Ramandeep Kaur | ThePrint
Illustration by Ramandeep Kaur | ThePrint
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The sight of seemingly demented people jumping and dancing on Chinese-made consumer durables raises some intriguing questions about the thinking processes of our shoot-from-the-hip nationalists. What do they think will happen when Chinese products are replaced by Korean or Japanese ones? China’s total exports in a year are about $2.5 trillion. India accounts for 3 per cent of that. China also has $3 trillion in foreign exchange reserves, and a large trade surplus. So who are we hurting? Some sellers of phone instruments, perhaps. Xi Jinping is unlikely to be impressed.

It is possible that Chinese suppliers will be replaced by Indians, not Koreans. I once asked the owner of a large retailing chain why he could not encourage more businessmen in India to become his suppliers, so that he would not have to import quite so much from China and elsewhere. His response was that India had virtually stopped manufacturing even the most ordinary goods. And even if they did make things locally, at what cost? One doesn’t know, but it is almost certain to be higher. The end result might be that the producers of things (who are busy taking out full-page ads in celebration) make money at the expense of those dancing and jumping consumers who end up paying more.

And what if China hits back? India’s imports from China are equal to about a fifth of total Indian manufacturing. If Chinese products have no ready substitutes domestically, the risk is of disruption along the supply chain. In the case of some products (like strategic materials) where it has market dominance, China could even deny sales to India as it did once with Japan during a dispute over some islands off the Chinese coast. At the least, sourcing from alternative suppliers would be at a much higher cost.


Also read: ‘Atmanirbhar Bharat’ needs both import-substitution and export industrialisation


The free trade argument is not a matter of religion. Britain became a free trader only in the mid-19th century, when it had established a clear lead in the Industrial Revolution. The United States, once the champion of free traders, is shifting position now (“America First!”). So import substitution (or self-reliance) is a valid tactic — if you know how to use it. Other countries have managed successful import substitution, as Naushad Forbes wrote earlier this week. But, as he showed, they did it by making sure that tariff support was temporary and reducing with time; those who failed to become efficient and competitive in a defined period would have to shut down — thereby ensuring market discipline. India, predictably, is doing it differently. And it remains a soft state, vulnerable to special interests. So it will become a high-cost economy again, and Indian manufacturing even more uncompetitive. The lessons learnt on the way to 1991 have been forgotten.

The point about trade is that both seller and buyer are supposed to gain. Bring politics into it and the picture gets clouded. The most defective of all positions (one used often by President Donald Trump, and by India in the past) is to seek trade parity with each trading partner. You might as well ask for the return of barter, or of rupee trade arrangements! India could have a trade deficit with oil exporters, and at the same time a surplus with the United States. And what it loses on merchandise trade it could gain through trade in services. If the overall balance is fine, or the deficit neutralised by capital inflows (as it has been for India), there is no need to complain of injury.

By all means be tactical. Don’t allow China access to strategic markets, like telecom products, because of the possibility of spyware mischief. Also exclude China from product segments where the quality record is said to have been poor, such as thermal power plant equipment. And if China is looking for ways to keep out Indian pharmaceuticals or software services, hit back in the same coin. Even cancel railway contracts if project completion is hopelessly delayed, but bear in mind the time taken to get alternative bidders. In short, aim carefully and don’t shoot yourself in the foot.


Also read: India can’t free-ride others to limit China. It needs to lead the containment strategy


 

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44 Comments Share Your Views

44 COMMENTS

  1. How ever small still a common person can hit the Chinese economy badly, when we all come together and do not use even chinese subsidiary apps such as Paytm or Ola until they are removed out of it completely. I myself pledge to stop using chinese products such as mobile or some other cheap stuff which we had been using. Let’s show our nationalistic pride by proxy fighting by not using and abandoning chinese goods

  2. The way author has used scare tactics is this article, he appears to be a chinese agent. Alternatley, author could be stupid who does not know to bring the right topics to forefront.

