China’s economic rise is associated with its export-led growth. This is why every time we have a conflict with China; there are calls for a boycott of Chinese goods. Those championing such ideas believe that our boycott will hurt China economically. Such views are, at best, half-baked. Economic competition between countries, especially ones as big as India and China, is far more nuanced. It requires long-term strategic vision. Foreign trade, at best, can only be one aspect of it. Also, military and diplomatic allies might not be willing to help when it comes to the economy.
Any strategy to even partly severe trade ties with China must carefully evaluate the pros and cons. Such a move will hurt China by taking away a small share of its export earnings. But it will also require finding alternative sources of such imports, either domestically or internationally. A World Bank data shows that more than 50% of India’s imports from China are either capital or intermediate goods. Consumer goods, which are more likely to bear a Made in China label, have a share of less than 20%.
While public opinion might be driven by the idea of boycotting consumer goods, any knee-jerk reaction can end up disrupting capital goods and intermediate goods supplies and therefore domestic value chains. To be sure, this does not mean that India should not strive for reducing its import dependence on China. However, any such policy should work via a simultaneous development of domestic capabilities which can satisfy the import demand. This will require access to funds, technology as well as export markets.
India’s counter-strategising against China will only succeed if we make sure that our bilateral and multilateral reactions to the recent developments maximise our gains while minimising any concessions we make for strategic support. India is a democracy unlike China. Domestic political pressures of achieving quick and radical gains will only complicate the pursuit of this objective.