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Boycott Chinese goods for Masood Azhar? Why this hashtag is a bad idea

Many Indians think boycotting Chinese goods will put pressure on China. It's a mistaken belief.

ET Online|
Updated: Mar 14, 2019, 01.54 PM IST
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After China put a technical hold on the UN Security Council resolution to designate Maulana Masood Azhar of Jaish-e-Muhammad (JeM) as a global terrorist, Indians are once again livid at Beijing. Azhar's JeM was responsible for attack on a CRPF convoy in J&K on February 14 in which nearly 40 personnel were killed. This was fourth time China has derailed such a proposal in last 10 years.

Indian social media is abuzz with calls for boycott of Chinese goods, a typical mass response whenever China hits at Indian interest. However, boycott may not be the right way to respond to China.

Why? In a mistaken belief, many Indians think boycotting Chinese goods will put pressure on China. On the contrary, it will harm India as India is dependent on Chinese imports.

India exports less to China (mainly raw materials) and imports more (mainly electronics and other manufactured goods which are in high demand). India's pharma sector has critical dependence on Chinese imports used in drugs manufacturing.

China's exports to India account for only 2 per cent of its total exports. So even if Indians boycott all the goods imported form China, it will not make as big an impact on China as to bring it to its knees before India.

China is India’s largest trading partner, but the trade is heavily skewed in favour of China. A trade war when Indian manufacturing ability is limited is not going to favour India. India’s imports from China are crucial at this stage.

India today imports telecom gear worth over Rs 70,000 crore annually, much of it from Chinese firms like Huawei and ZTE. Chinese companies dominate the telecom sector in India. In handsets, they control 51% of India’s $8 billion plus smartphone market with brands like Xiaomi, Oppo, Vivo and OnePlus.

Power is another sector where India has come to be dependent on Chinese imports. In the 12th Plan alone, almost 30% of the generating capacity was imported from China. In the rapidly growing solar energy sector, between April 2016 and January 2017, solar equipment from China had a share of 87% in a market pegged at $1.9 billion. According to consultancy firm Grant Thornton, in 2017, when inbound deals dipped, the Chinese shifted gears and accounted for 31% of the inbound deal value as against 27% from the US.

The popular impression is that China is dumping consumer goods into India. But the fact is that India depends on China for capital goods too. Reduction in import of cheaper capital goods will push up production costs.

India can fight trade wars with China only when it has removed the big skew in its trade with China, which can take a decade of manufacturing growth.

So is boycott of Chinese goods a totally useless idea? No. It may not impact China in the short run but can harm it in the long run, mainly by way of tarnishing its reputation when China is seeking markets for its goods in Africa and Europe. A social movement to boycott Chinese goods can underline China's tolerance for terrorism when China is eager to portray itself as a responsible global power.

Already, China has started facing backlash from people in various African countries where it is constructing infrastructure projects. Projection of China as an authoritarian, pro-terror country is likely to hit its ability to attract western businesses and increase its footprint in Africa and Europe.
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