China’s desperate dependence on exports is evident. It must keep its workforce employed. This means making its factories will have to continue churning out goods.
Mumbai : China is India’s largest trade partner. India-China trade accounts for $69-71 billion each year. In fact, the very nature of China’s exports to India make it more vulnerable to any trade restrictions than India’s exports to China.
There is another reason for China’s vulnerability. Ever since the global financial meltdown, China’s desperate dependence on exports is evident. It must keep its workforce employed. This means making its factories continue to churn out goods even if the markets are not willing to absorb them. This is what is happening to China’s steel.
That is why it wants to build the roads and bridges as part of its OBOR (One belt one road) project. It hopes that other countries will purchase its steel, even at discounted prices. That is why it looks to India’s market for infrastructure, hoping that India could help it stave off unemployment. India has the potential of being the largest market for China. That will not happen if China opts for sabre-rattling.
For China, more than India, unemployment is a political risk. When unemployed youth go back to their villages in China, they are more likely to spread discontent in the rural sector, where the communist party has its roots. That is something that China’s leaders are extremely worried about. It needs hungry markets for its goods to prevent political instability.
Normally, this would have meant maintaining good relations with neighbours. One would have hoped that China would not risk any military misadventure which would easily shatter its attempts to promote its image of being a peace loving nation. But the Chinese army is itself faction ridden and can be broken up into at least three major camps. Each of them has a leader with political aspirations. The mis-adventures of China’s PLA are often interpreted as attempts on the part of one political mentor or the other trying to
assert himself, using the PLA to make his presence felt.
In fact, in the face of China’s slowdown, the investigations on the part of the US into China’s trade practices, and India’s decision to slap anti-dumping duties against 93 Chinese goods which are imported could be seen as a precursor to a major trade war against China. Any attempt to use its military against any of its neighbours could run the risk of alienating more markets. That could aggravate China’s isolation. It could create even more unemployment and instability at home.
That is why it is likely that China will eventually back down. Analysts say that it attempted to do this when it announced (wrongly) that Indian troops had begun to back off. But this deceptive way out of a crisis was foiled by India which immediately denied that its troops had withdrawn. The high decibel propaganda war unleashed by China is now beginning to haunt it. If it backs off now, it loses face. That is unthinkable for most Chinese, and could be politically suicidal. To proceed ahead might risk losing face militarily, which too could have disastrous consequences both at home and for China’s markets.
India’s attempts to arm Vietnam and enter into pacts with Japan and with the US must be seen against this perspective. China is being warned against being militarily adventurous.
There is also the superior advantage that India enjoys in being able to fly its aircraft faster to any trouble spot than China can from the higher altitudes where its aircraft is housed.
Of course, China has a huge advantage of becoming the biggest military power in two or three decades. It is already investing money in key areas, which India has not focused on at all. In some areas, Indians have been given the best jobs, because they could not find suitable opportunities (or even remuneration) within India. But to get into a skirmish now, could destroy China’s plans and ambitions. A skirmish (or war) could hurt India. But it could destroy China’s march towards global supremacy.