How badly the border disputes between India and China affect their trade?
You must know about the disputes between India and China where we are totally dependent on China in Trade business. If you really want to support India (PM Modi), firstly you should know every single fact that affects our Trade (Business).
India China history?
Before highlighting the border disputes between India and China. Let me take you all in a time machine and drive back to the early 60s when all this started after the first war between them in 1962 known as the Sino-Indian war.
India and China are currently the two most populated, fastest-growing, and biggest economies in the world. But in the 1960s when both the countries were likely at the same level of progress in literacy, infrastructure, health, defense and also they had almost the same GDP and Per Capita Income.
India and China have strong cultural and economic relations earlier, either if you talk about the known trade route The Silk Road or even if it is the spread of Buddhism from India to China and East Asia their exchanges showed their brotherhood.
But after occupying Tibet by China and asking for help from India by Tibetan locals to save their culture and freedom from China, sourness developed in their relations. Finally, when tensions are high in Tibet, India proposed to make negotiations on the Tibet issue, make China miserable and these relations turned even worse when India asylum Dalai Lama known as the spiritual leader of Tibet and Buddhism.
On October 20, 1962, following its extension policy China dared and invaded Indian land in Ladakh and across the McMahon line. China declared war against India, whereas India strongly replied to China on every position after fighting long enough for 30 days war ended and China claimed to have “Line of Actual Control”.
After the 1962 war, the Chinese people’s liberation army again attacked Indian soldiers on the 11th of Sept 1967 in NathuLa post where they received a strong vigorous reply from the Indian army. They killed around 400 Chinese soldiers and reported 88 martyrs from the Indian side, conflicts continued with time on border issues resulting in the 1987 Sino-Indian war.
China Always has an eye on the land of neighboring countries and India. Doklam is another example of seizing other land and to understand their authority over them.
What happened at the boundary line?
The matter of border dispute between India and China was not new; it was also highlighted in the 1962s Sino- Indian war called Galwan Valley named after a Ladakhi explorer Gulam Rasool Galwan located nearby Galwan River which is 80 km long.
The valley is located near LAC(Line of Actual Control) which is also not defined between both the countries and they both follow their own line of perception. The soldiers of both the countries patrols over the LAC physical face-off is common most of the time.
But on 15th June 2020, a small face-off turned into murderous havoc, in which 20 Indian soldiers were martyred while China wasn’t disclosed about their dead soldiers. According to an agreement of 1966 firing and weapons are not allowed in the valley, therefore, stones, welding fence posts, wire wrapped clubs, rods with nails were used by the soldiers to strike each other.
India and China views on this situation
After this violent clash the world is afraid of the third world war situation between India and China, around the world after the Coronavirus this is the 2nd most popular discussion matter. In India, a wave of aggression spread across the peoples of the country against China where China makes his statement and said “Indian soldiers provoked first, invaded the LAC and wrecked the tents of Chinese troops and when we went to negotiate as per protocol Indian soldiers suddenly attacked us”,
Also mentioned, “that India should follow the path of harmony”.
Whereas India completely denied the claims of China and said Chinese soldiers violated the Indian territorial integrity and dared to build their tents on the Indian side of the LAC which is completely unacceptable. After this incident defense minister, Mr. Rajnath Sing said: “ Indian army is free to use their weapons when it is needed to protect their motherland”. A lot of high level and senior-level meetings were held to resolve the disputes between India and China and asked to withdraw their soldiers on LAC but still, the situation was not resolved.
The total contribution of trade in their economies
India and China the two biggest economies are trading from years with each other which contributed to their economy at a certain level. But there is a huge trade deficit between India and China where India is highly dependent on China for electronic appliances(TVs, mobiles, parts, sound recorders), machinery, reactors, optical and photographic equipment, iron, steel, fertilizers, plastics, ship, boat, etc. India imports about 70-75% from China whereas China import cotton, mineral fuel, copper, slug, animal or vegetable fat oil, sulfur, etc which is around 8-9% of the total trade.
