Today's Editorial

Today's Editorial - 29 June 2024

Creative political and economic policies will give India greater leeway with China

Relevance: GS Paper II

Why in News?

A recalibration of India’s economic policy towards China involves both diplomatic and economic elements.

More About News: 

  • China is also under increasing domestic economic stress and international pressure for many reasons. 
  • India should align more closely on security matters with both the West and those of China’s neighbours threatened by it; but, it can and should also strike a more independent path when it comes to bilateral economic ties and Asian regionalism.
  • For instance, the European Commission has followed the Americans in setting high tariffs against Chinese electric vehicles (EVs). 
  • Since India is trying to grow its EV sector, it both needs Chinese imports as well as limits on them to encourage local manufacturing. 

Policy changes required

  • Non-tariff barriers (NTBs) are recommended for China, accompanied by liberalization with other countries.
  • India should reconsider its opposition to regional trade arrangements.
  • This approach will help Indian industry develop the ability to compete with China. It will make India more attractive for Chinese investments.
  • Short-term pain is inevitable, India will need more than the narrative of its large market to attract the kind of foreign investments in manufacturing required to generate large-scale employment, and for the Indian economy to truly take off.
  • India's firm stance on security issues and its imposition of non-tariff barriers (NTBs) against China, achieving Chinese cooperation in technology transfer and investments requires compromises in other areas.
  • Leveraging International Organizations
    • International organizations in which China plays a leading role or has founded often serve dual purposes: countering Western influence and advancing Beijing's trade interests
      • India need not embrace the former but can certainly benefit from the latter. 
      • Although BRICS may lack a cohesive rationale, if it ever had one, its expansion still provides India with an additional platform for economic engagement.
    • The Prime Minister’s foreign delegations need to have a lot more officials from the ministries dealing with commerce and industry, small and medium enterprises, and infrastructure development, among others, than from the Ministry of External Affairs (MEA).
    • In the Shanghai Cooperation Organisation (SCO), China and Russia are the dominant players, but it is still an opportunity for India to engage politically and economically in a region that it has otherwise scant opportunities in despite long-standing historical connections and immense soft power.
      • In this context, the Prime Minister's decision to not attend the upcoming SCO Summit in Astana, Kazakhstan next month may be seen as a missed opportunity.
  • Recalibrating the Approach to the China-Pakistan Economic Corridor
    • It is probably on the China-Pakistan Economic Corridor (CPEC) part of China’s Belt and Road Initiative (BRI) that the greatest recalibration is necessary. 
    • India must continue to oppose the BRI, given one of the objectives of the Chinese project is to undermine regional and global order in favour of non-democratic, illiberal interests.
      •  However, the BRI’s economic dimension also offers India an opportunity to craft a more sophisticated economic and political approach.
    • Engaging with the CPEC does not have to be seen as undermining India’s sovereignty, but as an opportunity to develop additional levers of economic and political influence in Pakistan as part of the Prime Minister’s ‘neighbourhood first’ policy. 
      • Ignoring or boycotting the CPEC has the practical effect of outsourcing Pakistan policy to China, leaving India unable to influence Pakistani society and economic interest groups
      • At the same time, given the CPEC’s increasing travails, India can better leverage its participation to achieve its interests.
  • Enhancing Media Presence and Knowledge Exchange
    • New Delhi should also reverse its de facto expulsion of Chinese journalists which has led to a similar expulsion of Indian journalists from China. 
    • The lack of Indian perspectives on the goings-on in China ultimately affects knowledge creation and policymaking in India, which then becomes ever more dependent on just the MEA or on Western sources. 
    • New Delhi could consider imposing reasonable restrictions on Chinese journalists, given their ties to the Party-state rather than being representatives of a free press. 
      • Simultaneously, India could support its media houses to ensure equitable presence of Indian journalists in China, matching the number of Chinese journalists in India, with a focus on bolstering business journalism capabilities.

The Road ahead:

  • Creative political and economic approaches will allow India greater leeway in policy towards China. India could impose stricter conditions for visas for Chinese technicians and businessmen, but also ensure that more visas are issued, and that too, in a timely fashion. 
  • New Delhi’s plans to insist on majority stakes for Indians in Chinese companies based in India will require greater thought. While it is right to call for Indianisation of top leadership in Chinese companies this is exactly what China has itself insisted on with foreign investors. 
  • After all, the government must also be able to continuously monitor and regulate Indian stakeholders and managements, and not assume its job is done merely with legal requirements.
  • These are measures that will require the government to overcome turf battles among ministries, and their lack of expertise in multiple domains. 
  • It will require constant vigilance and the ability to both scale up appropriate measures in volume and technologically as the situation demands. 
  • India’s relationship with China is among its most important bilateral relationships, and for this reason, it requires not just clarity and assertiveness but also finesse and long-term thinking.

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