    1) In opening statement he calls the protesters ‘seemly demented’. There was not need to insult those who protest against chinese goods. The word stupid above looks small in front of it.
    2) In opening paragraph author argues that India accounts for only 3 percent of Chiense export. and Xi jinping won’t be affected if we stop it.

    What a foolish opening arguement. This is not about hurting China, this is about stopping Inida’s reliance on China so during war time we have lever. and need not worry, such as, what if they stop supply of our life saving drugs.

    3) In second para the opening question he asks is ‘What if China hits back?’ The question should be ‘What can we do so that 5 years from now, if we stop their export to us, we won’t have to fear’. i.e. how do we improve from here.
    The author goes on to argue ‘China could even deny sales to India as it did once with Japan during a dispute over some islands off the Chinese coast’. The author is openly using scaring tactic. :’Look, don’t do this or China will deny, or hit back…so keep quiet and keep importing from China.’

    4) In the last paragraphs the author says, dont import if quality is poor, or if there is delay. This position of author is okay for short term. He does not talk at all that in long terms, we want to stop import, and start manufacturing even if their quality is good or delivery is speedy.

  3. Good point of view shared by the Author. Having worked with Chinese for two decades, I can say that every small move to boycott Chinese products will matter. There is an indirect reason that author missed upon. If india boycott one product, it will create opportunity for local company. If an Indian company replaces Chinese product in market, within 18 months that product may hit international (atleast Asian and African) market. The good example is bajaj and motorcycle market. You see this is how Chinese calculate strategically. They plan using DAR system without relying too much on human memory and wits. To summarize, every step from Indian side to boycott Chinese products will irk communist regime. China may not consider India as military threat but it sees India as serious industrial threat.

  4. We are not dependent on china. China is dependent on us. We were doing our job prior to china also, there was no shortage of phone, contractors etc. We will achieve what we wanted
    Let it be an opportunity for us to develope some more products under make india approach. We wont fail , the country with maximum no. Of engineers and science tist

  5. Dear, when we boycott the british clothes for swadeshi movement, how much pie we were in British textile business. It doesn’t matter how small . It only matters what we did.

  6. First of all, Bharat youth should be encouraged to opt for technical courses like ITI and Polytechnic so as to
    make Bharat become a producing country. For this Central Gove should encourage people that a good amount of stipend will be given from date of joining the course

  7. I, in my individual capacity, don’t care about the hurt being just 3%. China is hurting the peace in my county, killing my countries’ soldiers. I find it morally wrong to do business with them. No matter how much it means to them. I would rather spend a few bucks more for same products manufactured in other countried. So, take back when you said, who are we hurting.

  8. It should be clearly understood that whatever be our differences with China on other issues, our trade with them continues but with a rider that we should ensure it is at a balanced level and not at something like 60+ billions of USD as deficit! With that end in view, we should reduce our taxes, make life easy for business and make Indian manufacturing world competitive. Hence, our aim is to make India a global manufacturer and in the process, we shed our huge trade deficit with China. It may a few years to achieve it but we ought to start now. The other steps such as denying strategically entry into telecom etc is fine and so is control over investments by them. In particular, we should not burn any Chinese goods which are already bought and paid for ! That will be stupid, to say the least. But awareness to avoid future purchase of Chinese products should be created by NGOs and media, as we need to impose costs on China for its misbehavior. We are bound by WTO rules and everything must happen within the rules!

  9. Well. China has captured most of world trade. Low cost manufacturing is only possible through, China. I. Hope the present govt take wise decision. Unfortunately if we look at the major decision taken by bjp govt has failed. I hope they don’t take any decision. In haste

  10. How much China has paid write this? We Indians now must habit to live with dignity by leaving cheap products from China. So bycut China and and have self dependent. It will hurt for a while for the betterment in future. Don’t get scared of this type of publications. These are the paid publishers of China or don’t have guts to leave in difficulty.

  11. China can retaliate by limiting rare earths export or make it like a none for one exchange, meaning , a certain amount of rare earths in return
    for a certain amiunt of chips.

    Just look at the bilateral aviation agreement. It means nothing when it finally came down to 1 flight a week by US carriers to China,
    meanung 4 total flights a week. The same with 4 total flights a week by Chinese carriers to the US.

