The second BRI Forum was recently held at
Beijing (25-27 Apr 2019). In the first Forum, grandiose plans were announced
and BRI took off like a tornado and suffered hiccups. Countries became wary of
Chinese debt trap diplomacy and started reviewing their commitments with China.
In the second forum, a chastened China had to reassure the participants that
BRI would be more transparent and corruption free. However, it was still all
about how to further Chinese economic and geopolitical dominance. India very rightly refused to participate in it
since CPEC, the flagship of BRI, does not take into concern our sovereignty
issues and is inimical to India’s interests.
The Chinese reaction to our
non-participation was multi-faceted. In public it stated that it understood our
compulsions at non participation and that instead there will be a one on one
meet as a follow up on Wuhan. It sounded conciliatory. In the same breath it
also stated publicly that CPEC did not violate Indian sovereignty. It also put
up a map in the Forum where Arunachal Pradesh and part of J&K were shown as
Chinese territory. It also showed India being part of BRI. Also, their official
media commented very adversely on the Indian Navy and its capabilities after
the small fire accident on INS Vikramaditya. This despite India being among,
the handful of nations to send ships to participate in a Chinese Naval Parade
which preceded the BRI forum. The Strategic, Diplomatic and Political
signalling was very clearly that of an adversary. This attitude will be compounded by the fact that it was forced to accept the UN designation of Masood Azhar as a global terrorist. At another level, China, very
ingeniously, invited our businessmen through various channels to participate in
side conferences, of the BRI Forum so that they can continue to milk our
markets. Businessmen being businessmen will follow the smell of money and
conclude deals to import cheap and poor-quality Chinese goods. However,
articles have appeared in our media which bemoan lost business opportunities
due to this boycott. Some have gone on to suggest that India should join the
BRI, forthwith. Some of these authors need to have their heads e xamined. A major Chinese onslaught is in the offing and we should be prepared for it.
We, as a nation should be clear. China is
our adversary No1 and will be our frenemy for ever – neither friend nor enemy
and vice versa. While keeping up the hostility on one level, it will entice us
to open our markets further and convince us to be part of BRI. The onslaught is
going to only gain further momentum during the proposed one on one summit with
the new government. After that Chinese goods will further swamp our markets
creating huge trade deficits and unnecessary dependencies. Then we will keep crying
hoarse that trade deficit is widening with China. This issue will flare up whenever
there is a crisis with China. Strategists and economists will pop and argue in
our supercharged media that we need to use our huge market strategically to
counter Chinese designs. The crisis will get over. Everything will be
forgotten, and the economic bloodletting of India by the Chinese will continue.
Forget the military and strategic aspects of this game, isn’t it time we do
something concrete about the trade imbalance? So, let us see what our
options are to leverage our markets by playing smart. I will
concede at the outset that some of the options would sound gauche and impractical
to a trained economist. But then I would like to look at these as an adjunct to
military options which will then become good bargaining chips.
To correct this imbalance, the first step
is to create a nationalistic awareness and outlook to rethink buying anything Chinese.
A decade back a group of officers and ladies were on a holiday and shopping in Namdaemun
Market in Seoul. It is Seoul’s Sarojini Market. The ladies were busy shopping
for fancy items. As per Indian custom, they got down to bargaining in a small item
shop. The sales girl, fed up of bargaining at one point, showed to all the
ladies two identical pieces of a hair clip. One, very proudly, she said was Korean, high
quality, would last for a year at least and was for two dollars. The other,
with derision, was Chinese, of inferior quality, would last a month or so and
for a dollar. All ladies picked up Korean stuff for the rest of the trip. It
was a great lesson in nationalism by a Korean sales girl. Indian small scale
and traditional industry must be revived and sustained to compete qualitatively
with the Chinese onslaught. A
nationalistic “Jan Jagaran” campaign highlighting fake cheapness of a Chinese
item vis a vis Quality Indian product should be started and sustained. What
about themes like Be Indian Buy Indian? Beyond a point Indians are not fools to
buy cheap and fake Chinese stuff if there are better alternatives. The Indian nationalistic
voice must be heard in Beijing not on our political platforms alone. It must be
clear – Chinese goods are not welcome in India if it continues to be a frenemy.
NGOs and societal organisations have a role to play in this.
Also, there are issues related to standards. It is well known that Chinese goods exported to other developed countries have much higher standards than what are dumped here. There is dire need to correct this situation.Mechanisms should be put in place to ensure that Chinese goods adhere to laid down standards before entering Indian markets.
Also, there are issues related to standards. It is well known that Chinese goods exported to other developed countries have much higher standards than what are dumped here. There is dire need to correct this situation.Mechanisms should be put in place to ensure that Chinese goods adhere to laid down standards before entering Indian markets.
