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US’ decoupling from China has begun. Modi govt must work to minimise India’s losses

Modi govt does not appear to recognise that international politics is spiralling towards a ‘soft war’ where all issues are linked to security and political interests.

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A fundamental decoupling with China is inevitable not only for India but for many other countries. The deep integration of the global economy, with China as a central player and the world’s factory, led many to assume that decoupling with China is impossible or at least unlikely. But that process has already begun, as former US National Security Advisor John Bolton recently said.

This decoupling with China is only likely to accelerate as an increasingly paranoid and authoritarian Chinese Communist Party (CCP) and the Xi Jinping government seek greater control over the Chinese population, as well as the outside world.

Also read: Modi’s bid to sway China’s Xi with personal outreach was a big error. India’s paying for it

India’s role in decoupling

Indian policy has helped this process, most recently by banning 59 Chinese apps, a move that others are now following. But the Narendra Modi government sees such measures more as retaliation, in this case against China’s unacceptable behaviour in Ladakh. The government does not appear to recognise that international politics is spiralling towards a cold war, or even worse, a “soft war”, as some Chinese analysts are calling it.

Whatever it is, what is incontrovertible is that this will drive the world towards a differently structured global economic order than what we have seen for the last three decades. Recognising these changes would require India to go much beyond banning just apps or stopping some questionable investment.

Indian policy should be based on the assumption that the fundamental global economic decoupling currently underway will inevitably go much farther and affect both India and the rest of the world.

Also read: Don’t suffer alone — India and the world need to act against China’s intimidation tactics

What coupled the world economy

Decoupling is inevitable because linkage politics is a defining feature of international competition and conflict. This decoupling is linked, paradoxically, to the coupling of all issues to security and political competition in the new soft war. Ultimately, countries put their security interests ahead of their economy because without security, there is little point in generating wealth. When the chips are down, security politics trumps economics.

The current global economic coupling was based on the assumption that, minimally, economic and security issues are delinked. More hopefully, it was based on the assumption, long a liberal-internationalist fantasy, that economic incentives would actually alter political calculations, which suggests a far more consequential coupling that changes calculations of national interest. Needless to say, this proved to be as foolish an expectation when it was first made in the run-up to World War I as it has been regarding China’s behaviour.

Also read: Xi contained Covid-19, but suppressing rising chorus against China won’t be easy

Rattled China can’t blame others 

The prospect of a significant decoupling has clearly rattled the Chinese leadership. Foreign Minister Wang Yi has said that the US and China “should stop attempts at decoupling and advance the relationship through cooperation”, while the Chinese Ambassador to the US Cui Tiankai warned that the relationship was at a “critical moment”. Chinese Ambassador to India Sun Weidong also warned New Delhi that a “forced decoupling is against the trends & will only lead to a ‘lose-lose’ outcome”.

But it is Beijing that caused this shift. China has repeatedly attempted to use its economic heft to punish other countries and force them to obey its diktats. China’s use of economic coercion has become the “new normal”. After repeatedly exploiting economic coupling for political gains, it is a bit rich for China to now complain that others are decoupling. They have little choice because China is leaving them with none.

Not only has China used its economic clout unabashedly, it has also attempted to generate even more clout by unfair means, such as domestic subsidies, taxes and weak regulations on top of the natural advantage it has in low wages. In one critical example, China has used such methods to become the key supplier of rare earths, as a recent report pointed out. China is attempting to do the same with 5G technologies, actively threatening other powers against banning Huawei. But now, other countries, including the US, Australia and Japan, are pushing back, a small but critical indicator of how the vulnerability that China deliberately creates as a political weapon is boomeranging.

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

Decoupling hurts everyone, so what? 

It should be noted that decoupling does not mean a complete economic divorce from China. The Cold War bipolar competition was, in this respect, the outlier: despite intense security competition, previous episodes of great power competition did not witness such complete economic estrangement. History may repeat itself but it is rarely going to be a carbon copy. The emerging cold war will likely look like something in-between these previous models, with more economic intercourse than the Cold War era but possibly far less than the pre-World War I period.

There is little doubt that decoupling will be neither easy nor inexpensive for India or China. Indeed, this is true for the entire global realm. China’s growth over the last two decades has made the whole world richer, not just China. And by the same measure, decoupling will hurt everyone, not just China. But that this is a tragic outcome does not make it any less likely.

This decoupling will not be limited to the economic realm either. We should expect this to spread to other areas, such as multilateralism and, of course, bilateral relations. To be sure, as in the economic arena, there will not be a complete decoupling in any of these areas. But active cooperation and coordination will become increasingly difficult, however much India wants to reach an “understanding”. Preparing for this inevitability is far more prudent than hoping against it.

The author is a professor in International Politics at Jawaharlal Nehru University (JNU), New Delhi. Views are personal.

