TRADE WARS

Q. Can India use bilateral trade and access to its domestic markets as ways to rein in an increasingly aggressive China?

• BIBEK DEBROY

Yes, it can. But this cannot be achieved overnight. Trade is not delinked from investments. The two go hand in hand. China does not have market economy status under the WTO (World Trade Organization) rules, which apply to countries, not companies (except in the case of anti-dumping agreements). Moreover, the MFN (most-favoured nation) clause doesn’t apply to all services. Therefore, a selective and gradual phasing out of Chinese imports is indeed possible.

• AJAY SAHAI

One of the reasons for China’s recent aggressive stance is to divert the attention of its people from the slowdown of its own economy. Therefore, hitting it economically can be an effective strategy. However, we have to evaluate its pros and cons. India’s exports to China stood at $17 billion and our imports from China at $68 billion in 2019. Thus, in aggregate terms, containing bilateral trade will, naturally, adversely affect China much more. However, China’s share in our exports was 5.2 per cent while India’s share in their exports was 2.72 per cent, thus retaliatory action will have some bearing on our exports as well. The loss in exports can be nullified by working out strategic trade partnerships with countries harbouring anti-China sentiments—like the US, parts of Europe, Japan, South Korea, the Philippines, Taiwan and Australia, among others. Another approach could be to facilitate imports of raw materials and intermediate goods from China while encouraging value-added exports from India, and discouraging our raw material exports, which help Chinese manufacturers become more competitive.

• R.C. BHARGAVA

I don’t have data, but I would think that India’s imports from China would not be a large enough percentage of their exports to cause China enough concern to shape their relationship with India.

• N.R. BHANUMURTHY

It’s not impossible, but might involve many interventions, more so of strategic and diplomatic nature. The US has been adopting such means to contain China’s imports, with limited success.

“INDIA SHOULD WORK OUT TRADE PARTNERSHIPS WITH COUNTRIES HARBOURING ANTI-CHINA SENTIMENTS”
— Ajay Sahai

• ASHWANI MAHAJAN

Absolutely. The country required political will to take on China. There are ample tariff and non-tariff barriers available to execute this. The cheap Chinese imports were killing jobs and manufacturing capacities in India, along with increasing security