I guess we will now be talking about China for several days now. I am not quite sure where to start, but this is as good a place as any.
Now we know: there is no more time. China is irritated, furious and is thinking about expansion through military aggression. The Coronavirus is back in China, they have zero global goodwill and everyone is worried about doing business with them.
It is time to disengage from China economically. This is easier said than done, of course. Luckily, everyone in the world is looking for the same thing, just like they are looking for a vaccine against Coronavirus.
And this process has to be carried out somewhat secretly, while constantly talking of more and more peace and economic cooperation.
First, we need a full and comprehensive audit of all the ways in which the Indian and the Chinese economy are linked. This needs to be classified in ways such as this:
(1) Chinese companies manufacturing in India
(2) Raw materials and minerals being imported from China. This needs to be broken down in terms of industrial ores etc on one side, rare earths, chemicals, etc.
(3) Technology imports from China such as phones, tablets, computers.
(4) Machinery imports from China.
(5) Chinese companies getting contracts for industrial or infrastructure projects in India.
(6) Indian companies investing, exporting and selling in China
(7) Low tech imports such as toys, sporting goods, household chattel, etc, even knick knacks made of paper or plastic.
(8) Chinese investments in tech and finance sector in India.
Of these, we would not like to disturb (1) or (6). It is the other aspects on which we would like to disengage from the Chinese.
In each of these, we have to make a priority list. The highest priority goes to things that deal with some version of “national security”. Such as Chinese investing in telecom sector which can become a security threat. The next would be Chinese investing in India’s financial sector. We have to be sure that our big financial institutions are insulated from China.
Don’t forget something which looks small but is important. I don’t know if there is a term for it, but I call it “niche manufacturing.” At this time, China makes a bunch of small specialized items that we absolutely need. For example, China produces certain rare earths which are needed (albeit in small quantities) but in the tech sector. In fact, China has repeatedly threatened that it would cut off these supplies to Japan. Another example would be certain chemicals that are needed by India’s huge pharma sector. Again, small quantities, but highly sophisticated and specialized items. The challenge here is that China is sometimes even the sole manufacturer for these things and literally everyone in the world depends on them!
I am sure the Chinese have a list of what they can do to their enemies. It is high time we made one.
So that’s the top priority. Getting China out of the difficult stuff. I’d say the next priority is at the other end. Getting China out of the really easy stuff. Surely we don’t need to import stuff made of paper and plastic from China. Our MSMEs can start manufacturing this stuff in a heartbeat.
So how do we stop these purchases? No, we cannot make it about tariffs. China would call it trade war. And it simply does not look good on the world stage. We have to keep talking free trade, cooperation and peace.
Rather this has to be done via the backdoor. No private business in India dares to make the government unhappy. A strong message sent through backdoor channels can be just as effective as a tariff. When it comes to infrastructure contracts, for instance, we don’t need to say that we won’t allow Chinese companies to bid. We can simply choose different bids. The Chinese will get the message as well.
We have to keep talking a good game, all the while doing another.
But in the bigger picture, it is not enough to simply disengage India’s economy from China. We also need to start biting into China’s business all over the world. For that, we need to start turning India into a business friendly destination. Today, more than ever before, the economy has turned into a question of national security. Fortunately, we are at a juncture when the whole world has lost confidence in China. We have to make the most of this moment. Hurry up!