India's geopolitics and economics are not complementary to each other with respect to China.
India treating it's Geopolitics and Trade separately while China following Geoeconomics.
India and China two neighbour countries are very different in their dealing with each other. After the independence when India's first PM J.L. Nehru adapted the peaceful co-existence approach, then China betrayed in 1962. Even now people debate that what gone wrong that time (1962). But China's same attitude we see again in 2020 during corona time when it violated the mutually agreed LAC norms. Again the world experts were surprised apart from India's. India still following the peaceful coexistence approach inspite of war with China in 1962, that why it surprised. India thoughts that China is our one of the largest trading partners and both the countries have good economic ties so we will also resolve the LAC issue as well.
But, here come the difference in approach of both the countries in dealing with each other. India have always sectoral approach, means India have a different approach for trade relations and a another approach for military and security matters. But, China don't follow the same rules. Then, what China do or how it is different from others or specially from India. China follows a single thum rule and th that is 'Geoeconomics'. Geoeconomics means using your economic power to fullfill Geopolitics aims for national interest. Means China's economic decisions are in consonance with its Geopolitical approach. But India's economics is not in consonance with its geopolitics. Let's understand it in a simple way that how it is so.
Recently, China's export to India has increased significantly. According to recently released GTRI report, in 2023-24 India's total merchandise import amounted to $677bn. Out of which $102bn was from China only. Which means China alone accounted for 15% of India's overall merchandise import. Moreover, India only export 3% of its total export to China.
Moreover, out of this $102bn import from China, $100bn means around 98.5% is in majar industries like telecom, electronic, Pharma and basic and heavy industries which are strategically important for national security. Seeing this data, everyone will be surprised that inspite of border tension with China, what India is doing with its trade. India has successfully diversified it's crude oil imports and drastically reduced it's dependance on conflict prone gulf region. But, it still unable to do the same in case of import from China.
If we tries to understand the direction of India -China modern trade we would like to start it from 2001, when China joined the World Trade Organization (WTO), ironically with India's support. In, 2001 the bilateral trade was just $3.6bn with trade deficit of only $ 0.19bn. In 2014, bilateral trade was $70bn with trade deficit of 37.8bn. In, 2019 the bilateral trade was at $ 93bn and trade deficit rose to $56bn. In 2023, the bilateral trade rose to $136.2 bn and the trade deficit was around $100bn. So, one can easily see that there is consistency in rising the bilateral trade and trade deficit with China inspite of the Government change in 2014. This consistency is hard to see in any other policy implimentation in India. Normally, in India government change, so many things changes, even foreign policy. But you would definitely find consistency in rising the bilateral trade and trade deficit with China.
India import 82% of its API (active pharmaceutical ingredients) from China. Indian pharmaceutical industry dependant on this import. We have seen during Corona, what was the situation at border and medical emergency inside the country. So situation like this can be be easily exploited for geopolitical gain by China. India import 89% of solar cell requirements from China. India's renewable energy also depends on Chinese import. Even China boosting it's economy by exporting 84% of India's need of toys. We also import vehicle spare parts from China, thus India' car manufacturing also depends on Chinese import or we can say our transportation system( if not wholly, but largely) also depends on Chinese import.
During April-January 2023-24, the electronics, telecom and electrical products sectors had the highest import value at $67.8 billion, with China contributing $26.1 billion.
This is 38.4 per cent of the total imports which is significant in this category, indicating a heavy dependence on Chinese electronic goods and components.
India is not managing it's trade strategically. Inspite of knowing that China is its biggest adversary, it (India) is boosting an enemy's economy. Economy is the platform for military capabilities. By giving trade advantage to China, you are enhancing its economy and alternatively making it militarly stronger.
Even in Crona times China threatened to stop export of medical aids to countries that are blaming China for spreading Corona virus. It was China's trade and supply chain advantage which provided it geopolitical gain. India didn't take a lesson from it and doing a big mistake by treating it's economy and geopolitics separately which is hitting it's national intrest. While urgent need is to treat the both(economy and geopolitics) in consonance. China is following Geoeconomics. Geoeconomics means when a country use its economy in such a way that it get geopolitical advantage which serve its national interests. China understand it very well so have control on supply chain which gives it the undue advantage and we have seen during Corona times it (China) have used it in defending it's national interests. Not only Corona time, China's every economic decision is its Geopolitical decision. The another great example is its belt and road initiative. Moreover, its investment in Nepal, Sri lanka and Maldives are to gain geopolitical advantage in India's neighbours.
Therefore, India need to understand and apply geoeconomics for its national interests. In today's highly geopolitical world, you can't treat your economy on other principles and geopolitics on another principles. In, geopolitics only national interests matters and the biggest tool of geopolitics is economy. So, to defend national interests India need to follow geoeconomics.
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