Bangla Thursday, August 13, 2020

Hostility to China helps Modi divert attention from the domestic mess

china-india

In the past six months India has been creating trouble for China both intensively and extensively. Bilateral relations have been pushed to the lowest point since the armed conflict between China and India in 1962.

Here are the problems created by India: There has been a call to "boycott of Chinese goods" at the societal level. There is clamor about a "China threat" in strategic circles. There have been efforts to decouple the Indian and China's economies, frequently promoted by the relevant Indian government authorities. Then there was the ban imposed on 59 Chinese mobile apps. In addition, there have been frequent military stand-offs on the China-India border, which culminated in a massive military build-up recently.

Many people ask: “In the past two years, leaders of the two countries successfully held two informal meetings and reached important consensus on the future development of bilateral relations and joint responses to global challenges. Then how could the relationship between the two countries suddenly reverse?”

In my view, the main reasons are as follows:

Prime Minister Narendra Modi attended to the ills of the Indian economy quite well in his first five-year tenure. Despite a little bit of fudging, the average annual growth rate was more than 7%, which was regarded as a miracle in India's history.

However, after entering his second tenure last year, Narendra Modi's series of Hindu nationalistic policies, such as the announcement to build the Rama Temple, the introduction of a unified civil code, and the amendment of the Citizenship Act, have seriously intensified contradictions and conflicts among the ethnic groups, sects and classes in Indian society, resulting in social unrest.

This year, COVID-19 has spread rapidly in India, and it now seems to be out of control. India has become one of the four countries in the world most seriously affected by the pandemic. In order to control the spread of COVID-19, India has implemented a strict lockdown, pushing tens of millions of daily wage laborers to "starvation". According to BBC, the lockdown has caused at least 50 million people to lose their jobs in India, while the International Labor Organization says the lockdown has resulted in 400 million people "falling into deep poverty".

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There has been a sharp decline in the economy. The Organization for Economic Co-operation and Development (OECD) forecasts that India's economic growth rate this year will be minus 3.7%, and if the pandemic spreads further, the growth rate might be minus 7.3%. At the same time, the opposition forces led by the Indian National Congress have launched a comprehensive attack on the Bharatiya Janata Party led by Narendra Modi.

It seems that there is no hope of getting any political mileage from playing the economy card. So smart Narendra Modi switched to politics and nationalistic fanaticism. So, India is now busy in military conflicts with Pakistan in the West and tries to encroach on China's territory and Nepal's territory in the North and the East respectively.

Looking at India's history, I find that whenever domestic problems came to the fore, the Indian authorities would create external tensions to divert the attention of people.

Attempt to find other ways out

After taking over as Prime Minister in 2014, Narendra Modi vowed to increase the proportion of Indian manufacturing industry in the GDP from 18% at that time to 25% in 2022, and launched a series of bold economic reforms and development initiatives. However, the manufacturing industry has been declining year by year, and the proportion of manufacturing industry has hovered between 14% and 15% in the last two years, which is the lowest in the past 50 years.

Disruptions in supplies from China caused by the pandemic have completely exposed the vulnerability of India's manufacturing industry. In particular, the four areas that the Modi government was very optimistic about, namely, mobile phones, textiles, electronics, and auto parts, are almost shut down due to disruption of spare parts supply from China.

In this scenario, Narendra Modi is trying to find other ways out of the mess. One way out is to replace "Made in China" with "Made in India”. For example, the Indian government plans to set higher trade barriers and raise import tariffs on more than 300 "non-essential products". These "non-essential products" are mainly from China, which have Indian alternatives. Compared with hardware, India's ability to copy is stronger in software. So, the Indian government has announced a ban on Chinese mobile phone software, which will make Indian imitation manufacturers direct beneficiaries.

The other way out is to make use of the opportunity of China-U.S. industrial decoupling to attract the industrial chains to move to India as a whole, so as to realize the "dream of becoming a manufacturing power". To this end, Prime Minister Modi has asked all State governments to make preparations to attract multinational enterprises located in China to invest in India instead. Indian Industry and Domestic Trade Promotion Bureaus have taken the lead in setting up an inter-departmental joint committee to work out relevant policies for attracting foreign investment.

However, whether India and the United States can substitute the China-US industrial chain is a big question. The plan needs time and Modi's sustained courage if it is to fructify. At present, the urgent problem to be solved is how to let Indian people use "domestic products" instead of "Made in China" products which they had been used to.

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Therefore, through nationalist fanaticism stimulated by grief from the Galwan Valley, as well as the already existing anti-China movement, the Indian government is trying to cultivate domestic products to replace "Made in China" products.

Dream of regional dominance

South Asia and even the North Indian Ocean region have been regarded as its exclusive domain by New Delhi. However, since China put forward the Belt and Road Initiative (BRI) India's strategic apprehension of China has increased significantly. India openly questions the intention of China’s BRI, and believes that China is undermining the India-dominated order in South Asia and the North Indian Ocean.

Considering that it does not have the strength to compete with China alone, New Delhi has to strategically cater to the US strategy of curbing China. This has provided great comfort to the United States which is wanting to attract India to its strategic orbit.

Conclusion

For a long time, China had cherished its friendly and cooperative relations with India. China-India relations had developed greatly over the past 40 years. Along the border areas between China and India peace and tranquility have generally been maintained. Bilateral trade had increased from about 100 million US dollars in the early 1980s to 92.68 billion US dollars in 2019. This is the result of the joint efforts of both sides. We do not want see this good situation destroyed.

In recent years, Chinese enterprises have actively participated in China-India economic cooperation and have strictly abided by international rules and local laws. India has the responsibility to protect the legitimate rights and interests of international investors, including the Chinese enterprises, in accordance with market principles.

Cooperation between China and India at the ground level is mutually beneficial. If such cooperation is undermined, it is not in India's interests.

While developing itself, China hopes to see the development of India. The total population of China and India is 2.7 billion. If both countries are developed, it will be an important contribution to mankind. Economic and trade cooperation between China and India is highly complementary. In the long run, China-India economic cooperation will be guided by the market, which cannot be blocked by any force.

I remember 40 years ago, the Chinese and Indian economies were basically at the same level. Now India's GDP and per capita DGP are less than one fifth of China's. China has two advantages: capital and technology. If India wants to develop, it will not succeed without China's cooperation. If the Indian authorities insist on blocking bilateral cooperation, the gap between India and China will be further widened. In the end, India itself will suffer a lot.

 

(Cheng Xizhong, Visiting Professor at Southwest University of Political Science and Law)