July 08, 2020
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Asian Century Flirting

What will New Delhi do with China’s call to check the US?

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Asian Century Flirting
Inching Closer
Chinese President Xi Jinping and PM Modi at Wuhan
Photograph by PIB
Asian Century Flirting

A crucial part of the geopolitical aspiration of the ‘Asian Century’ is a China-India relationship that is considered to be capable enough of changing the economic order of the world. But talks of such an alliance appear on the horizon only during a crisis, particularly when it is initiated by the US. More often than not, the optimistic possibilities of the developing nations becoming a force to reckon with as mutually nurturing economic allies have fizzled out either once the crisis is resolved or other compelling developments at play in the global theatre take over.

Where should India position itself at a time when growing China-US trade confrontations threaten to impair the world economy? “Under the current circumstances, China and India need to deepen their cooperation to fight trade protectionism,” suggested Chinese emb­assy spokesperson in India, Ji Rong, last week. Arguing in favour of a stable environment in Asia that will foster growth, Ji added, “Practicing unilateral trade protectionism in the name of ‘national security’ and ‘fair trade’ will not only affect China’s economic development but also undermine the external environment of India and hinder India’s booming economy.”

China’s fervent appeal to India to join ranks with it against the US is not a usual line. This is a challenging situation for the planners in South Block to gauge. For one, the ongoing China-US trade conflict has shown its impact on emerging economies. The Inter­national Monetary Fund recently cut its global economic growth forecast for 2018-2019 by over 3.7 per cent.    

China claims that in the face of American unilateralism and its bullying tactics, the two neighbours have more reasons to join hands to ensure a “more just and reasonable international order.” But India has serious doubts if the US’s departure from the scene or its marginalisation can prove to be beneficial for India. Will it be better for India if China, which is already the world’s second largest economy, replaces the US?

China’s appeal to India to join ranks with it against the US is not a usual line. It has to be gauged carefully.

In the past decade or so, Sino-Indian trade has shown phenomenal growth. But Delhi has also seen how China has managed to manipulate the existing system since becoming a member of the World Trade Organization to its benefit. By denying easy access to its markets to other countries it has managed to pile up huge trade deficits with almost all its trading partners. Beijing’s non-tariff barriers on pharmaceuticals, IT products and rice and meat exports from India have created a huge trade deficit of over $63 billion in their bilateral trade.

Indian officials admit that China has become more amenable now in opening up its market to Indian products than before. But they are not sure whether this was out of pure opportunism—a tactic to get Delhi on its side in its current trade conflict with the US—or whether this was indeed a course correction.

On the other hand, it is also true that the US’s policies under Trump are hurting India, both bilaterally and at the global stage. The current situation has made other international investors cautious of venturing into new markets. On top of that, the rupee has hit an all-time low vis-à-vis the US dollar and the situation has been compounded further by the steep hike in oil.

On October 15, the Indian prime minister warned oil producing nations of not making the mistake by killing “the goose that laid the golden egg”. After all, developing economies like India are big buyers of oil. The unfettered hike in oil and other petroleum products could force India to look at other energy options. These global developments have put pressure on the Narendra Modi government, with elections less than a year away.

At the global stage, the US is trying hard to regain its position of unquestioned supremacy. China is the obvious rival the US wants tamed. This was made clear by US vice president Mike Spence’s recent speech at the Hudson Institute. He criticised China for “bullying” investors, ‘buying’ countries with cheap loans and “tearing down the crosses.”

India and China have come just come out of a long strained relationship, which saw a cathartic end in last year’s Doklam crisis. After this came the Wuhan meeting between Xi Jinping and Modi in March, which appeared to bring about some positivity in Sino-Indian bilateral ties.

Still, India is in a position where it is being wooed by both the US and China. Hence, it may still be beneficial to maintain the independent foreign policy and expand the geo-strategic space to maintain peace and stability in the country’s immediate neighbourhood and beyond.

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