Should India boycott Chinese goods?

Seething and simmering anger against China has engulfed India in recent days consequent to their tense and deteriorating bilateral relations. This encompasses the ''technical hold'' that China continues to impose on designating Maulana Masood Azhar as a terrorist by the United Nations and its opposition to India's membership of the Nuclear Suppliers Group. The last straw on the camel’s back was the continued protection by China to its ‘’all-weather ally’’ Pakistan even after the gruesome Uri terrorist attack. India's arguments and reasoning with China on these issues in bilateral, regional and international fora have fallen on deaf ears. At the bilateral Summit during the first visit of Chinese President Xi Jinping to India in Sept, 2014, Prime Minister Narendra Modi asserted that a ''climate of mutual trust and confidence; respect for each other's sensitivities and concerns; and, peace and stability in our relations and along our borders are essential for us to realise the enormous potential in our relations.'' During his visit to Hangzhou, China, for the G20 Summit in September this year, PM Modi in his meeting with President Xi said that "India and China must respect each other's aspirations, concerns and strategic interests." He added that "The response to terrorism must not be driven by any political consideration," and that countries sponsoring and supporting terror should be isolated and sanctioned and not rewarded. It was being cautiously hoped that President Xi's visit to Goa for the BRICS summit would help to allay concerns, settle ruffled feathers and impart new confidence and dynamism to bilateral ties. These hopes were shattered. Xi stood like an impregnable wall against making any reference to cross-border terrorism or even indirectly pointing to Pakistan although PM Modi had described Pakistan as the ‘’mother-ship of terrorism’’. China’s strident opposition notwithstanding, India was able to register significant gains in the Goa Declaration with the strongest ever language used to condemn terrorism, unequivocal support for finalising the Comprehensive Convention on International Terrorism, and exhortation to all countries to ensure that their territories are not used for terrorist actions. Calls for boycott of Chinese goods have been made sporadically in the past. These have become more concerted and louder over the past few weeks. Some Chinese think tanks and state-controlled media publications have used offensive, rude and insulting language to criticise this move and said that this is bound to fail as Indian workers are lazy and inefficient and Indian goods cannot compete with high-quality, competitively-priced Chinese goods. Moreover most Chinese goods being exported to India are technologically advanced, sophisticated and of high quality. It will not be possible for India to make a dent in China's exports by such mis-guided actions. Use of such language by Chinese media is unusual. Sinologists opine that the media would employ such abusive and hateful words only if it is seriously concerned and worried about a possible adverse impact on Chinese interests. It will be useful to analyse whether in political and economic terms, India can materially influence China's expanding exports to the Indian market. India-China trade has developed rapidly over recent years. India's trade deficit with China increased to US$ 53 billion in 2015 from US $ 48 billion in 2014 and US$ 36 billion in 2013. India's trade deficit with China accounts for about 40% of its global trade deficit. An important reason for the huge trade deficit is the web of non-tariff barriers imposed by China that do not allow access to the Chinese market. Several Indian products are high quality and competitively priced eg pharmaceuticals, IT services, dairy and agricultural goods etc. India enjoys a positive balance of trade with USA to the tune of US$ 21 billion and of US$ 7 billion in the open and highly competitive UAE market. It is inaccurate to state that Indian exports to China are low because they are over-priced or are not of acceptable quality. India needs to work harder individually and in concert with other trading partners to pry open China's closed market. On account of its obligations under the WTO, India can neither ban nor officially boycott Chinese goods. China is able to manufacture and export its goods at such low prices because its companies receive huge undisclosed and covert State subsidies and support from the government. Details about these are not readily available because of non- transparency and opacity of the Chinese economy. Although China became a member of WTO in 2001, it has still not embraced all features of a market economy. China has been arguing that its Market Economy Status (MES) be recognized as of Dec, 2016 as stipulated in its Accession Protocol. Several countries like USA, EU and others continue to have strong reservations on this subject. India also needs to consult its own companies, corporate houses and other stake-holders and finalise a well-considered and thought through position on the subject. If China gets MES it will severely limit India’s capacity to launch anti-dumping action against its unfairly traded, low-priced goods into the country. It may be noted that out of 535 cases of imposition of anti-dumping duties from 1994 to 2014, 134 were against goods like steel, chemicals, electronic and electrical products imported from China. India needs to actively coordinate its position with other countries that have reservations about according MES to China. India did not use the leverage during China's accession negotiations to WTO from 1986 to 2001 and allowed it a free ride into the Organisation. India should not repeat the same mistake and negotiate hard to drive a positive bargain for itself. The campaign for boycotting Chinese goods can be undertaken and promoted at non-official and civil society level. If it is to have any chance of success, it should be undertaken after careful preparation, in a comprehensive manner and not in a perfunctory and desultory fashion. Plans by individuals and/or institutions acting alone will not have the desired impact. India is a large market for China. When all other markets are drying up, China sorely needs big, stable and growing markets. India being the third largest economy in the world in PPP terms and the fastest growing economy is particularly attractive for China. India needs to significantly and quickly enhance its manufacturing prowess and capabilities, both in quality as well as competitiveness. The slew of national economic initiatives launched by the government like GST, Make in India, Skill India, Digital India, Smart Cities, Swachh Bharat and efforts to improve ‘’Ease of Doing Business’’ are steps in the right direction. They however need to be pursued and implemented with single-minded determination. Baba Ramdev has said that China takes money from India through its cheap exports and gives it to Pakistan. Such an approach at the level of common people can unite the people to create a movement against use of Chinese goods. Decline in Chinese imports as a result of such a campaign will happen gradually and not immediately. What is important is to launch the movement in a concerted and coordinated manner and to keep on expanding the coverage in terms of participating institutions, products, geographical area etc. The movement once launched should be persisted with and not allowed to fizzle out. Festival season is the optimal time to start because purchases by common people see a significant rise during this period. China through its cheap and low quality products like crackers, fairy lights, electric goods etc has created a monopoly.  Introduction of good quality, competitive Indian products in the market will go a long way in lessening China's domination and send a strong and clear message to it that business as usual cannot continue. China will be forced to moderate its position on issues that are of interest to India and be more mindful of India’s strategic concerns. A significant decline in Chinese exports to India will put pressure on China to open up its market to Indian goods. This will help to increase Indian exports, production and productivity. It is likely that in the short term consumers, businessmen and dealers might experience some temporary hardships. This would in all probability be short-lived as alternative products of better quality and at similar prices will become available to substitute them. Chinese goods might be cheap but their quality and longevity leaves a great deal to be desired. It is not very likely that China will change its unwavering support for its ‘’iron-friend’’ with whom its relation is higher than the seas and deeper than the skies, or the other way around, or modify its position on India's membership of NSG or UN Security Council in a hurry. This will take some time but it will definitely force China to treat India with greater respect and take it more seriously. The call to boycott Chinese goods is commendable but it can be successful only if it is pursued in a united and coordinated manner by civil society and leaders of business, trade and industry community.

• Indian Foreign Policy
• Economic Diplomacy
• China
• Boycott
• BRICS 2016
• Masood Azhar

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