The Many Ironies of India-China Economic Relations

Pickpockets are not uncommon in crowded places in India. Victims are generally realists and tend to resign themselves to their misfortune quickly often not even bothering to go to the police. Not so, however, actor-turned-politician Manoj Tiwari, head of the Delhi unit of India’s ruling party, the Bharatiya Janata Party. When he lost his iPhone Seven Plus at a demonstration, he promptly complained at the local police station. Politicians in India are often able to get the police to expend extra effort on their behalf, so Tiwari’s response was not really surprising.

What was surprising was the fact that the politician had lost his phone at a protest against Chinese-made goods organized by an affiliate of the BJP’s parent organization, the right-wing hyper-nationalist Rashtriya Swayamsevak Sangh. And as American as Steve Jobs might have been, the iPhone is the quintessential made-in-China product.

Such ironies are a dime a dozen in the India-China relationship.

A movement in India for boycotting Chinese goods has picked up political steam particularly over the past year or so following China’s repeated blocking of UN Security Council sanctions against several Pakistan-based terrorists. Boycott messages on India’s most popular social media platform, WhatsApp picked up especially around the time of Diwali, a major Indian festival, in mid-October this year.

Diwali and many other Indian religious festivals are periods when demand for cheap electric lights, crackers, toys and other electronic goods picks up and China is the biggest supplier there is – even small figurines of Hindu deities are manufactured in China today. And in at least some cases, it has displaced or put out of business traditional Indian small manufacturers.

There is a conflation here of the political and the economic, therefore.

There is also however, a larger economic and environmental case to be made against many Chinese products. Take the cheap Chinese toys entering the Indian market, which certainly filled a gap in supply but are of poor quality and contain material hazardous to the health of children. The Indian government has therefore, recently imposed strict quality guidelines in this sector.

Chinese telecom products have long been the subject of debate and intense scrutiny from Indian security agencies. And going by the record of cyber-attacks on Indian institutions, and several instances of cyber-theft and data leakage there is good reason for India to improve its vetting standards and target Chinese products in particular.

However, it is also only fair to note this is a second-order effect. For well over a decade, India has actually benefitted from cheap Chinese telecom products. For India’s young upwardly mobile population cutting across class and caste, the mobile phone is no longer a luxury but an essential item and it is China that has made this possible.

The availability of mobile telephony across the length and breadth of India has set off not just an economic revolution in the country but also a social revolution allowing mobility of labour, access to information as well as to entertainment, transfer of monies, and quite simply more regular contact between India’s large numbers of internal migrant and their families. In other words, a cheap Chinese mobile phone, smartphone even, in India today, has allowed greater agency for India’s poor and marginalized – farmers, labourers, and small-time traders.

Half-baked calls to boycott Chinese goods in India must keep in mind this reality and give credit where it is due. If Indian manufacturers have been unable to even start an industry sector or fill a demand gap for whatever reason, Chinese companies cannot be blamed for coming in to fill the gap. It is only important that both the government and consumers ensure that both quality and safety standards are met.

At the same time, it is also necessary to ensure that local enterprises are not marginalized or priced out of the market by China’s generally predatory and mercantilist trade behavior. Thus, New Delhi has targeted Chinese power equipment suppliers to ensure that the playing field also supports Indian companies and is planning to ensure Indian majorities in joint ventures and in top management positions. This is exactly of a piece with China itself has done at home with respect to foreign investors.

Meanwhile, too much can be made of the large Indian trade deficit with China – a whopping US$51 billion out of a total trade of approximately US$71 billion. If India did not have a trade deficit with China, it would have one with another country because of the aforementioned inability of Indian manufacturers to supply the needs of their own market. However, China also gets picked on because it is also politically expedient to do so in India.

Nevertheless, China can also be blamed for repeatedly blocking access to India’s most globally competitive products namely, those in the IT and pharmaceutical sectors, despite its steady rhetoric to the contrary. China’s methods include an array of non-tariff barriers including legal opacity. There is also not a little hyper-nationalism on China’s part, too, as it seeks to build up its state-owned and private enterprises to take on regional and global rivals.

In the process China’s millions of cancer sufferers remain without access to effective and cheaper medications produced by Indian companies. A limited few with the resources are now travel to India for brief spells of treatment in what might be classified as ‘medical tourism’. But this only then sharpens the disparity of opportunities within China.

It is evident then that there is much that the two countries stand to gain from each other in the economic and social development sectors and there are still further areas – climate change mitigation, for one – where India and China have much to both learn from and to help each other on.

At the end of the day, though the Chinese and Indian governments continue to view each other with so much short-term thinking and political mistrust that they are effectively working against their own citizens.

A version of this article was published as Jabin T. Jacob, ‘From iPhones to cancer, the India-China relationship is full of irony’, South China Morning Post, 19 November 2017.

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