Economic hitback

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Economic hitback

Friday, 19 June 2020 | Pioneer

Economic hitback

Ladakh is forcing India to reduce dependencies. Rly, BSNL scrap projects despite asymmetric trade ties with China

The masks are off and the Wuhan spirit has all but evaporated. For China, at the receiving end of adverse world opinion in the pandemic era, doesn’t bother about good optics anymore. If the surprise medieval and almost bestial ambush by Chinese troops in Ladakh, risking the lives of their own men, and their stubborn refusal to restore status quo at Galwan Valley are any indication, then China is determined to push the salami-slicing of Indian territories on its terms, given the fluidic nature of the Line of Actual Control (LAC) on the ground, something it has steadfastly refused to codify for long. It shows that it will never renege on its border claims. And it has chosen India’s most vulnerable moment, when the pandemic is distressing our whole nation, to hold us down. Being the only nation that will ride out the pandemic without sliding to negative growth, with a high capacity war machinery and a desperate ambition to retain its supremacy in a post-pandemic world, it has allowed the escalation and may even prolong it within its affordable range. And Chinese President Xi Jinping, having lost the global perception of greatness by mishandling the Wuhan contagion, isn’t too concerned about another misstep at the moment, within controllable limits. So long as he can be a threatening big brother in the neighbourhood. He knows very well that despite India’s pro-US tilt of late, the Western superpower can hardly intervene on the ground except making grandiose statements and internationalising the context. Hong Kong is proof of such a propaganda war where rights protesters are facing the heat on the ground despite a global noise. So for all Western sympathies towards India post-pandemic, Xi wants to show that he can have the second biggest Asian power in his stranglehold and rob it of its comparative asset value. He can regain strategic edge along the Himalayan border that had been blunted by India’s rapid road-building and opening up of more Army conduits. China’s latest ingress means that it can monitor the road in the Galwan Valley that connects to Daulat Beg Oldi air base and keep a watch on Indian troops that are now favourably placed in many positions. China’s official English mouthpiece, The Global Times, warned that India could have to deal with multi-pronged border flashpoints from Pakistan and Nepal, too, if it stuck to its territorial claims.

But given the body bags that came back after the violent face-off, India has to stand up for its territorial integrity but do that smartly enough, graduating the incident to the highest level of diplomatic intervention. And encashing on the world’s favourable opinion towards it, the Government must publicise its reasonable rapprochement efforts globally to show why it is in the right and expose China’s naked territorial ambitions. Given the asymmetric nature of military and economic strengths between the two nations, India cannot afford an all-out conflagration at this juncture. Except for ground troop positions in the Himalayas, there is no parity in defence funding or resources. Economically, we are dependent on China for bulk supplies of pharmaceuticals, auto parts and electronics and while it may take long to build our manufacturing self-sufficiencies, fact is China, too, wouldn’t want to ignore our market potential. With a total trade of $85 billion, China is one of our largest trading partners. FDI from China was $1.8 billion between 2015 and 2019, some of them fuelling our start-up sector. Yet economic hitback could still be a deterrent. What began with the Government preventing opportunistic Chinese takeovers via FDIs in a pandemic-hit economy, continued with the Railways scrapping a dedicated freight corridor project with Chinese firms. The Department of Telecommunications has asked companies to consider reviewing future partnership with Huawei & ZTE. The state-run BSNL will no longer be using Chinese equipment for upgrading its 4G network. And while existing deals will continue and there’s no immediate danger of snapping economic relations that matter to both countries, future projects and 5G trial partnerships could be impacted. There would also be a progressive shrinkage of Chinese markets in India if the “boycott China” becomes an emotive surge among the masses, upset by the loss of soldiers at the front. Of course, going by China’s latest manoeuvres — increased patrolling in the Taiwan Straits, clampdown in Hong Kong — the latest offensive at LAC could be a short-term tactic to extract territorial concessions and tilting the balance of power in its favour while staying just beneath the escalation threshold. This will be Xi’s strategy, create a modern Warring States period where to his demoralised people, he can be a hero fighting the enemy.

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