The discord with China isn’t limited to one part of the world, but is best exemplified by its ties with neighbour India.
After nearly 9 months of tensions dating back to June 2020, between India and China since recently reached a mutually acceptable solution to retreat. But despite the easing of tensions at the border, there has been growing clamor among Indians to boycott Chinese goods, with numerous protests by Trade bodies and other organizations in favor of such a boycott. In fact, there is growing skepticism around Chinese economic intentions among Indian companies.
Nevertheless, China continues to be India’s largest trading partner with growing Chinese exports and investment across sectors which makes it evident that India can’t seem to do away with reliance on Chinese Goods. Between 2015 and 2019, India received $1.8 Billion in FDI from China in areas like automobiles, electrical equipment, services, and electronics. Between April 2000 and September 2020, Chinese FDI in India was estimated at $2.43 Billion. With an eye on China, the Indian government removed FDI coming from neighboring countries from the automatic approval list in April 2020. As per the official statement, the move’s objective was to prevent “hostile takeovers of Indian companies” in the midst of the pandemic.
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India’s Chinese Reliance
China has been investing in India via capital markets and in Indian startups. 18 out of 30 unicorns, including big names like Paytm, Flipkart, OYO, and Zomato, are backed by Chinese investors. But after recent tensions, FDI from China dropped to $163.77 Million USD in 2019-2020. Similarly, India took other steps after the border clashes; including a ban on popular Chinese apps like TikTok, putting infrastructural projects on hold, and the approval of production-linked incentive schemes to reduce dependence on critical goods from China, with focus sectors being mobile manufacturing and electronics components, drug intermediates and active pharmaceutical ingredients. This trend is not limited to China’s immediate neighbour.
Other countries also took steps to prevent takeovers by Chinese companies. In the aftermath of the Covid-19 pandemic, many countries, apart from the US, had sought to reduce their dependence upon China and shifting of supply chains. Some of the countries which had brought in laws with an eye on preventing investment in sensitive areas, and also preventing takeovers in the aftermath of the pandemic by Chinese companies were Australia, Italy, Spain, Germany. In March 2020, the EU had also issued guidelines to member states to guard against the increased risk of attempts to acquire healthcare capacities.
Watch: Despite India’s efforts to curb the reliance on Chinese Products, China tops as India’s Trade Partner
The Balancing Act
At the same time, the world still heavily depends on China. For instance, the EU finalized an investment agreement with China known as the Comprehensive Agreement on Investment (CAI) in December 2020. President of the European Commission while commenting on the importance of CAI had said that the agreement will commit China to “ambitious principles on sustainability, transparency and non-discrimination”, thereby rebalancing the EU-China economic relationship.
Members on @EP_HumanRights will debate the human rights situation in China in light of the EU-China Comprehensive Investment Agreement (CAI)
— DROI Committee Press (@EP_HumanRights) February 23, 2021
, on Thursday 25 February at 13.45 CET.
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On the other end of the map, the Australia-China tensions have increased in the aftermath of the pandemic. China had imposed duties on a number of Australian commodities, including Australian wines and Barley. It has also suspended the import of red meat, cotton, timber from down under. Coal imports from Australia too were made tougher. All these steps were taken by China after the Scott Morrison government asked for an international inquiry into the origins of Covid-19. China also happens to be Australia’s largest trading partner and sends a large number of tourists and students down under.
Brain Drain in recent years
The youth are an important stakeholder in the context of ties with China. Not just in the economic context, but even in the area of education linkages youth have an important role to play. While it is true that Anti-China sentiment has risen in India and that a large section of Indian youth is more familiar with Western countries and Australia due to a large number of Indian students and professionals in these countries, it is important to note that at the time of the pandemic there were over 20,000 Indian students enrolled in China most of them in medical universities. As of 2018, China had over 4,00000 International students and Indian students were the fourth largest group (after students from South Korea, Thailand, and Pakistan) within International students.
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While like other countries India needs to keep a close watch on its interests, it also needs to be pragmatic and not get carried away by ultra-nationalist rhetoric. India should not be solely dependent upon China and should strengthen economic ties with the US, Japan, and ASEAN countries. It should also work with other countries towards shifting supply chains from China. India’s youth are important stakeholders in this multi-layered and complex relationship and they will have an important role to play in steering bilateral ties in the right direction.
The Ground Reality – Boycott Impossible
Even after the call for boycotting Chinese goods and some of the steps taken by the government, many analysts had believed that not just raw materials, but given the demand for Chinese consumer goods, such as smartphones, such a boycott will not be possible. In October 2020, Indians bought more Chinese smartphones than the previous year (63 lakhs as opposed to 46 lakhs) according to estimates. Four Chinese brands; Xiaomi, realme, Vivo and Oppo account for over 2/3rds of India’s market share. This is not to say that there has been no impact with regard to the consumption of Chinese goods in the aftermath of the tensions between both countries. During the festive season, a survey revealed that an overwhelming number of Indian respondents (71%) decreased their reliance on Chinese goods.
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