By Nantoo Banerjee
At first, it was the virus. Then came the vaccine. China has converted the pandemic into a great opportunity for economic expansion and international cooperation in pursuit of its strategy to become a strong imperial economic power in Asia and other parts of the world. Paradoxically, China has already entrapped India, which had, only a year ago, restricted investment and import flow from the People’s Republic (PRC). India, Asia’s third largest economy after China and Japan, has already buckled under the Chinese pressure to step up import and investment from its giant neighbour.
Post-Covid, India is importing from China like never before although the government of India has been, for unknown reasons, silent on the latest development surrounding the rising the India-China trade traffic. The door is being opened for Chinese foreign direct investment (FDIs) and portfolio investment (FPIs) in India. Few will be surprised if China emerges as India’s biggest trading partner this year, surpassing the United States. China rarely encourage import, investment and even business travel from India.
China’s state-owned media has lately interpreted the development as a “spectacular growth” and a sign of resilience in trade ties between the two nations despite the continuing border conflict in the Ladakh region and Arunachal Pradesh of India and other political differences. Trade between China and India soared 70.1 percent in US$ terms in the first five months of this year to $48.16 billion, shows the Chinese customs data
Specifically, Chinese exports to India grew 64.1 percent year-on-year from January to May. The report said the India-China trade volume was higher than the trade that Beijing conducted with any other trading partners, this year. The latest statistics were recently released by China’s General Administration of Customs (GAC). The trade, specifically Chinese exports to India, rose sharply between April and May. Many consider this as a “Covid impact” on India. To an extent, imports spurred on arrival of medical goods from China to combat the second wave of the Covid-19 pandemic.
While the world economy is struggling to recover from an unprecedented downturn, China seems to be having a ball. China’s GDP jumped a record 18.3 percent in the first quarter of 2021, riding on strong domestic and foreign demand. The gross domestic product reached 24.93 trillion yuan (about US$ 3.82 trillion) in Q1, data released by China’s National Bureau of Statistics said. This is the highest quarterly growth rate since China first began publishing GDP data in 1993. In the first three months of the current year, China saw a steady rebound of industrial production, improvement in market sales, recovery in fixed-asset investment and noticeable momentum in export trade of goods.
China’s fast expanding equity stakes in Indian start-ups and other technology companies raise major concerns over the protection of intellectual property rights, data privacy, and national security. For instance, Alibaba is Paytm’s single largest shareholder. Paytm handles daily financial transactions of millions of Indians. Alibaba may be a Chinese private investor, but the world knows how the Chinese government influences its private technology companies’ foreign activities, including technology transfer and access to sensitive data through the Chinese censorship policies.
Various study reports show that 18 out of 30 Indian ‘unicorn’ enterprises have significant Chinese investment. Generally, technology start-ups whose market capitalisation is US $1 billion or more are called ‘unicorn’. Apart from Paytm, online retailer Flipkart and ride-hailing company Ola Cabs count on Chinese investors such as Alibaba and Tencent for their growth and success. The recent spurt in Chinese investment in India may also represent a shift away from its investment in the United States, where Chinese FDI faces growing suspicions and scrutiny.
For quite sometime, the Modi government has been reportedly working on a ‘white paper’ on India’s trade ever since it walked out of the Regional Comprehensive Economic Partnership (RCEP) agreement. Higher tariffs on imports were considered as a strong option. The Chinese aggression in Galwan reportedly pushed the process. In the short run, the government was said to be looking at hiking tariffs on a range of products — from electrical and electronic equipment to the medical and diagnostic sector — as well as putting curbs on import of active pharmaceutical ingredients (APIs) from China. India is the world’s largest manufacturing hub of generic drugs, but imports almost 90 percent of APIs from China. Unfortunately, the government has clearly failed to handle India’s profit hungry businessman and China’s well-planned move to economically colonise India in due course as it did in most other countries in Asia, barring Japan and South Korea. It appears that ‘Atmanirbhar Bharat’ is fast becoming ‘Chinanirbhar.’ (IPA Service)