Tuesday, 24 May, 2022
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Is India a colony of China? The answer from trade data is rude

In episode 716 of ‘Cut the Clutter’, Shekhar Gupta explains why India's trade relationship with China is disadvantageous and colonial.

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New Delhi: India’s exports to China have risen over the last few years even as its imports have fallen. But a closer look reveals unequal bilateral trade.

Trade numbers between 2014-15 and 2019-20 show that export of low-value raw materials and import of high-value manufactured goods has characterised India’s trade relationship with China.

In episode 716 of Cut the Clutter, ThePrint’s Editor-in-Chief Shekhar Gupta explains why India’s trade ties with China are disadvantageous and colonial.

If we look at the Indian history of colonialism under Britain, it is well known that until the 17th century, India was a dominant player in global trade. India was a big exporter of finished goods, particularly textiles, noted Gupta.

India and other colonies were producing cotton, which was then going to Britain and they were converting this into textiles, which were coming right back to India. That is how Gandhi started his Swadeshi movement saying that we will make our own cloth. This is the essence of colonialism, he said.

It is a provocative question to ask whether we are a colony of China when it comes to trade, Gupta said. “But if we look at data, it is true.”


Also read: How Modi is repeating Nehru’s mistake by evoking self-sufficiency


What can qualify as a colonial trade relationship?

India enjoys a nearly $30 billion surplus trade with the US, but has a $45-50 billion trade deficit with China. With this argument, the US should be a colony of India and India should be a colony of China, but it does not work like that, said Gupta, adding that it depends on what the countries are exporting and importing.

India, for instance, has a trade deficit of $22 billion with Saudi Arabia. However, this is not a colonial relationship because Saudi Arabia sends India the raw material that it does not produce, like crude oil and cooking gas.

In case of China, India’s exports generally have remained 1/5th of India’s imports from China and over the last six years, India’s average trade deficit with China stands at $57 billion.

India exports iron ore, a few refined petroleum fuels, small organic chemicals, refined copper, cotton yarn and cotton to China. It was a large exporter of refined copper too but following the shutdown of Sterlite copper’s plant, India went from an exporter of copper cathodes to a net importer, he said. India also exports cotton, raw cotton and cotton yarn to China which converts it into textiles, and Indian mills import that.

We buy computers, phones, video equipment, semiconductor devices, electronic circuits, transistors, heterocyclic compounds used in pharma and dyes, fertilisers, TV cameras, automobile parts, and capital project equipment from China, Gupta said.

Therefore most of India’s imports from China are complex manufactured goods, while exports to China are low-value goods, which we can “call a colonial relationship”, he added.

Similarities with British colonialism

India’s colonial trade relationship with China has similarities with the drain system the British Empire had imposed on India, Gupta noted.

The drain theory suggested how a free trade policy followed by the British in India saw an excess of exports of raw materials from India but without any improvement in the corresponding economic prospects.

In 2019, India enjoyed a trade surplus of $28.8 billion with the US, but qualitatively, we have exported high-quality services to the US. We import fuels, precious metals and stones, particularly diamonds or diamonds, military aircraft, and agricultural imports including tree nuts, almonds and pistachio.

Meanwhile, India exports diamonds, finished pharma, machinery, spices, rice and essential oils to the US.

India’s current trade relationship with China, however, is purely disadvantageous for India, Gupta concluded, adding that the solution is not to stop buying from China, but to start manufacturing more and to start reflecting on what is it that “destroys our manufacturing system”.

Watch the full episode here:


Also read: What 100 contracts with secrecy clause reveal about China’s development lending


 

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26 COMMENTS

  1. I think it is true and Guptaji has lighted us the trade relations with China in a proper way.
    I will definitely urge for Guptaji’s reflections on things destroying our manufacturing system.

  2. Sorry to mention that your analysis does not even deserve a trash box. SG you have such kind of people and have started seeing with closed brain? This article reflects like ………….

  3. I think you should not try to brain wash innocent people. Do you know Chinese strategy, plans and execution plans? Do not try to operate propaganda network for Chinese, congress, Maoist and other motive agenda. You people do not have shame of selling your own ethics and moral with red money soaked in dark black ? It is unfortunate in our country that people have time for dharma, danga, demands but no time for throwing you people out of window. Shame on you.

