest bilateral trade partner. Any ill-conceived ideas of boycotting Chinese goods should be confined to the dustbin. India has no leverage to push such hare-brained claims. During the ongoing festive season in India, the sale of Chinese goods has hit a record high. “Sales figures for Chinese products on the top three Indian online retailers in the first week of October hit a new record. Amazingly, the Chinese mobile phone company Xiaomi sold half a million phones in just three days on the Flipkart, Amazon India, Snapdeal and Tata CLiQ platforms," according to Global Times, the English daily run by the Chinese government. The Global Times report was picked up by a whole host of Indian publications, including the Press Trust of India. "The bilateral trade relationship is one of the pillars of the Sino-Indian relationship. The trade volume was over $70 billion in 2015, and China's investment in India soared to around $870 million in 2015, six times what it was in 2014," the report added. Indians consume a lot of Chinese-made tech products, including laptops and mobile phones, and there is little indication that this trend will change anytime soon. India stands to benefit a lot from greater trade and investment ties with China. For example, China has shown a keen interest in investing in the Smart Cities project. Earlier this year, Finance Minister Arun Jaitley promised Chinese investors high-growth potential even in an “unsupportive global environment”. “And for a large number of Chinese investors present here, I think having gone through that experience in China, we are now passing that phase where there is massive infrastructure programme which is in India. Part of the infrastructure programme we are building rural roads, national highways," he said.