Tuesday, April 21, 2020

Letter to a friend - Our perception of China



Dear friend,


Below is a quote from a recent mail of yours welcoming the Indian Govt. policy changes to make Chinese investment in India difficult:

“Important and welcome decision today!
For reasons I fail to understand China, our number one enemy always had an unfair advantage over Pakistan, our number two enemy!”

I will take up just a fragment from your quote, “....China, our number one enemy...”, for discussion below.

Is China our enemy, number one or otherwise? 

It is not unreasonable to suppose that you are using the word ‘enemy’ in the context of the nation. The Oxford dictionary defines ‘the enemy’ in this context as a hostile nation or its armed forces in time of war. We are certainly not at war with China.

India and China do have an unresolved issue and that is the lack of a settled boundary. This problem is historical and dates back over a hundred years to the period of British Rule. On the boundary issue, a recent statement of the Government of India has this to say:

“The two sides have agreed to appoint Special Representatives to explore the framework for a boundary settlement from the political perspective of the overall bilateral relationship.The 20th round of the Special Representatives Talks on the India-China boundary question was held in New Delhi on 22 December 2017. The two sides are committed to seeking a fair, reasonable and mutually acceptable solution to the boundary question through dialogue and peaceful negotiations”

So both countries agree that there is a “boundary question” and that a mutually acceptable solution must be found through peaceful negotiations. In this situation, how can one justify referring to China as an enemy?

Neither country wants the boundary question to overshadow their “overall bilateral relationship”. What is this relationship about? The short answer is trade.

China is India’s largest supplier of goods (nearly 14% of all imports at $70 billion in 2018-19) followed by the US. It is the third largest consumer of Indian goods (5% of all exports in 2018-19). Only US and UAE import more Indian goods. China and US are India’s two main trading partners ( each roughly accounting for 10% of all trade). Overall trade with China has increased by 18 times between 2002-03 to 2018-19. 

This trade bears looking into in greater detail. Items imported from China include components and parts for electronics, telecom and mobile products, active ingredients for pharmaceuticals and fertilisers. India’s exports include organic chemicals, mineral fuels, cotton and metal ores. The “telecom revolution” in India, the proliferation of smart phones, even the success of the Indian pharmaceutical industry are all tied to inexpensive parts and materials available from China. Our economy is significantly linked with that of China.

While the principle of “free trade” itself can be debated, in the present circumstances where India has accepted and practices it, the rapid rise in trade with China has to be seen as being beneficial to both countries. A most recent example of this is the import of 650000 Covid test kits (which arrived on Apr 16th) and the order for 15 million PPE kits from China at a time when India was facing a severe shortage of these items. Would India source test kits or China supply them if the two were “enemies”?

Is this trade relationship without its problems? The answer is of course no; India has an adverse balance of payments with China as its imports exceed exports by a huge margin. But this problem is not unique to India and these are issues that any country has to be prepared for it opts for “free trade”.

To summarise, China and India have a long-standing boundary issue for which they seek a mutually acceptable solution through dialogue; they are also partners in mutually beneficial trade that has been growing rapidly over the years. It makes no sense to see China as an “enemy”. Then  , you may ask, do we look upon China as a “friend”?

In my view, all nation states today act in their own interest. Even a nation that appears to be a “friend” is probably acting in its own interest. Political system, religion or shared culture does not make nations “friends” necessarily. Nepal shares religion and culture with India as well as open borders. However, we have an ongoing boundary dispute and there was a crisis in relations between India and Nepal for six months in 2015-16 when Nepal alleged that India was blockading goods coming into the country. Numerous dictatorial regimes around the world are considered to be “friendly states” by the US. When it comes to defending its own trade interests, the US is ready to bulldoze its “natural allies” be it India or Europe, into submission.

China will pursue its own self interest and so must we. Being neither “friend” nor “enemy”, we can still be still good neighbours.

Sincerely,

X



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