Dr Ashwani Mahajan
Today, almost all countries around the world are battling the virus from China, which has so far infected more than 9 million people and has also killed half a million people. There is a belief in the world that China was researching this virus, in its laboratory, for its biological warfare designs, which suddenly leaked and spread through the city of Wuhan, China. Even if it is not a conspiracy of China, it is well known that China hid its spirit from the world and continued its air travel and spread the virus around the world. Due to this irresponsible behaviour of China, not only people around the world are facing a health crisis but they are also facing a terrible economic crisis because over the last 3 months, economic activities have almost stalled and it seems that the situation will not be normal before December of this year. So even though people from all over the world have generally postponed all purchases other than their essential requirements, the world still appears to be dependent on China for the purchase of some essential commodities. The reason for this is that in the last nearly two decades, since China became member of the WTO, it has captured markets globally with its cheap goods. America, Europe, Africa, Latin American countries are all dependent on Chinese goods, as their industries have been generally destroyed due to not being able to compete with cheap goods from China.
In such a situation, China is emerging as a superpower of the world compared to America. With trillions of dollars of foreign exchange reserves, it has started a mega project, namely, Belt Road Initiative (BRI), involving 67 countries, so that it can control the infrastructure over a large part of the world and could trap most of the countries under its debt. With designs to enhance its strategic power in the world, it has already started snatching away strategically significant territories from member countries of BRI. The capturing of Sri Lanka’s Hambantota port is an example of China’s nefarious designs.
China, meanwhile, has expanded its strategic power with the help of its economic power. The history of China so far has been of an expansionist, capturing of thousands of kilometers of land is the example. Since 2001, it has started expanding its expansionist designs even more rapidly. All its neighboring countries always remain apprehensive of China that it can forcefully stake its claim on their land at any point of time.
USA has already waged a trade war against China’s fraudulent trade policy and is also expelling Chinese companies like Huawei from its telecom sector. After the Corona crisis, almost every country is moving away from China. Many European countries have also clearly expressed their displeasure by returning shipments of cheap and fake test kits back to China. Whereas, America’s trade war against China continues unabated, the countries of the European Community have also decided to impose special import duties on goods coming from China. They are apprehensive of act of China in subsidising its exports, which is causing damage to their industries.
It seems that China’s belt road project is also going to fall into disarray. Significantly, China has built road and other infrastructure in the name of China Pakistan Economic Corridor (CPEC), on Pakistan occupied Kashmir (PoK), despite the opposition from India, due to which India boycotted and protested the expansionist BRI. Almost 67 countries had joined BRI. However, many of them have already realised the expansionist intentions of China and have started distancing themselves from BRI. Significantly, Malaysia has already considerably trimmed its project. The Sri Lankan people and Government are very annoyed with China after losing of Hambantota port to China. The people and Governments of many other countries are no longer enthusiastic to take that project forward. Many countries including Maldives, Mongolia, Montego, Pakistan, Kazakhstan, Kyrgyzstan, Laos etc, have already been caught in China’s debt trap. Even European countries like Italy, which, despite opposition from the US, had previously participated in the Belt Road Plan, after getting exposed to Corona virus from Chinese workers coming from Wuhan, are now reconsidering its ties with BRI of China. Other countries, who were engaged with China economically, namely African countries, Latin American countries and Australia, all are now unhappy with China. Australia’s growing engagement with India has been worrying China. It can be said that countries all over the world, including India, are boycotting Chinese goods. Governments there are breaking ties with Chinese companies and are creating tariffs and non-tariff barriers to curb Chinese goods, and see China as a strategic threat, given China’s expansionist attitude. We can also call such a situation a ‘global boycott’ of China.
Why question the success of boycott?
China is in deep trouble due to public anger, boycott and increasing opposition from the Governments all over the globe. Writings of Chinese government’s mouthpiece Global Times are pointing to this more clearly. There are still many people in India who believe that the boycott of China will not fructify, because we have extreme dependence on China. Our country’s dependence on China, including mobile phones, electronics, active pharmaceutical ingredients (APIs), healthcare equipments, chemicals, metals, toys, components and raw materials for industries; is so high that China boycott is not possible, and ban on imports from China could be harmful to India’s economy. They also say that even if a complete boycott of Chinese goods is done, it will not cause any harm to China, because its exports to India are only $ 68.2 billion as against its global exports of $ 2498 billion, which is only 2.7% of its total exports.
We have to understand that China enjoys a total trade surplus of $ 50 billion from our country which is 11.6% of its total trade surplus ($ 430 billion). Also, let’s not forget that the US has a trade deficit of $ 360 billion, which is more than 83% of China’s trade surplus. If both India and America join hands to shun Chinese imports, then all the trade surplus of China will vanish. So far as India’s dependence on China’s imports is concerned, it is not right to underestimate India’s capability. Until 15 years ago 90 percent of active pharmaceutical ingredients (APIs), the raw materials for pharmaceuticals were manufactured in India, but due to dumping by China, our API industry was ruined. To rebuild the same, the Government has already announced a package of Rs 3000 crore. Many products coming from China are of Zero Technology, which can easily be started getting manufactured in India immediately. Recently in just 2 months India has become self sufficient in many requirements including PPE Kits, Testing Kits and so far more than 50,000 ventilators have also been manufactured in India. India’s talent and capability should not be doubted.
It will not be prudent to take our procurement decisions solely on the basis of the price of products coming from China. Imports of products dumped by China have led to the collapse of manufacturing in India. We must consider the cost of cheap Chinese imports in terms of rising poverty and unemployment of the people. In the name of cheap products, we cannot put our country to hardships. After Corona, a challenge has come, which we can convert into an opportunity. And this effort of converting crisis into an opportunity is Atmanirbhar Bharat (Self Reliant India).
(The author is Associate Professor, Department of Economics, P.G.D.A.V. College University of Delhi)
Dr Ashwani Mahajan