Millennium Post

Foreign trade can’t progress during conflict

There is nothing startling about China’s blocking of the United Nations (UN) motion against Pakistan for releasing the mastermind  of the Mumbai attacks, Zaki-ur-Rehman Lakhvi. Lakhvi is responsible for the killing of 166 innocent Indians. Although it must be noted that the UN motion has received tacit support from all other permanent members of the Security Council – namely, the United States, Russia, France and The United Kingdom. Expectedly, China has parroted the Pakistani logic that India has not provided concrete evidence on Lakhvi’s involvement in the Mumbai attacks. 

 Diplomatically, China is much closer to Pakistan than any other country in South Asia. This is notwithstanding the reality of the Chinese police systematically exterminating Pakistan-backed Chinese Uighur Muslim dissidents in Xinjiang. China is investing billions of dollars in Pakistani ports, roads, telecommunication and defence related infrastructure. The reason for this is apparent. In diplomacy, an enemy’s enemy is a friend. Given this China, naturally, can’t support a UN motion against even a high-profile terrorist such as Lakhvi. 

Strategically, China has enveloped India along its southern borders running  from Ladakh to Sikkim and Arunachal Pradesh. China has recruited Pakistan to build strategic infrastructure projects ensuring road and sea links with Myanmar, Bangladesh, and to some extent, Sri Lanka and the Maldives. In addition to this, China is also participating in billion-dollar hydrocarbon projects in Myanmar and Bangladesh. Although Myanmar and Bangladesh are friendly with India, Pakistan has been consistently bellicose in its approach towards India. 

Until the World Trade Center came crashing down in 2001, Pakistan had great diplomatic ties with the United States of America. This was probably due to the fact that the United States always felt uneasy with India’s robust and intimate ties with, first, the erstwhile Soviet Union and, thereafter the country of Russia. The US diplomatic engagement with Pakistan further soured after the former discovered and killed the mastermind of the World Trade Center attacks, Osama bin-Laden. The Navy Seals sent by the US killed Bin Laden near a well-fortified Pakistani military cantonment area in Abbottabad, where the fugitive was apparently sheltered for years. Post the killing of Bin-Laden, Pakistan must have felt the need for an ‘alternate’ friend. The situation perhaps brought Pakistan and China closer.

The Chinese “String of Pearls” model mandates a series of secret access agreements and covert development of commercial facilities to support later military use, with the ultimate objective of being able to support major combat operations against India and to dominate the Indian Ocean Region. It is through these measures that China plans to encircle India. China is also plainly unhappy about the latest global economic forecast that identifies India as China’s principal economic rival. According to Masayoshi Son who is the chairman of the billion dollar SoftBank group, India’s economy is on the cusp of the “hockey stick” curve before takeoff, and has the potential to overtake the Chinese and United States economy within 25 years. 

The slowing Chinese economy and its reduced capacity for exports are seen as an advantage to India in the long run. India’s time-tested liberal democratic system fosters the trust of foreign investors. The emergence of South Korea and Communist-ruled Vietnam as new economic powers in the north and eastern parts of China and the growing aggressive attitude of Japan in the South China Sea region seem to have a lot to do with China’s fast-changing geopolitical policies and actions in the region.

India could do little to contain the aggressive diplomatic stance of China, except taking a tough stance on trade ties. The easiest thing for India would be to stop China’s dumping of industrial products and institute a rigorous anti-dumping policy. Furthermore, India is running a significant trade deficit with China in excess of 40 billion dollars. In addition, there is a huge quantity of smuggling of Made in China products – from toothbrush to sophisticated guns and other armaments for the use of terrorist outfits in India – into the country. Given these facts India needs to seriously reconsider its trade relations with China. 

 In economics, “dumping” is a kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production. An example of this blatant dumping is India’s fast-growing telecom sector being increasingly flooded with Chinese products, including security-sensitive apparatuses. If India could offer deficit neutrality to Bangladesh in terms of bilateral trade, there is no reason to allow China to destabilize India’s economy with its massive dumping of products. China is the largest exporter to Bangladesh, which runs an annual trade deficit with China to the tune of $7 billion. A $40-billion plus loss of China’s trade with India is probably the best way to respond to the former’s diplomatic belligerence.

 Economic and political diplomacy are usually in sync with each other. If China thinks it differently, India should respond with firmness and conviction.  It is high time that India takes a firm economic and trade stand with China and formulates a policy that ensures the copybook structure of the two most important aspects of diplomacy. India is emerging as a major destination of global investment – from consumer goods, infrastructure, and military hardware to banking, insurance and services. India can ignore China which is insensitive to the country’s public sentiment and security.           
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