1. Doklam standoff: India, China trade ties to be hit; in crisis, what can really happen

Doklam standoff: India, China trade ties to be hit; in crisis, what can really happen

The bilateral trade stands at around $70 billion and the trade balance is heavily skewed in favour of China

By: | New Delhi | Published: August 24, 2017 6:15 AM
The standoff between India and China at Doklam hasn’t yet affected bilateral trade but the crisis is likely to have broader policy implications, including in trade, in the longer term. (Reuters)

The standoff between India and China at Doklam hasn’t yet affected bilateral trade but the crisis is likely to have broader policy implications, including in trade, in the longer term. Analysts say ever since the 2014 border stand-off (during Chinese President Xi Jinping’s visit to India), India has been cautious. However, this time around, the high-pitched anti-India rhetoric by China has damaged the prospects for cooperation. India does not have too many levers to pull vis-a-vis China although trade might be an area that India might be able to use in order to inflict pain on China. The bilateral trade stands at around $70 billion and the trade balance is heavily skewed in favour of China. Access to China in the areas of infrastructure, power and telecom must be cut off as well, says Rajeswari Pillai Rajagopalan, senior fellow at Observer Research Foundation.

Since bilateral trade is hugely tilted in favour of China, any prolonged stand-off will likely hit China more than India, said analysts. While total trade between the two nations stood at $71 billion in 2016, India witnessed a massive trade deficit of $46 billion with China, partly due to non-tariff barriers imposed by the giant neighbour on India. Although Doklam crisis has hit trade through Nathu La Pass, trade through this route accounts for not even 1% of the total bilateral trade. India exported goods worth only `63.38 crore in 2016 and imported items of `19.30 crore through Nathu La. The Chinese President, during his visit to India in 2104, had announced $20-billion investments in India (over a five-year period). Analysts had earlier predicted that the investments from China would offset the damaging impact of the massive trade deficit to some extent. However, only around $1 billion investments are learnt to have flowed in by September 2016.

Analysts said while trade between the two countries hasn’t been dampened so far, continued belligerent rhetoric from China may prompt private people to vent their anger against Chinese goods, as was noticed earlier when some people called for a boycott of Chinese toys and even crackers, even though the Indian government hasn’t put any curbs on Chinese products. In an interaction with members of the Indian Association of Foreign Affairs Correspondents, former national security adviser Shiv Shankar Menon said all the technical work on settling the boundary issue between India and China was complete, and now a political decision has to be taken for final resolution.

However, Menon pointed out that it was a complex relationship and the ties between the two Asian powers were under stress at present, with the situation being exacerbated by the rise of ultra nationalism which always reduces the space for any government to make concessions in larger interest of peace and stability. Menon was of the view that the present stand-off with China might not be defused till November after the annual Congress of the Communist Party of China was over, underlining that no leader in China would like to come across as weak to their party; so until November no sign of thaw could be expected. The former National Security Adviser also called for India changing the way it was dealing with the neighbours and the world as a whole. He was of the view that India made a mistake by not responding to Sri Lanka’s request for development of Colombo Port, and the result was that the Chinese came over and did it. India’s failure to respond to Sri Lanka became all the more surprising as 83% of its trade was handled by the Colombo port.

  1. A
    Apte
    Aug 24, 2017 at 7:45 am
    1. Doklam stand-off is just incidental but let us not overlook a few facts. China is the biggest beneficiary of free trade and has used it to expand its industrial economy and it has now a very clear objective: to be acknowledged as a super-power. China’s aggression seen (in the South China Sea island or in Arunachal Pradesh and now Sikkim), is directly related to its rise as an economic super power. 2. Obviously time has come for democratic countries, especially India, USA, France, Germany, Great Britain Australia and Japan to join hands and tell China that its aggressive postures are simply not acceptable to them. 3. China uses all kinds of barriers to block imports. In view of the expansionist designs of China, time has come for all democratic countries to unite and review their trade relationship with China. Question is whether India can persuade these countries to tell China that it cannot go on blocking imports in a clandestine fashion and how quickly it reduces the trade gap.
    Reply
    1. I
      Indian
      Aug 24, 2017 at 10:39 am
      Well articulated. Totally agreed.
      Reply
      1. V
        Vincent Chin
        Aug 24, 2017 at 11:03 am
        Don't try to mask this as an ideological war, it is not. This is nothing but sour grapes and a bad loser mentality. Try to compete with China in price to win a bigger share of the market if you can. Improve your country's system, infrastructure and productivity in the realms of globalization. If not, open your markets to Chinese investments and stop whining or play or victim card. Pity India is resorting to overt protectionism instead.
        Reply
        1. F
          Freethough
          Aug 24, 2017 at 12:41 pm
          Who said it is an ideological war. China has constantly opposed India .If you cannot support India's core concerns and remove barriers in your own countries for foreign companies there is no need to open up our market to you.. You can peddle your world class stuff elsewhere.
          1. H
            harsukh
            Aug 24, 2017 at 1:18 pm
            unlike your country where you force people to work, stop people visiting cities, force your prisoners for free is not what India stands for. that is why your prices are low and heavily subsidised by your commie government. india is a democratic country. try to be democratic and then i will see how you lot can competer.. look at the quality of your products. it is junk and like a toilet paper use it and throw it away. your commie government wants to grab land from every country. pity they are still not claiming the american land by using some old history. you lot need to grow up and stop whinging like a toddler.
            1. Ashok Bhagat
              Aug 24, 2017 at 9:40 pm
              Generally Chinese products are shoddy. Cheap, yes. Most of engineering goods do not last. Chemicals fail, chemicals are mixed with similar looking foreign ingredients. People have lost money doing business with cheating Chinese traders

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