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July 1, 2020

INDIA: Seeking to score a low-cost equalizer with China

BY Aditi Phadnis

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In tacit recognition that a military response to China’s aggression on an undemarcated border could be foolhardy and unpredictable, India has embarked on a twin strategy of inflicting near-term economic pain on China while planning longer-term diplomatic and security options.

Although there has been brave talk, especially in the veterans’ community, about how China’s capacity to do battle is rusty as the country has not fought a war for 30 years, Indian defense forces realize that fighting to defend a border with poor military infrastructure – roads, landing stations, communications – against an adversary with extensive fortifications on its side, could lead to an adverse outcome for India. While military aggression is politically attractive, failings in India’s military readiness could give China the balance of advantage and risk India losing further territory.

Instead, as talks continue to resolve tensions on the border, the government is developing a diplomatic-military riposte to China, away from the Indian subcontinent. This involves striking alliances and laying the foundations of deals, especially with those countries which see themselves as victims of China’s expansionism. The Quadrilateral Security Dialogue (Quad) between India, the US, Japan and Australia, and a closer US alliance are among the options to contain China, though both are fraught with inherent problems. Another option under consideration is to review India’s endorsement of the One-China policy; to reignite the issue of the Tibetan government in exile in India and improve ties with Taiwan which currently does not have full diplomatic recognition in India.

But these are long-term plans. To equalize the relationship after the recent clash in which India lost 20 soldiers in combat with the People’s Liberation Army (PLA) on the border, India has struck at China’s commercial interests in India. Chinese goods led Indian imports by value in 2018, making up 14% of the total imports. The Indian government is considering imposing restrictions and higher tariffs on Chinese companies and goods. Measures include a directive against the use of telecommunications equipment from Huawei Technologies and other Chinese suppliers. State-owned telecoms have been told not to use equipment from Huawei and ZTE to upgrade 4G infrastructure or in pilot 5G networks. China’s auto sector is also being targeted as much of India’s auto ancillary sector is dominated by Chinese imports, and already in April India had brought Chinese FDI in the country under increased government scrutiny.

However, the biggest strike has been to shut down 59 companies offering Chinese apps in India. Sanctions on more are in the offing. Some of these, like TikTok, are wildly popular in India and contribute to more than a third of the app’s global user base. Most Indians, especially between the ages of 16 and 45, are resigned to the sudden absence of TiKTok which was also used by political parties to expand their digital presence. The criteria by which these 59 apps were selected, and what criteria will be followed if more such bans are to come, remains unclear. The Indian ministry of Electronics’s argument that the apps were stealing Indian data and offering it to China has found traction among the public and Indian-developed apps, while less efficient, are quickly replacing the Chinese versions.

Though China has vowed retaliation, this strategy has minimal costs for India. In fact, it has had the effect of uniting anti-China sentiment in domestic politics, with even the opposition Congress, endorsing the actions. While the economic costs to China might be minuscule, India believes it has made a point and shows no intention of stopping, even as the government continues to pursue a diplomatic-military alternative to China’s moves.

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