The State of Chinese Economy

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The State of Chinese Economy

Tuesday, 17 November 2020 | Dr Banshidhar Rukhaiyar

The Chinese economy has not been doing well for the last few years. Their national debt is much higher than America. America's national debt is also very high and it is trying its best to get out of this unenvious situation. The Chinese balance of trade with Australia is not favourable to them. Their relationship with America is at its lowest ebb and it would affect Chinese trade as the US is her biggest trade partner. The Chinese relationship with India has taken a nosedive in recent months and the ' Boycott Chinese Goods' campaign in India is hitting them where it hurts the most. China is the factory of the world and most of the countries of the world suffer from the disease of 'Made in China.

The Covid-19, which exploded in the Chinese city of Wuhan has given a golden opportunity to these countries to walk out of this uncomfortable trade and take protective measures to safeguard their economy violating the terms and conditions agreed to in WTO agreement. I deliberately used the term ' exploded' and not originated as the reputed journal 'Lancet ' had already reported in January itself about the deadliness of Covid 19 which had broken out in Wuhan. Unfortunately, America and the West did not react to Covid 19 the way they should have. Moreover, it is very easy to pass on the blame upon China as the whole of West is frustrated with the emergence of China as a regional hegemon thereby disturbing their dominance in South Asia. However, America has been successful in creating a perception that it  is a man made virus and right now China is held guilty for this pandemic all over the world. Australia has demanded even an investigation into the whole issue. This perception would definitely hurt the Chinese economy.

China has the dubious distinction of producing goods which are cheap but not of good quality. They are rather infamous for their poor quality and poor durability so much so that anything that is of poor quality is referred to as 'Chinese maal' in India.

The Chinese defence equipments, aeroplanes, submarines etc. have not successfully stood the test of time and the countries who bought them have been let down in critical times and they feel cheated. The poor quality of high-tech and low-cost Chinese defence capabilities is a cause of concern to those nations which bought them. Jordon bought six CH-4B Unmanned Combat Aerial Vehicles (UCAV ) produced by China Aerospace Science and Technology Corporation ( CASC ) in 2016. They were put on sale in June, 2019 by Jordan as it was not satisfied with its performance. This is a bad omen for China's defence industry.

China is not known for transparency in statistics and the data of growth provided by her cannot be taken on its face value.Therefore, China has put itself in a very difficult situation. On 15th of November, China signed RCEP (Regional Comprehensive Economic Partnership ) with ten ASEAN nations which was also joined by Japan, New Zealand and Australia. India was set to join this trade pact, but did not join as it was detrimental to Indian interests. India had put forward two conditions to join it. First, the Indian workforce be given free movement for employment among the member nations of RCEP so that the trained and untrained Indian youth could get employment in those countries. Second, India must have the right to impose protective tariff to protect its vulnerable manufacturing sector like steel from the cheap Chinese product. These terms were not accepted and India stood firm on its ground. It is a bold decision which would protect our interest. Australia joined it as it cannot antagonise China as she has a highly favourable trade with her. Japan and New Zealand signed the trade pact as they are not to lose anything because they are developed countries.

America, too, did not join the trade pact as it could not give legitimacy to the Chinese bullying of ASEAN nations. In the absence of India, RCEP lost the big market of India it intended to capture. It would be interesting to see how RCEP unfolds in the coming months. It would also be interesting to see how India and America reposition themselves.

(The writer is Registrar, Vinoba Bhave University, Hazaribag and a passionate writer. The views expressed in the article are his own)

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