The face-off with China in the Doklam border region is generating a revival of ‘economic’ ultra-nationalism from strange quarters. In recent interviews, yoga proponent and entrepreneur Baba Ramdev has been calling for boycott of Chinese goods. “If we boycott Chinese products, we will rub their nose on the ground, and they will be forced to bend before us,” Baba Ramdev has been seen lecturing TV crews.
Last October, too, Patanjali Baba had tweeted calls to boycott Chinese goods as retaliation against China’s opposition to labelling Jaish-e-Mohammad chief Maulana Massood Azhar a ‘global terrorist’. The timing, Diwali, raised suspicions that the Ramdev was driven more by his sense to keep China out as a business competitor rather than for patriotic reasons.
Largest trading partner
India’s trade with China is huge and is a worry because it has not followed the expected script. Last fiscal, India imported a humungous $61.7 billion worth of goods from China, while our exports to that country were just $9.05 billion, a yawning deficit of $52 billion. China is India’s largest trading partner accounting for 16 per cent of our imports. Those next in line from whom we import are miles behind – the US is at $18.15 billion (5.7 per cent share), the United Arab Emirates $17.4 billion (5.5 per cent) and Saudi Arabia $16.6 billion (5.19 per cent).
To put this in perspective trade with Pakistan was a mere $2.67 billion in FY2016 or just 0.41 per cent of India’s global merchandise commerce. India can ignore commercial ties with Pakistan and concentrate on military challenges. With China, trade is too big to be banned at the drop of a hat. There are good economic reasons. Underlying the big trade numbers is the fact that China is a more cost-effective source of advanced information technology and hardware. Anil Ambani’s Reliance Communications, for its 4G/broadband programme sources hardware from the Chinese IT giant Huawei. Beyond the jokes of cheap and poor quality Diwali lights, China has become a vital source of telecom and computer instrumentation.
Guns and roses
Even as there is sabre-rattling at the borders by the foreign ministries of the two countries, a few days ago, Union Commerce minister Nirmala Sitharaman met with her Chinese counterpart Zhong Shan in Beijing to tackle the trade deficit and demand a level playing field for Indian agro, pharmaceutical and IT products in the Chinese market. In commerce, there is realism! Chinese businesses are known for their aggression and there is need to investigate the dumping of steel, photovoltaic cells and such like (which India is doing) to protect our own industries. But a rollback by banning Chinese goods is no answer.
Beyond the haze of jingoism, the fact is that Chinese exports to India are of high value-addition, and cost-effective. So, there’s a natural demand for them. Telecom and computer instruments and hardware, entire project plants and drug intermediates are chosen on merit by Indian industry. Sitharaman acknowledged as much when she said: “These imports feed the growing demand in India for such goods which China, due to variety of reasons, is able to export to India at competitive prices.”
There is evidence that India, too, did better when it moved away from traditional exports like iron ore, and cotton and yarn, to more value-added products. According to Chinese customs, Indian exports went up over six per cent in the January-April period with increasing purchases of items such as polished diamonds and other precious stones.
ChinaInterestingly, the Indian consumer is smart and has not fallen prey to jingoistic calls of ‘boycott’. And, why should he? He has a head on his shoulders and his hands firmly in his pockets. If he gets equivalent quality and good service at half the price, he would be a fool to pay twice as much to a western or Indian retailer. The iPhone 7 Black sells at Rs 76,000 a piece, a Samsung S6 Edge top model is at Rs 52,000, while the Chinese equivalent in the high-end cell phone market – the OnePlus 5 – top model is priced at Rs 38,000. We don’t want the Chinese fixing and dumping in our market, but let us also not have a bunch of local monopolists erode competition by calls of pseudo nationalism!
[The author can be contacted at gurbir1@gmail.com]