top of page
  • Writer's pictureEconAfterHours

Boycott China?

Twenty Indian soldiers lost their lives in a brutal border skirmish in Galwan valley, following which the socio-political mood in India was set to “Boycott China”. From the twenty martyred soldiers to the fifty-nine Chinese apps banned by the Indian Government, the Indo-China Border conflict is now a war of numbers. Anti-China sentiments plummeted to an all-time high, with “#BoycottChina” trending on Twitter for days at a stretch. A million news articles and Op-eds later, most of us are still ambivalent regarding this subject.

Although the popular nationalist sentiment across India, demands to ban Chinese and boycott China, on a closer perusal of the situation, such calls seem far-fetched when one examines the Indo-China Bilateral Trade. When it comes to trade, it turns out that China is India’s top trading partner after the United States. In the financial year 2019–20, 5% of total Indian exports were to China, while a whopping 14% of all Indian imports were from China, resulting in a huge trade deficit in the favour of China. The trade deficit for the financial year 2019–20, although less than the previous years, amounted to USD 48.66 billion. In simple terms, India buys more from China, than it sells to China. The days following the border clash saw traders and various unions coming forward with “Boycott China” clarions. Traders across the country are willing to participate in the boycott movement as long as their businesses remain undisturbed. They advised the government to bring about the movement in a calibrated and phased manner.

A country that is expected to have a 34.33% share of youth (15–24 years) in its total population by 2020, is bound to see a rise in indigenous businesses in the form of “startups”. Needless to say, China pumps in billions of dollars in the Indian markets via these startups. In 2019, Chinese investments for startups towered at a massive USD 4.6 billion.

As a result, 17 out of 21 Unicorns in India (Startups with a valuation of USD 1 billion or above) are funded by Chinese firms and corporations. The Chinese FDIs- Foreign Direct Investments in India enables China to have good control over the startup economy and tech ecosystem, which the Indian state views as a long term sovereign threat. In the backdrop of the current ongoing nCOVID-19 pandemic and change in FDI rules, the future of Chinese funded unicorns and startups are unforeseeable, and the effect of “Boycott China” on these startups can only be gauged in the future.

Peeping across the window of the “overview” to Indo-China economic relations, one can only find uncertainty. While we can at best predict the positive and negative repercussions of “Boycott China”, owing to the complexity and the multitude of factors involved, the future can be anybody’s guess.

Here are the top consequences of “#BoycottChina” movement that are bound to unfold:

● Hardships for companies and startups dependent on Chinese FDIs

● Trouble for traders dependent on China for import of intermediate and capital goods

● Loss for businesses dependent on the sale of finished Chinese products

● Unemployment may increase if China retrieves back its investment in India

● Reduction of the massive trade deficit between India and China

● Local products and goods will be promoted and will pave a way for “Atmanirbhar Bharat”

● The government will be positively pressurized to bring out new policies and investments for the growth of the Indian. Manufacturing industry and to help India push back

● Fiscal support from the government to encourage trade from other countries, in order to provide alternate options for the Indian consumer

With these consequences in the waiting, the state can provide fiscal support and bring about a positive economic revolution, by utilizing the anti-China sentiment:

● BIASED IMPORT DUTIES: The government may revise the import duties by relaxing the tariffs for some countries while increasing the tariffs for others- most presumably for our Chinese neighbour and thus discouraging the imports.

● REDUCE GST: domestic goods are often costlier than their counterparts- Chinese imports. Moreover, the high GST rates catalyse the market sentiments in the favour of Chinese products. A GST rate cut on local goods that have the potential to beat Chinese products, might help the novel alternate Indian markets grow.

● INCENTIVES: Give incentives to various Indian companies and corporates according to their profits, which helps in creating a competitive environment, thus redefining quality and increasing quantity of the goods and services concerned.

● INVESTMENT: The government can invest in Indian companies and startups, and thus prevent them from getting entangled in the clutches of neo-colonising nations. By pouring in money to these companies, not only will the government increase its assets, but also kickstart a new phase of the Indian market.

With geopolitical tensions simmering on the Indian borders, with maps being redrawn and boundaries redefined, India finds itself in a situation where ceding the battleground to the Dragon is no more an option. With the war for an Asian dominance knocking India’s door, it is certain that India will retaliate. The only thing to be seen will be whether India will end up hurting the Dragon more than itself.

71 views0 comments

Recent Posts

See All

Economics Deconstructed- 3rd Place

By Abhigya Asmi, Sophia College for Women. Decoding India’s population obsession : Examining the consequences of India’s declining fertility rate and how it affects the economy A 2019 UN report foreca

Economics Deconstructed- 2nd Place

By Garvit Gupta, Ashoka University. Problem Statement: Increasing population has always been a hotly debated topic in the public domain. Is a burgeoning population a boon or a bane? That depends on wh

bottom of page