China’s emergence as a recent economic superpower is in no small part due to its massive production industry. The coastal factory towns produce an assortment of goods — with equally varying degrees of quality — on an enormous scale and with low cost, only for them to be shipped off to the rest of the world. Cheap labour —allegedly through labour rights violations as well as slave labour — and brazen theft of intellectual property have played a fairly large hand in cementing the Communist state as a principal hub for free market production.
Experts had prophesied a subsequent political transformation from communism into a democracy with the liberation of China’s economy. Unfortunately, the Chinese Communist Party (CCP) has pioneered a sinister amalgamation of the ugliest aspects of Marxist authoritarianism and free-market capitalism — one that allows it to participate in the global economy while stretching the upper limits of acceptable disobedience to the rules of free trade. Nonetheless, India has grown weary of China’s duplicitous trade practices.
Bilateral trade with India had ballooned to USD 89.6 billion in 2017-18 — over twice the amount just a decade ago; the trade deficit in the same financial year stood at USD 63 billion. Now, in 2019-2020, the trade deficit has fallen to USD 48.6 billion. Government data cites a decline in imports from China in accounting for this deficit. The Indian government’s ‘Make in India’ initiative, along with tightening restrictions on an overly obstreperous China, aims to serve as a compensatory measure by correcting the damage done to the economy by unscrupulous Chinese trade.
For many low priced goods, China’s metrics for quality control are highly suspect — an oversight that conveniently saves cost; moreover, Chinese exporters have superseded India’s efforts in countering dumping — an international trade practice wherein the price of goods is strategically lowered in the exporting country in comparison to the market price, or the price of said goods in the domestic market. Importers are wary of this unscrupulous process and levy an anti-dumping duty for such goods. In a 2018 report by the Standing Committee on Commerce, it was noted that one way China evades anti-dumping duties is by misclassifying products meant for dumping.
Furthermore, more explicit means of illicit importing — à la smuggling — amount to hundreds of crores in value from China alone. The Directorate of Revenue Intelligence (DRI) — responsible for countering smuggling activities — is unfortunately in a shortage of adequate personnel to tackle this situation.
Therefore, low quality cheap Chinese goods circulate within the Indian market and gravely undermine domestic micro, small and medium enterprises (MSMEs). With China dumping cheap goods in India, MSMEs encounter a tall barrier to entry as they cannot compete with the imported dirt-cheap imported products — even though the quality of goods produced domestically is higher. Through dumping, the Chinese seize a massive market share from domestic producers.
The pharmaceutical industry is heavily reliant on Chinese raw materials, as the present infrastructure does not allow for sufficient support from within the country. Although the imports bring massive value to the Indian market, a high level of dependence on China only stagnates domestic innovation as the industry grows complacent without little ability to compete. Thus, investment in the pharmaceutical industry is the best path towards economic sovereignty.
In the textile industry, China has found yet another bypass for anti-dumping measures. The GST rates of 18% on synthetic fabrics, 12% on yarns, and 5% on fabrics have inadvertently catalyzed the import of textile goods. Additionally, China leverages India’s Free Trade Agreement with Bangladesh by sending raw fabric to Bangladesh for refinement into garments and ultimately dumping into the Indian market. These slimy workarounds only fortify China’s exploitative conduct — which it asserts is in the vain of economic development.
Chinese exporters profit from selling subpar and dangerous goods to the Indian mainland, and slaughter Indian soldiers at the border — this perfectly encapsulates Chinese tactics with respect to India. Consequently, the Indian boycott of Chinese goods — which comprised over 50% of the business done in the Diwali season years past — may cost China a hefty amount of INR 40,000 in business this year.
For China, foreign markets are mere pawns in its greater fundamental conquest for political domination; and Indian consumers are treated no differently. India has always had a longstanding tradition of entrepreneurship and self-reliance, and a trajectory towards domestic production and distancing from Chinese goods kills two birds with one stone — accelerating domestic economic development and weakening China’s nefarious economic leverage. China’s unethical trade ought not to be allowed to go unchecked, and the reactionary policies by India and economies all over the world are reflecting just that.