What India stands to lose

Indian and Chinese troops are still in a tense standoff at the Doklam Plateau. The rhetoric emanating from Beijing continues to be belligerent and hostile. A Chinese commentator was quoted saying: “China could carry out small scale military action if India didn’t immediately and unconditionally withdraw its troops.” But in terms of economic relations between the two trading partners, who really has the edge? And what effect could this conflict have on the trade front? Bilateral trade between India and China is around $71.5 billion, but it is not an entirely level playing field. India’s imports from China stand at around $61bn and India’s exports to China is around $10bn, so the trade deficit is palpable. Also, China is becoming a significant investor on key areas of India’s start-ups. A crucial part of this sector of India is getting Chinese money, funding, and investment. Needless to say, the Chinese have a considerable influence on the Indian economy already. For example, more than 50% market share of all handsets today in India are Chinese, and the figures are growing.India’s concernsIn the last three years alone, China’s trade surplus with India has doubled. The Chinese are flooding the Indian market, and China has emerged as an important creditor, creating a Mumbai lobby that’s beholden into China. So now, India has three major concerns strategically. The first is that New Delhi is underwriting China’s India containment strategy, for example, the CPEC (China Pakistan Economic Corridor) that China is building through Pakistan-occupied Kashmir (POK) -- it’s total value is less than the annual trade surplus that China enjoys with India (and that’s just one year’s trade surplus).

One thing China is developing expertise in is cyber-warfare, which can cripple India’s economy

So, whatever China is doing in terms of containing India -- India is actually indirectly funding that by allowing China to reap these burgeoning trade surpluses, an estimate of around $60bn annually. A second concern is the domination by China of India’s telecommunication and power sector, while the third is the fact that China is leveraging its credit to certain important Indian companies, and it has created a lobby within India that’s putting pressure on the Indian government not to do anything on the trade front. On an even more serious note, one thing China is developing expertise in is cyber-warfare, which can cripple India’s economy.What can India do?Three sectors are crucial: Communication, transportation, and energy. I don’t think India seems to realise that in the event of a serious showdown with China, they can cripple India’s transportation, energy, and communication. In order to prevent that from becoming a reality, giving incentives to Taiwan, South Korea, the Japanese and others to make India a more attractive destination can be more beneficial than it seems. India doesn’t manufacture semi-conductors, it doesn’t manufacture the basics of insulators or handsets. These particular sectors should consult and negotiate with private sectors, especially where there may be certain disincentives for the Chinese. How to reduce Chinese dominance in strategic areas like telecom? India can’t separate the economic elements from the geo-strategic elements. Geo-strategy includes economics as an essential component. In fact, India has to have a holistic, integrated approach in which it blends military, diplomatic, and economic elements into a coherent strategy vis-à-vis China. When China is waging economic warfare against India, its goal is to establish a robust manufacturing base in India. By dumping goods in the Indian market, China ensures that Indian manufacturing sector doesn’t grow. It deprives the Indian government of billions of dollars in customs, levies, and tax revenue. It’s a two-pronged economic warfare that is being waged and India can only address that if it’s part of its geo-strategic plan.Sharif Hasan is currently working as a field researcher on behalf of Centre for Genocide Studies (CGS), University of Dhaka.