  4. 400 years ago every country or kingdom in Europe had a trade deficit with India, so Europe was India’s colony. – Guptajee’s modern reading of ancient history

  5. SG has gone out of touch… Such brainless people compare everything with Hitler or British Colonization… Does he even understand the meaning of “Colony”… This guy is always pushing narrative disguised as news.

  6. After reading all comments so far…. we clearly comprehend one basic truth … that how some wicked learners manipulate notions …. reflecting vividly thier axe to grind…….

  7. Try understand india is democracy and china is socialist autocratic state .Where union right,civil liberty is not their and environmental protest is not allowed .More importantantly Intellectual property right does not exist.All democratic country out source finished product from China because of cost.Till when china can maintain supremacy in manufacturing artificially.

  8. What do you actually gain by publishing such stupid ideas Mr.Gupta , actually the question should be addressed to “The Print.”
    Really feel that Mr.Shekar gupta should go outdoors and enjoy life rather than writing articles of this standard.
    First of all please try to understand the meaning of the word “colony.”

  9. Incompetent govt strategies to develop manufacturing in our country is making us ruled by china.More over people don’t understand the slavery mindset residues left by britishers and still incapable of their own ideas and manufacturing.

  10. Sir a lot that has been said but unidimensional. India’s trade cannot be divorced from the internal issues.
    Indian economy in UPA era heated up with real estate bubble. It became more profitable to trade in factory land than to produce anything in that factory. People registered comapnies to deal only with properties. They sold and bought these companies with no need to transfer the said properties. Black money ended up in share holdings and sweat equities of these companies.
    This bubble single handedly destroyed our production.

    Now coming to present day – we are again entering a new form of nehruvian era where only big production factories have quantities to be run profitably. Big is better.

  11. We should stop exporting ores, on the other hand the minerals and ores should be converted to finished goods and export. The govt should ban on export of minerals and ore

    • Is your point that Indians will move towards more manufacturing if ore exports are banned?

      For manufacturing, workforce skills is quite different from the skills of a mining workforce. for example we have poor workforce skill in making machines. We need to become a society curious and fascinated with machines.

  12. Reading the headlines, the first thought was that it is perhaps ‘April Fool’ prank but the publication date quickly banish that thought.
    Colonial relations by definition mean total control over foreign policy, defence policy, trading policy, educational policy, currency etc.
    Mr Gupta you are by no means stupid and since this is not a ‘tongue in cheek joke’ therefore short of some silly conspiracy theory, what are your true beliefs and what exactly is the purpose of publishing such negative , provocative and false narrative?

  13. Atmanirbhar is a push in right direction and should not stand for protectionist policies but developing capabilities of mfg high value finished products to. any country. Semi finished and finished products should be sourced from other countries also to avoid over dependence with China.

  14. But sir by that definition even US, African Union, Iran etc are also china’s colony.. they send goods to china then china assembles it and sends it back to the respective countries… And money earned from that is given as loans or investments to the same country…

  15. But sir by that definition even US, African Union, Iran etc are also china’s colony.. they send goods to china then china assembles it and sends it back to respective countries… And money earned from that is given as loans or investments to the same country…

  16. But sir by that definition even US, African union, Iran etc are also china’s colony.. they send goods to china then china assembles it and sends it back to respective countries… And money earned from that is given as loans to the same country

  17. You have not said anywhere how Modi govt is trying to change this.
    Just talking does not help. Doers are required, left hate of Modi has not acknowledged the work of present govt.

    I say boycott every possible Chinese product. don’t give excuses

    • The trade imbalance with China is precisely the reason the government is promoting the Atmanirbhar scheme.

  18. Guptajee’s confused logic is apparent. Often, I have heard him preaching about the need to practice free trade and yet here he is, preaching the opposite by criticising the effects of globalisation. I hope he will be bold enough to admit that China’s brand of state led growth is what has propelled it to such heights and embracing the free market ideology will result in more colonisation. He is part of the Indian middle class who wants protectionism in his field i.e. journalism but free markets in all others.

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