India needs to disengage its economy from China

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!

9 thoughts on “India needs to disengage its economy from China

  1. On China-related matter: Rahul (Pappu) Gandhi shows bravado and says how dare China attack and kill our soldiers? In so doing he is confident that nobody will ask him, how dare Pakistan carry out terrorist attacks after terrorist attacks during the UPA rule, Mumbai Zaveri Bazar, Pune, Ahmedabad, etc. and when nothing was done, Pakistan carried out mother of all terrorist attacks on Indian soil, the 26-11 attacks.

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  2. Consequences to china must follow for this perfidy at Galwan.

    A few economic measures that could be affected:

    1. Government should send private message across to businesses and trade bodies in India to not place any orders on chinese products. Any business violating the unsaid and unspoken ban should face government wrath by way of increased scrutiny of their business from taxation and compliance angles and should find it difficult to get financing from PSU banks. Such businesses should also be put on unofficial ban list for government procurements.

    2. Levy high import duties on any products imported into India that have chinese components in it and for which there are alternative sources of procurement by creating a negative list of items that attract high duties.

    3. Create non-tariff barriers like issuing category specific quality and other criteria and use that criteria to weed out chinese products on the grounds of quality not meeting specifications. Use such non-tariff barriers where tariff barriers cannot be erected due to international commitments.

    4. No government tenders should be awarded to chinese companies due to their “not meeting technical criteria” grounds. This is necessary as the chinese companies are funded by their government to undercut competition from Indian competitors and other bidders. Such unethical and immoral practices are the rockbed on which china has built its economy.

    5. India traders body should be encouraged to boycott on their own volition to not sell chinese products through their member bodies and retailers.

    Diplomatic consequences:

    1. India should engage more with the quad and formalise the quad defence alliance.

    2. Engage more with SE Asian nations with support for SCS rim countries.

    3. Actively oppose and/or undermine the chinese positions in international bodies.

    4. Actively create hurdles for the OBOR chinese megalomaniac debt trapped schemes by engaging the countries and highlighting the dangers they are bringing on their sovereignty due to the chinese debt trap.

    Military consequences:

    1. Taking due note of chinese perfidy in Galwan give full freedom to forces in the border to conduct armed patrols instead of unarmed patrols.

    2. Do not trust the chinese intentions and create more number of permanent bases near the LAC and complete the border roads as soon as possible.

    3. Empower troops patrolling the border areas in LAC to have local authority to take decisions as deemed fit to deal with the situation without any restraints about usage of arms if required to put down chinese aggression.

    4. Actively engage and create a quad military alliance / Asian Nato by being at the centre of its creation. No more pussyfooting time for open and bold actions as china is untrustworthy and should face the consequences of its own creation.

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    1. Elaborating on the specific quality criteria point above, make it mandatory for all imports for SARC countries (with whom India has a FTA) that for every product exported to India a list of components used and the country of its origin should be declared.

      Any products that have more than a certain percentage say 5% – 10% of the value of the product sourced from third countries (China) it should be subjected to duties at higher levels as it is not a product made in that particular SARC country.

      Any company that exports products for any country / region with which India has FTA, it should be made mandatory declaration about the ultimate beneficial ownership of that company registered in that country to weed out chinese goods shipped through third countries.

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  3. The key for prosperity and strength is in my opinion mass production and quality production. The original prosperity of any nation depends on how abundant or affordable and quality resources are internally produced or strategically made available. The export is inevitable and ancillary. Of course, to the wise initial foreign markets open early opportunity and faster growth, eventual affordability and quality opens the world market. The trick is HOW? Lack of raw materials, excess population, lack of capital, technology etc. are no excuse. Luckily, India has it’s own demand, the present govt. can also strategically fill in demand, we are not missing talent for developing technology. It is now institutions, organization, execution, vision, persistence, talent banks, intelligence, defence equipments, armaments, heavy equipments.

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  4. I agree with top analysts who have concluded India is in much more advantageous position than China because communists have no demand, they are free loaders.

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  5. China has lots of sleeper cells in India.
    Bureaucracy, judiciary, “environmentalists”, you name it.

    The 4 lane National Highway under construction from Kiratpur (Punjab) to Manali (HP) – and thereafter to Leh is at a FULL STOP between Kiratpur and Mandi thanks to stay orders, unions and what not. (Read this as Bold letters) The work is at a complete standstill since the last two years or more.

    Likewise, the Bhanupalli (Punjab) to Leh railway line is not showing any signs of laying even ten metres of track. And this line is “under consideration” since the 1990s. During 10 years of UPA rule this project was quietly allowed to die off. Gadkari tried to revive it but it is still in ICU.

    All this reminds of the CPC dictum: Strangle them with their own systems.

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    1. Yes. China has financed an army of NGOs, communistis, urban naxals, heck even main political parties to act as its agents in creating hurdles in India’s rise. These agents were having a free run until UPA 2 with some of them as members of super kitchen cabinet created called National Advisory Council. Some of them are now getting outed with many others well ensconced in key positions lying low to act at their chinese master’s call. All of them need to be identified outed and named and shamed and exposed for who they are. These are the agents of china created and financed by them to act as their trojan horses inside India. It is not only in India, chinese CCP has acted in a similar fashion in influencing all democracies including USA, UK, Australia, and Europe. In USA it has bribed its way into all key research bodies and prestigious universities who now promote chinese agenda. It has even cultivated key political assets across all mainstream parties in USA, UK, Australia, and Europe. Establishment politicians have been targeted by chinese with offers and inducements in many forms. China is a threat to democracy across the globe. They use the freedoms provided by democracies to subvert the institutions and exploit faultlines with use of money.

      China is a rouge state. The sooner the world accepts this reality and deals with china accordingly the better it is for the world. Otherwise the world will have to pay a heavy price later. China takes all benefits of free global trade by being an member of WTO (US blunder in declaring China as market economy is now biting them hard) while preventing free trade for the rest of the world in the chinese market. China actively disregards IP rights and steals and copies technology. China actively indulged and continues to indulge in Nuclear proliferation (Pakistan and North Korea are chinese creations) while being a member of NPT and NSG. China disregards environmental commitments. China claims benefits as a “developing nation” while dumping cheap goods and killing the industries in developing economies of the world. It supports terrorism indirectly by vetoing resolutions to declare notified terrorists. One can compline 100s of such instances of chinese duplicity. The world and more particularly a collective of democracies should come together and frame new world order, one that ensures that china cannot continue to subvert democracies and their economies for furthering its megalomaniac agenda.

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  6. Yes India needs to disengage its economy from China. But before that it needs to engage its troops in a preemptive manner and not allow the Chinese the luxury of acclimatization with the mountain terrain.

    We should not worry too much about China’s larger economy or defense budget. In PPP terms we are 12 trillion and China 25 trillion. China overstates its GDP and we understate ours. So not that much of a difference.

    Our weaponry is better and our soldiers are even better. That is what matters in a war. With Ramayana and Mahabharata as our epics, our people are no strangers to war and what it brings. We should not be always on the defensive but have to take the battle to China whichever way we can.

    This would be a good time to take back Aksai Chin – it is far from the Chinese heartland and far from the Chinese airbases so air cover will be low. If India can take over the Karakarom and Kunjerab passes, then Chinese link to Pakistan can be cut off. Most of the tanks/helis/guns wont come into play into this terrain so it will be our infantry vs theirs. On the Naval side, India can block the Malacca straits if required and choke the Chinese economy further.

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