Besides this, there must be policy
initiatives to convert “Made in China” into “Made in India”. Let us take an
example. Sony TVs are made in China. However, they are sold like hot cakes in
India and lapped up. Why
not have a policy, wherein after a time window and a cost cum number limit,
Sony TVs sold in India must be Made in India or face exorbitant duties? Extend
it to all FMCG items. The impact will be huge. Take up the issue with the
Japanese, Koreans, Europeans and other OEMs. Not needed with Chinese. Force
others to set up shop here or make it costly for them. In any case the ground
is ripe for it. Already there are reports that many companies want to quit
China and relocate. How about enticing those countries and companies to set up
shop here? How about having country specific enclaves like the Japanese one near
Alwar?
If Chinese want to sell their services or products
here or want to set up shop here, we must enforce the principle of offsetting
used in defense contracts. It can be widened to all other goods also. 30%
offsets are the standard for all global defense contracts beyond a laid down value.
In infrastructure projects it can go up to 50% easily. In addition, 80% of manpower
costs should be on hiring locally. Which means that any outsider getting a
contract here must plough back into the system. These simple steps will go a
long way in addressing a lot of imbalances with China. Play smart. Leverage domestic
consumption.
China is getting into AI and 5G
technologies and other disruptive technologies in a rapid manner. Its cyber invasion
is quite pervasive. A special program must commence to reverse the tide. Very importantly,
manufacture of electronic hardware in India must commence at a national level. International
players must be incentivised to set up shop here. This is very important where
there is even an element of cyber security risk to our public networks which
are blooming as never before. Digital India cannot function from a Chinese platform
where our data is being siphoned off, processed and being turned against us.
There is a small but significant step which
the new government can enforce. Control the import of Chinese goods from entering
India though other routes and from neighboring countries. Also, devise a system to detect masking of invoices, under invoicing/ under valuation and other
such practices which are quite routine in inbound traffic from China. If we are
serious about it we can make a difference.
One can argue on feasibility and
practicality of executing such options. Fine. Suggest some other. In this era of protectionism and isolation many more can be thought of. China should
get the message that our markets will only open if there are strategic concessions. Besides, also one might argue that we
will ruffle feathers. So, what if? Did the Chinese ask us for permission before
peddling nuclear technology to Pakistan or declaring that CPEC will go through
disputed territory? We need to do what is in our national interest. We need to
be smart and we need to be firm. We need to ensure that the playground for
Chinese is as level as they have made it for us. Alternately, they must allow
unfettered access to Chinese markets so that a level playing field emerges. The new government must have some steel in it
and show it too.
Got this interesting feed back from a knowledgeable person
Couldn’t agree more sir . The matter is
extremely serious and requires urgent and strong measures . We need to take all
possible steps on a war footing We
should go to the extent of creating a organization in government dealing only
with Chinese imports and business practice . Today almost all global brands are
manufactures in China and exported to rest of the world . I ordered tennis ball
cartons from a well known store in UK through
e channel , the goods were shipped from
Germany from a warehouse maintained by Chinese manufacturer of global
Brand ( US OPen and Head tennis balls).
We must force all the global brands like
Adidas , and you have listed many to manufacture the goods in India .
Sun Txu says
If your enemy is secure at all points, be
prepared for him. If your opponent is temperamental, seek to irritate him.
Attack him where he is unprepared,
The supreme art of war is to subdue the
enemy without fighting.
Supreme excellence consists of breaking the
enemy’s resistance without fighting
Problem statements
Our business folks are not going to listen
Solution sir
India must immediately ; HOLD and DELAY
every single consignment coming from China
in the customs , impose demurrage charges on importers so that their
costs go up . Launch swadeshi aandolan
and take steps you have listed .Recently their e-commerce platforms have
become very active and circumvent our customs by sending goods as gifts . They
will go to any extent to make profit .
There are low hanging fruits . Give tax
free status to Taiwanese investors for specific projects and import
substitution of things like API ( active pharmaceutical ingredients) must be
taken up immediately . Just ban the import if this stuff because it’s strategic
. Close economic and military cooperation with Vietnam and such friendly
countries ( currently not good enough ) .we should promote unrest in places and
countries where China is entrenched. Disrupt their supply chain particularly
raw materials . Defame them within India.
In short all out covert and overt steps must be launched . Thanks for
bringing this up sir .
Will BRI prove to be the Waterloo for China? Is China embarking on a neo Colonialism by enticing its BRI partners into a debt trap. What will happen if the Partners fail to service the debt. Are the Chinese preparing grounds for treating failed BRI partners as vassal states of China ?. Would the failed partners who may be poor economic entities, but have high nationalistic spirit, acquiesce to the vassal status peacefully? What would be costs for Chinese State and PLA in keeping the vassal states in line? I get a feeling that the BRI initiative is a lose- lose proposition for both China and each of its partners.
ReplyDeleteThese are questions and impressions I got after reading your blog article. May be you can think on these in your next article on the subject in this blog.