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  1. “China’s growth over the last two decades has made the whole world richer, not just China”. China’s growth was a consequence of the West’s policy of Soviet containment. At a time when the West, especially the US, was so far ahead economically that they used their market access to wean countries away from the Communist embrace. They did not foresee the day when the CCP would upend this policy and cause significant disruptions in the US economy and impoverishment of large sections of the US populace when the process of manufacturing was lured away to China through the mantra of free trade. Well, the era of laissez faire trade is over. Coastal elites in the US got wealthy , speculating on money and importing China-made goods. As long as China stayed on the lower end of the manufacturing totem pole the Western elite did not care, Now China is creeping up the tech ladder and the challenge cannot be ignored.

  2. The recent actions of China against India proved they cannot be trusted any more. The agreement with China in the year 1996 was a very good agreement. But they violated the agreement thinking they will be able to capture Galwan valley. This has happened due to anti-national fake Gandhi family and Commies. Fool Rahul has signed a secret MoU with the Communist Party of China. in the year 2008 knowing China is India.s number one enemy. No hybrid can become a true Indian and cannot be trusted. These anti-nationals might have told the Communist Party of China that India is busy with Coronavirus and is the best time to attack India. PLA is like Moist or Naxalites. They do not know mountain warfare. They know Guerilla war with light weapons. Huang Guozhi, the senior editor of Modern Weaponry magazine, has said that the world’s largest and most experienced country with plateau and mountain troops is neither US nor Russia but India. Indian Army knows all kinds of fighting very well. So PM gave a free hand to them and as a result, Indian Army inflicted more causality on the Chinese side. The 21st century is the age of missiles, rockets and Laser beam. Indian is a superpower in this field.

  3. the fact of the matter is that the US is a power in decline. most certainly in the economic and technology fields. elections are due. for the US it has been said ruling parties may change but policies do not. this is because the US is run by corporations and war mongers and not political parties. india is headed in the same direction. therefore we will be in the same boat as the US is today. one simply needs to look arounf the world and the condition of beneficiaries (countries) of US largeness and decide where one needs to be.

  4. Wow ! Something rational from a JNU Prof ? Surely, this must be the China virus effect ! China will not go down alone or without fighting. The leftists and anarchists have been ravaging the cities across the USA – not surprisingly those ruled by the Democrats – and will do their best to disrupt normal life. For India, all around are enemies and so vigilance is key. Learn from Israelis – everyday is a new day.

  5. Even if there is no World War III, one can clearly see a Chinese lead Axis consisting of China, North Korea, Pakistan, Iran, Turkey, perhaps Russia too. India has to be careful as none of them are India’s friends, including Russia.

  6. “But it is Beijing that caused this shift. China has repeatedly attempted to use its economic heft to punish other countries and force them to obey its diktats. China’s use of economic coercion has become the “new normal”. After repeatedly exploiting economic coupling for political gains, it is a bit rich for China to now complain that others are decoupling”

    Very true. Xi and co seem to be stupider than the previous generation of leaders. Maybe he buried their head too deeply into marxist theory and truly underestimated the flexible nature of capitalism.

  7. India treats every country as a friend till it proves Unworthy of india s affection. Both China and Pakistan have crossed the limit and will be made to bleed. Just wait.

  8. Exactly. When Modi does something it can be spinned by left publications. The world will have a new economic order with China marginalized in the new setup. China was thriving all around leveraging the benevolent and openness of democratic societies. Now that they have woken up to Dragon dirty games now this decoupling will slowly lead to china’s irrelevance in global community. Technology that China stole and progressed today are rapidly changing and in about 10 years time many of them will be obsolete. Unless China is integrated and engaged with west the progress in the technology domain will be nothing to write about in the next 2 decades. There begins the end of this exploited growth. People who know how technology progress directly affects long term progress will vouch for this. As proven recently Russia is no friend of China either to steal that technology from Russia. We know that from the S400 story recently.

  9. India n Indians must decouple from trade connections with China. We must go full throttle in Attamnirbhar path. Stop Chinese goods from entering Indian ports…
    No if No but – No trade till border dispute is settled for good.

  10. Not sure why you have stated that modi’s move to ban Chinese apps is more a retaliation and not a well thought move in line with the global trend?

    • What is the global trend? 10 ASEAN countries and their five big partner countries, Australia, South Korea, China, and Japan, have agreed on a trade deal RCEP, and have also invited India to join. America signed a trade deal with China in January, by virtue of which China would by American goods worth $200 billion ny the year end. This would help Trump’s reelection campaign greatly. EU countries also wants to do trading and business with China. EVEN INDIA IS IMPORTING TEST KITS FOR CORONAVIRUS FROM CHINA RIGHT NOW! INDIANS DON’T HAVE ENOUGH OF CHEAP, QUALITY, CHINESE IMPORTS! A recent media report says, “KOLKATA: Chinese smartphone and consumer electronics brands saw sales rise by double digits from the year earlier in sales on Amazon and Flipkart, with some products running out, three senior industry executives said, belying fears of public sentiment turning against them because of border hostilities. …… Industry executives said several products of prominent Chinese brands have stocks running out, including offline. Brick-and-mortar retailers and said it had been business as usual as far as Chinese brands were concerned. “There has been no impact on sales of the Chinese brands,” said a senior industry executive.”

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