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View: China is all set to pay a heavy price for its Doklam blunder

Author: Kanwal Sibal
Publication: The Economic Times
Date: August 23, 2017
URL:    http://m.economictimes.com/news/defence/doklam-affair-is-a-product-of-growing-chinese-vanity/amp_articleshow/60182285.cms

Our skewed trade relationship with China has produced a $ 51 billion trade surplus in its favour out of a total trade of $ 71 billion

China has begun to believe that like America, it too has become an “indispensable nation,” at least for the global economy, and that its position as virtually the biggest trade partner of most major economies limits international options in dealing with its imperious foreign policy based on a unilateral definition of its “core interests” and disregard of international law. This explains its willingness to challenge Japan, pursue egregious historical claims in the South China Sea and confront the US in the western Pacific.

 This hubris born of such self-evaluation of China’s economic and financial muscle, coupled with its growing military capabilities, lies behind its condescending policies towards India. The Doklam affair is a product of this growing Chinese vanity. A country, supposedly with a sense of history, seems to be forgetting its lessons. Just as it believes that it can resist US hegemony today, others will resist its own tomorrow. China has limited economic leverage over India, although Chinese experts, including its unprofessional, threat-brandishing diplomats in New Delhi, believe India needs Chinese investments, especially in infrastructure, for achieving its growth objectives.

 While in normal circumstances flourishing economic ties between the world’s biggest markets can be mutually beneficial, China’s adversarial policies towards India are a barrier. India, less tethered to China’s economy excepting some areas, is less anxious about economic pressure tactics China has used against Japan, South Korea, Philippines or Mongolia over political differences. Conversely, China’s external trade is so huge that it can absorb the loss of the Indian market in the short term, but with the slowdown in its growth rate, mounting US pressure on it on trade, investment, IPR and cyber security issues, murmurs in the EU about its economic ingress into East European countries, the rise of anti-globalisation and protectionist tendencies and so on, China’s export dependent economy might need expanded access to the Indian market in the medium term perspective.

 Our skewed trade relationship with China has produced a $ 51 billion trade surplus in its favour out of a total trade of $ 71 billion, which is manifestly unsustainable. China has flooded the Indian market with cheap manufactures, destroying local manufacturing in the process. It has penetrated our power and telecom sectors despite obvious security concerns. It is now entering the e-commerce sector in a big way. Chinese smartphone brands together command more than 51% of the market share in mobile telephones.

 Viva and Oppo, who account for 50% of that share, have now captured all the major sponsorships of Indian cricket through their holding company BBK Electronics by committing huge sums of money. PayTM, which has Chinese e-commerce giant Ali Baba as its biggest shareholder, owns title sponsorship of all cricket tournaments in India. The swelling distrust of China’s intentions towards India, aggravated by the Doklam thrust and earlier Chinese blows on NSG, CPEC and Masood Azhar issues, has the government directing mobile manufacturers (predominantly Chinese) to share security procedures and processes they follow to ensure security of mobile phones sold in India to prevent data leakage and online theft.

 Without naming China, which does not allow foreign investment in power grid projects but is winning distribution network contracts (in 18 cities) to smarten up city grids, India, with cyber security concerns in mind, has also said that it will invoke the principle of reciprocity to keep foreign companies out of power transmission projects. Some political groups are becoming active in advocating a boycott of Chinese goods and this movement can get galvanised proportionately with Chinesemisbehaviour with us. China will pay a price for its folly.

Views expressed here are the author's own, and not Economictimes.com's
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