India and China bilateral trade increased over the years, but clearly more in favor of China where India following an unfavorable trade with the dragon. But over the years India’s trade dependence fell from 43% to 25% whereas China also reported a 30% downfall on trade dependence but their trade to GDP ratio remained in a comfortable position over the years.
According to the department of commerce that India imports from China about 14% of its total import, and imported around $64 billion from China in April-February FY20 whereas India exported China around $16 during April-February FY20.
After this whole scenario of a border dispute between India and China, India has decided to reduce its import dependency on China and reduce 17.3% of its trade deficit with China over 2022. India is looking for new import substitution for sectors like chemicals, bicycle parts, electronic parts, agro-based items, cosmetics, Chinese mobile phones, and many others and saves around 0.3% of India’s GDP. China also invested in Indian startups valued around $1 Billion also Chinese biggest E-commerce company Alibaba invested in Indian companies like Paytm, Bigbasket, Zomato, Swiggy, and Tencent in Ola, Flipkart, and BYJU’S.
How these conflicts badly affect their trade.
1.How the situations get even worse
Border disputes between India and China were there for the 1960s and many times Indians decided to boycott China and their products, trade, and investment when these disputes arose and after some time it became normalized when issues were resolved.
But this time it doesn’t seem to normalize for a long time, because 20 Indian soldiers were martyred on the 15th of June and however China wasn’t mentioned death numbers of their soldiers. India china border tensions are at its peak because China has increased its activity and deployed 20,000 PLA troops along the LAC, India in return also deployed 12,000, of its soldiers, fighter jets, Apache helicopters near the disputed area.
2. How China is misusing FDI in Pandemic
After this whole incident, anti-Chinese voices get more supported and transformed into a wave of India boycott China in every sector. In this tough time of coronavirus pandemic when economies of several countries are badly affected, trying hard enough to survive China is taking advantage of their creaked companies and investing too much to finally overtake them. In India recently China raised its stake from 0.8% to 1.01% in India’s largest banking sector HDFC Ltd, Australia, and European Union has taken measures and changed its FDI rules to counter the Chinese strike.
On the 22nd of April Indian also notified changes in FDI rules for their neighboring countries that need government mandatory approval for foreign investment.
3.India boycott China on serious notes
Due to recent Border disputes between India and China, Now Indian markets are openly boycotting Chinese products like Chinese mobile phones, machine parts, auto parts, and many others, but really at what cost?
They think that it really doesn’t even matter in front of their nation’s safety and security. On focusing security Indian government made a digital strike on Chinese apps and India banned 59 Chinese apps including popular apps like TikTok, UcBrowser, WeChat, Club Factory claiming they are ‘malicious’, citing several complaints and found to have misused user data and transmitted outside India. This ban will definitely impact the Chinese app market in India because TikTok lost its huge 200 million users in India having a 23-25crore revenue in the quarter ending December 2019.
Indian Railways operated Dedicated Freight Corridor Corporation of India (DFCCIL), terminated its contract Beijing National Railway Research and Design Institute of Signal and Communication Group worth Rs 471crores.
Also, one of the leading bicycle manufacturing company hero cycles in India canceled its business investment worth Rs 900crores in China. The union minister of India Mr. Nitin Gadkari said that “we will not entertain Chinese investment in Micro Small and Medium Enterprises(MSMEs)”.
According to me, all these steps and measures that are taken by the Indian government somehow or somehow not affect China on a huge scale, because it has its trade relations and investment with so many countries. But it definitely strengthens the projects like Make In India to boost the Indian companies to become independent and find the substitute for Chinese products.
Recently on the 4th of July Indian Prime Minister Mr. Narendra Modi motivated and requested the Indian youths to come up with their innovative ideas and products to replace and substitute the 59 banned Chinese apps by promoting and launching the Atmanirbhar Bharat App Innovation Challenge.