On September 2, the Indian Government announced that 118 Chinese mobile phone applications were prohibited from being used in India on the grounds that “the above-mentioned applications secretly collect and transfer users’ personal information, threatening India’s sovereignty and national security.” This is not the first time India has adopted such measures, but simply the latest wave in a series of economic and trade protectionist measures taken by India since June. Although India uses national security and other rhetoric as an excuse for the above mentioned policy, it is not difficult to see that the real cause is the physical clash between the Sino-Indian border guards in the Galwan Valley region on June 15 and the tensions in the border areas that have continued to this day. On the one hand, India continues to act on the border (itself), and on the other hand, it uses domestic “anti-China” sentiment to promote economic and trade protectionist measures. Considering India’s recent severe epidemic situation and economic performance, this operation is obviously “unlikely” to succeed and to be of no avail.
From banning Chinese mobile apps to various forms of restrictions on Chinese companies regarding participation in India’s domestic infrastructure construction, India’s main consideration behind them is to pursue “absolute security” and replace “made in China” with “domestic products”, but this akin to “growing flowers in a greenhouse”. Such (protectionist) thinking is quite evidently not conducive to the development of India’s own industry.
First of all, it directly pushes up the purchasing cost of Indian companies, which in turn pushes up the cost of living of the Indian people. Take India’s review of imports of electrical equipment from China as an example. India has long imported a large amount of Chinese electrical equipment for domestic power generation and transmission, and its imports in 2018/2019 amounted to 210 billion Indian rupees (2.81 billion US dollars). In view of the high quality and low price of Chinese electrical equipment, Indian power plants and distribution companies using Chinese equipment are able to provide Indian consumers with affordable and cheap power supplies. In the future, if the Indian power industry is unable to import Chinese electrical equipment due to government licensing procedures, and India itself does not have sufficient production capacity for the time being, it can only switch to expensive Japanese and European similar products. This will obviously increase the cost of electricity generation in India and ultimately affect the terminal equipment, which have a bearing on the vital interests of Indians.
Second, it weakens the international competitiveness of Indian companies. The experience of China’s reform and opening up and its accession to the WTO has shown that not being afraid of industrial competition is the right way to cultivate competitive industries and to realize the overall improvement of national competitiveness. However, India has always been inclined to “grow flowers in the greenhouse” (protectionism), and is neither willing to open up the domestic market, nor with daring to compete in the region or even the world. For example, the author has visited India many times for research and found that there still are a large number of mom-and-pop grocery stores there. Modern international logistics and retail companies face several challenges in India. For another example, the Indian government decided in November 2019 not to join the Regional Comprehensive Economic Partnership Agreement (RCEP). Although this move will help prevent the Indian industry from being impacted by dairy products from New Zealand and other countries and industrial products from China in the short term, it will weaken the momentum of India’s domestic economic reform in the long run, and will not help India improve its overall economic competitiveness. .
Third, it weakens the confidence of the international market in India. India’s refusal to join the “Regional Comprehensive Economic Partnership Agreement” has been regarded by the international market as a sign of the Indian economy’s more introverted and conservative economy, and India’s integration into the global industrial chain and value chain has once again been blocked. In addition, India’s series of restrictive measures aimed at Chinese companies and capital since June have also severely dented its market image. People can’t help thinking that if India can unilaterally use “national security” as an excuse to impose various restrictions and discriminations on Chinese companies and capital, it could also use this excuse to impose discriminatory treatment against other countries in the future.
India recently announced its economic data for the second quarter. Compared with the same period last year, its GDP shrank by a record 23.9%. It is expected that this year will be India’s first full-scale economic contraction since 1980. At the same time, India has become the fastest Covid spreading country in the world. In this situation, India should find the real “battleground”, concentrate on developing its economy and competitively advantageous industries, and devote itself to the welfare of the people. Moreover, how to properly handle relations with neighboring countries, including China, will directly affect whether India can realize its “great and colorful dream of being a great power.” For this reason, India is sincerely advised not to get the “battleground” wrong.
(The author is the Deputy Director of the South Asia Institute of China Institute of Contemporary International Relations)