  12. Please do not demotivate Indians with this type of half knowledge analysis. Every common man also knows about supply chain continuity. India is going to benifit or not is secondary, ultimately we should not fund China to encourage them to fight with Indian army and to disturb indian sentiments.

  13. I have read China bashing and contemporary theories on the fall of China for the past 15 years. Yet during that period, she leaped from a $2trillion economy to now a collosal $14trillion and number 2 in the world. This didn’t happened by luck but a result of hard work and resilience..

    The perception of one size fit all in the name of painting a country bad because of it political set-up is wrong. China may have it flaws but like many other countries, it isn’t different in protecting itself interest.

    The West may romance with India today only as it remain a non competitor and as potential ally to derail their arch economy rival – China. Just as an individual takes radical measures to clean up poverty and attain wealth, the route China has taken coupled with it size without doubt should worry the elite nations enjoying the fruits of being at the top of the table. But common wisdom says nothing last forever. A heavy weight boxing Champion even undefeated sucuumb to age and eventually retires to new comers and sometimes the upcoming champion maybe someone he dislike but cannot control events to prevent the natural course of life.

    India and China should man courage and solve their border differences. None of them, except outsiders wins from skirmishes. They both have enough mouths to feed, hence this should be their primary objective for centuries to come…. Both nations should quickly save face by making little compromises, agree clear demarcations to please their nationals and move on…

  14. Dont read too much. For example america is stopping export items to Iran and other countries are also following
    How they are surviving . Anyway , we have to start a beginning.

  15. Author is right in some sense as reorganize bidding process is complicated process but one should also use domestic product.

  16. Uk said they ll fully reduce china deal with in 2 years. Usa is already in tension with china…
    If India too do the say add 3+5+% etcetc reduce in china’s export… Dear editor think wise and post… The above is just a layman and not in long time deal… Be true to journlism and not as a communist party thinking…

  17. Ban Chinese products slogan mongers need some answers from government before making such noise. Government should release the imported items wise value wise from China to clarify such people without Chinese goods no car,no scooter,medicine tablets etc etc. Let us forget about toys, novelty items etc etc. Many industry production lines will face grinding halt if we take emotional decisions.

  18. we need to boycott chinese product and investment for sure Mr. Print. However it needs to be done gradually . It is not that only government can do it but the public also must behave responsibly in this direction. Govt need to subsidise local initiatives. And newsprint also ahould create awareness . But it seems thar every entity that can influence public is bought by chinese or paki money

  19. Things does not change if you keep fearing and taking baby steps. Like article 370 removal remover by BJP without thinking and today India is benefited. Chinese are making petty products and low technology appliance and gadgets which world has stopped manufacturing as world was busy in making high tech products like India making software for world . If China thinks making petty products World can’t make it is big joke. Stop allowing China petty products in India create vacuum automatically manufacturing will Start in India. Indians don’t look at price while buying that is why automobile sold in India are not Chinese but Japanese , European and US make. Even if petty products are manufactured at higher cost in India they will be more reliable that cheap Chinese. In 1990 all electronics products TVs, VCRs , high end audio sets, refrigerators , AC’s were 100% Indian make . Indian manufacturer shifted to IT because it paid more money and left manufacturing to China.

  20. I broadly agree with the author for his pragmatic approach without getting into dogmatic,jingoistic hyper nationalism. But at the same time, I would like to point out his contradictory statements in this article itself. He says trade should be beneficial both to the seller and buyer and in the same token he says that we should explore the posibility of buying telecom equipments from elsewhere without looking after the price advantage and cancelling of some contracts in the midway. China and India are a very big nations with huge populations i.e ., very big consuming society , but still 50% of indians are not consuming basic materials like soap,toothpaste,chappals, etc there is a huge internal market is ther e to tap for another 30 years. If you assume that one China within a span of 35 years can emerge the most powerful nation,equaling the GDP of USA and India also emerges within a span of another 20 years the whole world will have to redraw the power and world order.but what is required is patience perseverance policy focus technological upgradation internal and external peaceful environment social harmony. Till such time we must adopt a policy of avoidance of extreme positions on international and bilateral issues. Raw emotions and empty slogans like boycott may not lead as to nowhere except perhaps ruin us in the long run besides being drawn us 30 years backward

