Patriotism VS Jingoism...high time to understand the Chasm...

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[{"type":"txt","id":"rich_1592895923433","data":"          After the Galwan Valley skirmish<\/i> wherein we have lost 20 invaluable lives, the popular idea resonating in Indian streets and social media is that Indians should boycott Chinese goods and thus teach China a lesson<\/i>.However, this in reality will have more repercussions on India than China.The phone we use to toys our children play with, the Indian economy is heavily dependent on Chinese investment. In the absence of a viable alternative and proper strategy, boycotting Chinese products will affect India more than China.<\/p>Why the #Boycott China is an ill-advised move?<\/b><\/p>1. Trade deficits are not necessarily bad.<\/p>Trade deficit\/surpluses are just accounting exercises and having a trade deficit against a country doesn\u2019t make the domestic economy weaker or worse off.India has a trade surplus with countries like US,UK. But this does not necessarily mean that Indian economy is stronger than these countries.<\/p>So, having a trade deficit is good?<\/i> <\/p>Of course, running persistent trade deficits across all countries raises two main issues.One, availability of foreign exchange reserves to buy the imports.Today, India has more than 500 billion dollar of forex good enough to cover imports for 12 months.Two, lack of domestic capacity to produce in the most efficient manner.<\/p>2.The poor are the most hurt.<\/p>This is because poor are more price-sensitive.For instance, if Chinese TVs were replaced by either costlier Indian TVs or less efficient ones, unlike poor, richer Indians may buy the costlier option.Similarly, the Chinese products that are in India are already paid for. By banning their sale or avoiding them, Indians will be hurting fellow Indian retailers.Again, this would hit poorest retailers more due to inability to cope with the unexpected losses.<\/p>3. Will punish Indian producers and exporters<\/p>Several businesses in India import intermediate goods and raw materials, which, in turn, are used to create final goods, both for the domestic Indian market as well as the global market .An overwhelming proportion of Chinese imports are in the form of intermediate goods such as electrical machinery, nuclear reactors, fertilizers, optical and photographic measuring equipment organic chemicals etc.Such imports are used to produce final goods which are then either sold in India or exported. A blanket ban on Chinese imports will hurt all these businesses at a time when they are already struggling to survive, apart from hitting India\u2019s ability to produce finished goods.<\/p>4. Will barely hurt China<\/p>While China accounts for 5 percent of India\u2019s exports and 14 percent of India\u2019s imports, India\u2019s imports from China are just 3 percent of China\u2019s total exports.More importantly, China\u2019s imports from India are less than 1 percent of its total imports.The point is that if India and China stop trading then China would lose only 3 percent of its exports and less than 1 percent of its imports.However, India will lose 5 percent of its exports and 14 percent of its imports.On the whole, it is much easier for China to replace India than for India to replace China.Ban can also seize Chinese funding to many Indian businesses.In short term, replacing Chinese products with Japan or Germany, will only increase our total trade deficit.If on the other hand, we decide to use Indian products, that too would cost us more.<\/p>5. India will lose policy credibility<\/p>It has also been suggested that India should renege on existing contracts with China.This can be detrimental for India\u2019s effort to attract foreign investment.As one of the first things an investor especially foreign,tracks is the policy credibility and certainty.If policies can be changed overnight or if the government itself reneges on contracts, investor will either not invest or demand higher returns for the increased risk.<\/p>6. Raising tariffs is mutually assured destruction<\/p>Many argue that India should just slap higher import duties on Chinese goods or apply prohibitive tariffs on final goods.By doing this, firstly India would be violating rules of the World Trade Organization.Secondly, it would make China and many others to reciprocate in the same way.<\/p>Equating border dispute with trade is no panacea <\/b><\/p>The first thing to understand is that turning a border dispute into a trade war is unlikely to solve the border dispute.Worse, given India and China\u2019s position in both global trade as well as relative to each other, this trade war will hurt India far more than China.Thirdly, these measures will be most poorly timed since the Indian economy is already at its weakest point ever,facing a sharp GDP contraction. <\/p>When is \"Boycott China\" possible?<\/b><\/p> \nWhen the economical gap between India and China is narrowed, the country, prompted by emotions of nationalism amid the standoff between the two countries, can boycott Chinese products and carve out a path for AtmaNirbhar Bharat. <\/i><\/p>Made in China<\/i> label has over the years catapulted into every possible industry operating in India. This includes the well known consumer durables comprising electronic goods, textile and garment industry, toys, medicines, car components but also encompass the Indian digital sector consisting of applications, OTT platforms, e-commerce companies and consumer fashion accessories etc. <\/p>In long term, under the banner of self reliance,India must develop its domestic capabilities and acquire a higher share of global trade by raising its competitiveness.But no country is completely self-sufficient and that is why trade is such a fantastic idea.It allows countries to specialize in what they can do most efficiently and export that good while importing whatever some other country does more efficiently.Need of hour is well thought and balanced approach involving the following <\/p>Evolving comprehensive China policy<\/i><\/p>Strong political direction, mature deliberation and coherence are keys to handling the situation.Army\u2019s role can involve tactical adjustments and manoeuvres to deter the Chinese.But comprehensive China strategy should be left to those tasked with national security policy.Chinese transgressions in Sikkim and Ladakh can provide learning lessons for our future strategy.A complete strategy would involve military, diplomatic and political levels.<\/p>Future plan of action Defence<\/i><\/p>India should take the initiative on a timely and early clarification of the LAC.Identify areas of conflict and mark such areas as demilitarized by both sides through joint agreement.At the same time, India must stand resolute and firm in the defence of territory in all four sectors of the border.Contacts between the two militaries \u2014 joint exercises and exchanges of visits of senior Commanders \u2014 should be scaled down for short term future.Diplomatic channels must continue to be open and should not be restricted in any way as they are essential in the current situation.A border settlement is part of long term strategy.<\/p>Strengthening alliances<\/i><\/p>The events in Galwan Valley should be a wake-up call to re invent it\u2019s South and east Asia policy.This is an opportunity for India to align its interests much more strongly with the U.S. as a principal strategic partner.India should also infuse more energy into its relations with Japan, Australia, and the ASEAN.The time has also come for India to reconsider its stand on joining the Regional Comprehensive Economic Partnership.To disengage from economic involvement with China, and build the capacities and capabilities it needs in manufacturing, and in supply chains networks closer home, India has to think in the long terms<\/p>Future of business, trade and investment between two countries<\/i> <\/p>Indian businesses in China and Chinese business operations in India can expect tougher future.The scenario on trade and investments could encounter similar obstacles.Areas of on national security, as in the cyber field and in telecommunications  should take necessary reduction in import of Chinese items.<\/p>So, the phrase BOYCOTT CHINA should instead be DEVELOP INDIA, in as many sectors and as many ways possible in order to become self reliant and stand as a strong alternative to Chinese products.<\/p>"},{"type":"img","id":"img-uid-1592895923434","data":"5ef0caea54af2"},{"type":"img","id":"img-uid-1592895923435","data":"5ef0cac456cf1"}]

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