[Financial Review] Is it possible to boycott Chinese goods and India?

Jun 24 - 2020

[FinancialReview]IsitpossibletoboycottChinesegoodsandIndia?

  The recent military clashes between the Chinese and Indian armed forces in the Galwan River have raised national sentiment in India. Demonstrations against China have occurred in many parts of India, and some organizations have organized demonstrations in Chinese embassies and consulates in India to initiate a boycott of China. Commodity movement. On June 20, local time, a survey released by Indian polling firm LocalCircles showed that 87% of the respondents said they plan to boycott all Chinese-made goods within the next year.

  The Indian government and officials are also instigating populist behavior in the country. On June 17, the Ministry of Telecommunications of India ordered BSNL Telecommunications Corporation and other state-owned enterprises under its direct management to "use Indian-made equipment as much as possible" when upgrading infrastructure and equipment. On June 18, Rajya Sabha Congressman Ramdas Athawale said on Twitter, "China has failed us. India should boycott all Chinese-made products and close all restaurants selling Chinese food in India. And bar".

  However, the voice of boycotting Chinese goods in India is very loud, but it is always "thunder and heavy rain". After the Sino-Indian army Doklam confrontation in June 2017, there was a wave of boycotts of Chinese goods in India. It is embarrassing that since then India’s imports from China have not decreased but increased. Data from the Chinese Ministry of Commerce shows that India imported US$38.3 billion worth of goods from China in the second half of 2017, an increase of 19.2% year-on-year, and the growth rate increased by 1.1 percentage points from the first half.

  Today, China is still India's largest trading partner. According to statistics from the India Business Information Administration and the Ministry of Commerce of India, the import and export volume of bilateral goods between India and China reached US$85.49 billion in 2019. Among them, India’s exports to China amounted to US$17.13 billion, accounting for 5.3% of India’s total exports; India’s imports from China amounted to US$68.37 billion, accounting for 14.1% of India’s total imports; India’s trade deficit with China was US$51.24 billion. , Accounting for about one third of the total trade deficit. China is India's third-ranked export destination and largest source of imports, and India's largest source of deficit.

  From the perspective of reversing the trade deficit, India must hope to get rid of its dependence on Chinese goods. However, India's infrastructure is backward, the quality of its workforce is low, and there is no mature modern manufacturing industry. As a result, India needs to import large quantities of good-quality Chinese products to meet the needs of domestic consumers. Therefore, from small pots and pans to large washing machines and televisions, the Indian market is flooded with Chinese products.

  Prior to this, India’s industrial policies tended to develop modern service industries, and only pharmaceutical manufacturing had certain international competitiveness in manufacturing. After Indian Prime Minister Narendra Modi took office, he launched an ambitious "Made in India" plan, determined to make India a global manufacturing center. However, the fact that India's manufacturing industry lags behind will not change in a short time.

  In order to develop manufacturing, India must improve its backward infrastructure, and this is inseparable from Chinese goods and services. In 2019, India announced plans to invest 100 trillion rupees (1 rupee is about US$0.013) by 2025 to strengthen infrastructure construction. With India's infrastructure gap, only China can meet its infrastructure services and infrastructure equipment needs. India also understands this and has carried out large-scale cooperation with China in infrastructure. According to data from the Ministry of Commerce of China, from January to September 2019, Chinese companies signed new engineering contract contracts in India with USD 3.85 billion, a year-on-year increase of 104.7%.

  In addition, the global manufacturing industry chain is a whole, and China is an important part of it. If India wants to make a difference in the global manufacturing industry chain, it will definitely use Chinese goods. Taking the pharmaceutical industry as an example, Indian pharmaceutical companies produce 20% of the world's generic drugs, but require a large amount of organic chemical products produced in China as raw materials. At the beginning of 2020, due to the impact of the new coronavirus pneumonia epidemic, Chinese raw material production enterprises were temporarily suspended, and some Indian pharmaceutical companies were also forced to stop production due to insufficient raw material stocks.

  Indian economist Swaminathan Aiyar (Swaminathan Aiyar) believes that China is an integral part of today's global industrial chain. India wants to go further in the global industrial chain and will only import more Chinese products. Therefore, India is now inseparable from Chinese goods, and the future development and upgrading of manufacturing industry is inseparable from Chinese goods.

By:Flower