2020-07-17

Indian voters want to teach Beijing a lesson? Decoupling from China will only hurt Indian consumers

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Japan’s Nikkei Asian Review article, July 15, original title:India’s wrong approach to decoupling from China will only hurt its domestic consumers. Sub-topic:In the long run, banning TikTok and refusing Beijing’s participation in the construction of 5G networks will do no good to Indians. India believes that its dependence on Chinese investment, commodities, and mobile phone applications has made it vulnerable in other fields, so it has been decided Decoupling, focus on strengthening its own industry. In addition to imposing new restrictions on Chinese investment and banning 59 Chinese mobile phone applications, India is also considering raising barriers to imports of up to 300 Chinese products.

getInterUrl?uicrIvZQ=069a1a5a7c6ff8a15c885d3773b9f918 - Indian voters want to teach Beijing a lesson? Decoupling from China will only hurt Indian consumers

Indian voters There seems to be a consensus that Beijing needs to be taught a lesson. However, what they may not understand is that the tough reaction of New Delhi will not only hurt China, but may eventually increase the cost of the domestic industry and make Indian consumers suffer.

What China buys from India is mostly raw materials such as cotton or iron ore. China can buy from many other channels. But things India buys from China, such as electronic products, solar panels, active pharmaceutical ingredients, batteries, and electric car parts, are rarely replaced in terms of speed, scale, and price of supply.

China’s active pharmaceutical ingredients are the key to India’s booming generic drug industry, while cheap Chinese solar panels have increased the use of renewable energy and helped India achieve Its climate change goals.

New Delhi is also considering banning Huawei and ZTE from participating in the construction of 5G wireless networks in India. However, India needs Chinese electronic products to support its digital economy, which is one of the few areas in India that can create high-paying jobs.

Preventing Indian manufacturers from accessing cheaper Chinese supplies and materials will increase input costs and damage many, including retail, real estate, hotels and tourism industry. This, in turn, will lead to higher prices for goods and services, which in turn will hurt those Indian consumers who are most actively supporting “boycotting China”.

There is also a retaliatory measure that prohibits Chinese companies from bidding for Indian highway contracts, even when working with local partners. This is actually equivalent to increasing the cost of new roads and highways to punish taxpayers.

Restricting Chinese investment will have an impact on Indian technology startups. Even for such a simple matter that prohibits China from applying it, there are potential job losses and the cost of giving up before investing. TikTok, with 2,000 employees in India, has said that it will invest US$1 billion in India in the next three years.

For a long time, India has exaggerated the economic potential of its 1.3 billion people. In fact, what really matters is purchasing power, not population. Mercedes-Benz sold 14,000 vehicles in India last year and 700,000 in China. India’s per capita GDP is $2,000, which is still much lower than China’s $10,000.

(The Global Times author is Rishesh Kumar Singh, former assistant director of the Indian Financial Commission, translated by Chen Junan)