Why ‘boycott China’ is not easy to implement

The inroads China has made into the Indian trade, commerce and industrial sectors over the past two decades are so deep and expansive that an Indian boycott or economic blockade of Chinese goods and investment is easier said than done.

During a demonstration in Gauhati on June 18, portesters shouting slogans and calling for a boycott of Chinese products.

RIGHT from early May, when news about Chinese incursions into eastern Ladakh started filtering in, there were calls from various quarters to enforce a sort of economic blockade on Chinese trade, goods and industrial engagement. They initially originated from a number of motley groups and individuals, including the Ladakh-based innovator and entrepreneur Sonam Wangchuk, who came up with the #BoycottMadeinChina hashtag on twitter. However, since the second week of June, after the Chinese army killed 20 Indian soldiers at Galwan Valley, the campaign has gathered greater momentum.

Public rallies and calls from political and social organisations exhorting people to boycott Chinese trade and goods are coming from different parts of India. Many associate organisations of the ruling Bharatiya Janata Party (BJP) and its ideological fountainhead, the Rashtriya Swayamsewak Sangh, were actively involved in this campaign. By the time Prime Minister Narendra Modi convened an all-party meeting on the Ladakh face-off on June 19, three Chief Ministers—Bihar’s Nitish Kumar, West Bengal’s Mamata Banerjee and Maharashtra’s Uddhav Thackeray—had picked up on it and formally placed their proposal for a boycott at the meeting.

However, economic affairs experts and long-time China watchers are of the view that a boycott or economic blockade of China is easier said than done. This is essentially because the inroads China has made into the Indian trade, commerce and industrial sectors over the past two decades are deep and expansive. Some statistics compiled by diverse economic affairs research bodies, including organisations in the Union government, highlight this. According to these figures, imports from China to India are close to five times more than exports from India to China. The figures for 2019-20 are $74 billion and $18 billion respectively.

A majority of the imports are in crucial sectors such as antibiotics and pharmaceutical ingredients, telecom equipment and semi-conductor devices. In each of these sectors, the imports are to the tune of above 70 per cent of India’s requirements. Chinese investments have also seen a whopping increase over the past five years. The figures for the 2014-17 period show that investments rose from $1.6 billion in 2014 to $8 billion in 2017. These investments are in sectors as broad-based as automobiles, electronics and pharmaceuticals and are across the country. One of the top destinations is Gujarat, a State that the BJP has ruled for 19 years at a stretch. States such as Haryana, Karnataka and Maharashtra have also welcomed huge Chinese investments in infrastructure projects over the past decade. Clearly, although many Sangh Parivar outfits have intermittently been raising the idea of “Boycott China”, the States run by the BJP for a long time and even the Modi-led BJP-National Democratic Alliance Union government have not bought the idea in earnest.

Even more significantly, the Parliamentary Standing Committee on Commerce, chaired by Shiromani Akali Dal leader Naresh Gujral, had drawn attention to the march of China into India’s trade, commerce and industrial sectors as early as 2018. The 2018 report of the committee titled “Impact of Chinese Goods on Indian Industry” pointed out that bilateral trade between India and China increased from $38 billion in 2007-08 to $89.6 billion in 2017-18, and of this, the rise in imports from China was to the tune of $50 billion, while Indian exports increased only by $2.5 billion. The committee further pointed out that trade with China constituted more than 40 per cent of India’s total trade deficit. The report identified several key areas where Chinese trade was galloping, including pharmaceuticals, solar power and textiles. The committee noted that China was even dominating the firecracker industry. According to the report, India’s dependence on China for life-saving drugs was to the tune of 90 per cent, and in solar energy China’s penetration was up to 84 per cent.

The committee noted that the Chinese “incursion” into trade and commerce had led to the burgeoning of illegal imports and smuggling. Parallelly, Chinese products were having a debilitating impact on the micro, small and medium enterprises of India. The committee noted that poor-quality Chinese products dominated the unorganised retail sector. It went on to suggest that to boost domestic production imported finished goods should be taxed at the highest rate and raw materials at the lowest rate.

In conclusion, the committed pointed out that the United States and the European Union had been quite aggressive and agitated over the erosion of their domestic industry and loss of employment because of Chinese trade, and that India too should be more proactive in taking trade defence measures as provided by the World Trade Organisation and in the imposition of other trade restrictions on the import of Chinese goods that had caused an erosion of India’s manufacturing capacity.

The report also found that “monitoring, surveillance and enforcement of the trade remedies and other trade rules in the country requires more attention”. “The Committee finds that quality standards and technical regulations are quite potent tools to check substandard Chinese imports. However, the Quality Control Orders and Compulsory Registration Orders laying down technical standards of the products being imported need strengthening. The government needs to work in this direction with more urgency and alarm.”

Even though nearly two years have passed since this report came out, there are no indications that the Modi-led regime has effectively acted on it either in its first or second term. However, the Union government and associate organisations took some decisions to scrap deals with China in the run-up to the June 19 all-party meeting. The Indian Railways cancelled a Rs.471-crore contract for signalling equipment with the Chinese Beijing National Railway Research and Design Institute of Signal and Communication, citing inadequate pace of work as its reason for doing so. The contract, signed in 2016, was for Dedicated Freight Corridor Corporation of India Limited. In the telecom sector, BSNL has indicated that it will not use Chinese equipment for 4G upgradation. How far will these cancellations and the conscience-driven consumer boycott go to curb the dominating Chinese influence on India’s trade, commerce and industrial sectors? Not much, given the scale of the Chinese penetration.