  21. Yes, first of all it is true that it is very tough decision and we should be ready to pay a price but if we execute it with a time frame with wise execution, it will definitely be fruitful. First of all whenever we start talking…we get a figure of billion dollars investment. Did it come on a single day? When they took time of approx 20 years, why can’t we set a target of 5-7 or else year. Who said we have to do this within a week? But yea we have start today with a single thing. And more its wider impact will create a atmosphere worldwide. More than killing that poisnous snake, we have to make him dance on flute. But of course we will have to learn how to make him dance.

  22. If China is willing to share fifty percent of its profits on all items on invoice rate BBC, India has no problem of trade deficit. How much is the profit on each item at invoice rates can be assessed pragmatically.

  23. start small and achieve big( piece-meal). This boycott will not hurt immediately. Its like a statuary warning. In long term and with China’s progressive expanding trade diputes a loss of market as big as India will not go down easily. Trade flourishes in peace only and agressive military posture is not going to help.

  24. Most of the export to China from India are input material for businesses in China! Stopping this will hit their sourcing. Much of the imports are finished product. This will hit their revenue.
    I think what is happening is a good Idea I India is serious about enhancing it’s manufacturing capabilities.

  25. The author is right about his views which I generally agree,
    In the name of globalization,and privatization followed during the 70s and 80s ,we have got a wrong
    focus on our indigenous Industrial development matrix.we can boast of an Agricultural revolution in thecountry,but not an Industrial Revolution.We have not exercised our discrimination in allowing FDI in sectors critical to the development of indigenous production systems.W e have not tried to stop brain drain of our high IQ Technocrats nor tried to help establish themselves in the country when they came
    equipped with expertise and love to give it back to the country,Few exceptions are like Apollo in the health sector.
    We have to put in place long term focused industrial policy aiming to generate employment and engagement to our young band of technocrats.The govt.need not give up its own children and can
    strengthen its PSUs with modern technology and Management.A long way to go before even we can
    sneeze against a giant like the Chinese .

    • No country is as big that cannot be defeated. China relies on exports and if we donot buy will definately hurt China. Lets make a start and make others follow. BOYCOTT BUYING CHINESE GOODS. Kab tak tum dusro ko follow karoge… Let others follow you

  26. This print publication is a scrap. How come its allowed to publish. Someone somewhere needs to make a beginning. So what is its just 3% that India imports from China. This move will trigger other nations to act on same lines. We need matured writers please and not the ones surviving on congressi money

    • It’s u who needs maturity
      How is Congress dragged into this.
      They have been weeded out.
      Its time this govt show some good results.
      6 yrs not a small time to improve.

    • At the end when you wrote Cingressi money your comment became crap. Don’t think you can fool all the people all the time. Anyone opposing Govt can not be termed as Congressi..

  27. Who so ever has made this article n the figures mentioned do not forget that the figures of Chinese Market u mentioned is going to be a past story, did u forget the ppe n medical kits china supplied to e u countries were all defective. All most entire world have denied to have business with China except few countries who doesn’t even exist. Manufacturing units hav moved out of China that others counties have already began with. China n my useless president of China will definitely get a hit. Mind it.

  28. Boycott will work only if it’s global.. but does Modi have enough trust, economic, diplomatic and intellectual capital to make it happen?! Will he be able to override the (now) weak-PM image domestically and internationally to tide over the inevitable repercussions?!

    How can you ask others to fight the bully when you yourself capitulate to 20 brutal deaths with such a hurried pathetic denial?!

  29. Reliance & Huawei ? UK wants 5G alliance of 10 countries including India, Australia, South Korea,France, Canada, Germany, Japan, Italy,UK & US.

  30. True. In d Telecom sector too govt should make BSNL more competitive and in sensitive establishments and it’s colonies only BSNL SHOULD BE GIVEN ACCESS.

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