Boycott China- A Wave Of Hyper Nationalism?

As India pushes for a bigger share in global supply chains to improve its battered economy, it has tweaked its economic policies. All Chinese investments must get government approval first and the ‘Atmanirbhar Bharat Package’ has been introduced - primarily aiming to cut dependence on imports. With the current border tension between India and China, a new dimension has been added to India’s relationship with China.

Since the deadly clash between Chinese and Indian troops in the Galwan Valley on June 15, wherein twenty Indian soldiers were killed, #boycottchina has been deluging on social media. This call was to specifically avoid anything made in China.

People in the city of Ahmedabad hurled Chinese TV sets down their balconies, while traders in Delhi protested by burning Chinese goods. This movement has been making waves and continues to dominate Indian trending pages. The Indian government has banned 59 Chinese apps - a bold move. The Indian government hopes this move puts economic pressure on China since these apps were heavily reliant on the Indian markets.

The biggest question, however, remains. Is this a rational move? Or is it just hyper-nationalism taking over the Indian socio-political environment?

Nevertheless, it is imperative to understand the implications of adopting such a strategy, considering China’s emergence as a “global power,catalyzed by its export-led growth strategy. China, being India’s second-largest trade partner, exports a multitude of products to India, accounting for 12% of the latter’s total imports.

Furthermore, at least 70% of India’s drug intermediary needs are fulfilled by China. India’s booming smartphone sector also heavily depends on cheap Chinese phones made by Oppo, Xiaomi, and others with the lion’s share of the local market.

If we examine China’s Foreign Direct Investment (FDI) in India, we realize how India and China are becoming increasingly integrated in recent years, with increased Chinese investments in startups and other lucrative segments.

Chinese money, for instance, has penetrated India's technology sector with companies like Alibaba and Tencent strategically pumping billions of dollars into Indian startups such as Zomato, Paytm, Big Basket, and Ola. The hostility between these two nations could result in India losing out on these investments.

The disturbing factor here is that India accounts for only 2.1% of Chinese trade, which means that a boycott could adversely impact India’s economy and hardly have any implications on the Chinese economy.

While India runs a $22 billion trade surplus with the U.S., its deficit with China in 2018 was $50 billion, which is nearly double the amount. This clearly means that India’s exports to China stood at $15.54 billion whereas imports from China made up $62.4 billion. This shows how dominant Chinese products are in the Indian market due to the cheap prices they offer.

Moreover, China acts as a source of raw materials for domestic industries in India. For example, the automobile industry imports 24% of all auto components from China. If Indians are serious about boycotting Chinese cars and parts, their auto industry will be battered, especially as India is pushing for electric vehicles. Subsequently, a lack of proper alternatives or substitutes also makes “Boycott China” a non-pragmatic movement.

So, even if the government decides to raise import duties on Chinese goods, ultimately it would be the Indian consumers who have to pay a high price. Moreover, the Indian economy is already set to contract in the 2020-21 fiscal year.

In conclusion, it does seem plausible to say that a standoff is bound to do no good to both the economies, but it will do more harm to India,

This is not the first time people are making an impractical appeal and buzzing the social media forums with a call to boycott Chinese products. ‘Boycott China’ is trending in India, but turning rhetoric into reality may be easier said than done.

This is risky for India as the availability of proper substitutes for Chinese goods poses a huge problem. The Indian government should shift its focus from the standoff to proper economic recovery in light of the forecasts of a global recession in 2020.

Written by Vedika Bhagat


Go to our new site