India-China trade surge muffles beating war drums

At a time when India-China relations are at new lows, bilateral trade touched new highs in 2021.

According to China’s General Administration of Customs (GAC) data, bilateral trade between the two neighbors totaled more than US$114 billion, up 46.4% year-on-year from January to November 2021.

Trade between the two Asian giants has steadily grown over the last two decades, up from a modest $1.83 billion in 2001.

“Even though the China-India border spat affected the bilateral relationship from the aspect of politics, the willingness of trade among entrepreneurs in both countries were not affected,” Qian Feng, director of the Research Department of the National Strategy Institute of Tsinghua University, told Chinese state mouthpiece the Global Times.

He said the China-India border stand-off which erupted in 2020 had not affected the bilateral trade relationship, as reflected in buoyant trade statistics.

India’s political relations with China hit a new low after border clashes in the Galwan Valley in June 2020 when soldiers from both sides were killed, including through the use of crude weapons. Soon after that incident, an Indian “#BoycottChineseProducts” campaign took off online, impacting the sales of Chinese-made goods.

Prime Minister Narendra Modi’s government upped the boycott ante by banning more than 260 Chinese apps, including the popular TikTok, Shien and CamScanner. It’s now apparent to many those bans were more symbolic than substantive as broad trade surged.

That was seen in an earlier agreement signed between India’s space agency, the Indian Space Research Organization (ISRO), to swap technical details of its satellite-based messaging service, with Chinese smartphone maker OPPO. The deal provoked a nationalistic backlash while raising questions of national security.

India’s imports from China are mainly in the areas of telecom instruments, computer hardware electronic components and drug intermediates, among others. India’s exports to China, on the other hand, consist largely of cotton yarn, iron ore, organic chemicals and gems and jewelry.

Against this politicized backdrop, the surprising surge in India-China trade has not settled well with many Indians, including opposition parties. Rahul Gandhi, a senior leader of the Congress Party, wrote in a Hindi language tweet: “This is a government of rhetoric, the pretense of falsehood is immense and the country is waiting for their bags to be packed.”

Online commentators have echoed that call, with a flood of comments asking “why are we strengthening our enemy on the border?” Others tweeted: “Why can’t we cut imports drastically. We are feeding our enemy. Govt has to act.”

Another critic tweeted a resounding response: “How much will we lose if we stop all business with China? I think we will face a big loss for a short time, later in near future everything will be correct, I strongly believe that it is in India’s interest to end all business & relations with China.”

Brahma Chellaney, a strategic thinker, author and prominent commentator, joined in the tweet fray in December 2021, saying: “Amid China’s border aggression, how does the Modi government justify the nearly 50% increase in trade with China in 2021, with the $61.5 billion surplus in PRC’s favor just between January and November roughly equalling India’s total defense spending in the current fiscal year?”

In November, he tweeted: “PRC data shows that despite its border incursions, trade with India rose 32.4% during Jan-Oct 2021, crossing $100 billion for the first time, with Chinese exports 327% higher than imports. Modi’s reluctance to impose substantive costs allows PRC to have its cake and eat it too.”

India’s Minister of Commerce and Industry, Piyush Goyal, denied implausibly at a recent press conference that there has been an extraordinary increase in trade with China. He claimed India’s trade deficit with China had come down to $44 billion in 2021 from $48 billion in 2014-15.

“Under UPA imports from China grew by 1,160% between 2003-04 and 2013-14. Govt. led by PM @NarendraModi Ji has brought that down drastically to 8% between 2014-15 and 2020-21,” Goyal said in a tweet.

The United Progressive Alliance (UPA) is a coalition of political parties led by the Indian National Congress, commonly known as the Congress party, that was in power from 2004 to 2014.

Goyal’s remarks came after Congress spokesperson Gaurabh Vallabh raised questions about the state of India-China relations. In a statement, he noted that China renamed 15 places in Arunachal Pradesh, a state in northeast India of which China claims as much as 90,000 square kilometers and calls Zangnuan, or south Tibet. Beijing gave Chinese-sounding names to places there in late December.

“Is our response restricted up to banning a few Chinese apps and on the other side India-China trade crossed the $100 billion in the year 2021?” he asked. He added: “Modi government’s unpardonable, blatant and brazen compromise of ‘National Security’ & India’s ‘Territorial Integrity’ stands exposed once again.”

“When will [the] Modi government respond to this verbal, geographic, military and strategic aggression of China? Why are we tolerating all-around aggression from China and doing absolutely nothing about it? Despite a tense military stand-off, why India-China trade crossed the $100 billion in the year 2021,” Vallabh asked.

Author: ANIL SHARMA, Asia Times