Indian Defence Review

“¦the raw materials that China imports from India are abundantly available in that country but which are  being saved as strategic reserve

Fourthly, while China, thanks to its three trillion worth of foreign exchange reserves is investing in a huge way all over the world, particularly in the developing countries, it is not so inclined to do so in India. Its foreign direct investment has been miniscule 52 million dollars in India. And this is in sharp contrast to a reasonable 879 million dollars that India has invested in China between 2004-05 and 2010. A particular mention in this regard is noteworthy.  Indian businessmen, who are importing a significant amount of power equipment from China, have been expecting China to manufacture such equipment through FDI into India, particularly after the Reliance Power has inked recently one of the largest global import deals for $8.3 billion with the Shanghai Electric Power Company. However, Chinese investments into India in power equipment manufacturing locally and setting up of R&D and after-sale service facilities are yet to take off in any sizeable manner.

Viewed thus, Wen’s visit to India has proved to be a win-win situation for China, with India gaining very little. And yet, if I have given India two points in a scale of ten, it is precisely because after ages India did show some guts by refusing to incorporate in the joint communiqué few sentences making it clear that India believes in “one-China” principle. After every India-China summit, because of the insistence of Beijing, New Delhi always agrees to these sentences. This time, Tibet does not find a mention in the joint communiqué.

In 2003, the then Prime minister A B Vajpayee had surrendered the little leverage that India had over Tibet. India had recognised Tibet to be a part of China through the India- China Treaty on Tibet, 1954. Its validity was, however, for eight years. That means that after 1962, India was not bound to regard Tibet as a part of China. The 1988 statement during Rajiv Gandhi’s visit was diplomatically worded in the sense that it talked of Tibet as an autonomous region of China, meaning that India’s view on Tibet could change if Beijing takes away Tibet’s autonomy. But Vajpayee, during his visit to China, agreed unconditionally that “Tibet Autonomous Region (TAR) is part of the territory of the People’s Republic of China (PRC).”  And what is more important, such an agreement on Tibet was signed for the first time at the prime ministerial level.

“¦the Chinese enjoyed a system of “one-way free trade” in open markets of the Western countries while protecting its own market against western goods under some pretext or the other. As a result, the balance of trade was always in favour of China”¦

How India should deal with a hostile China? Some time ago, I had argued in an op-ed in a leading English daily that “Gandhisim” could be a diplomatic tool. I will repeat the same even today. The main component of rising Chinese power is its economic strength, particularly its foreign exchange reserve, that is, dollars. And this the Chinese have earned through export of their goods, which they produce cheaply by their cheap labour, in markets all over the world.

In fact, for the most part, the Chinese enjoyed a system of “one-way free trade” in open markets of the Western countries while protecting its own market against western goods under some pretext or the other. As a result, the balance of trade was always in favour of China, and, that, in turn, endowed it with more and more dollars. This is the case even now.

In this age of the WTO, which ensures free trade, there cannot be any ideological ground to stop Chinese goods entering any country. But what we can do here is to adopt the Gandhian tool of boycott. Let us pledge ourselves not to buy Chinese goods. Once this Gandhian practice gains momentum, that is, if more and more people in the world, particularly in the United States – the biggest market for the Chinese goods, voluntarily stop buying Chinese products, it will have a salutary impact on the Chinese rulers.

The lopsidedness of the Chinese economy is so acute that an overwhelming majority of the Chinese people themselves continue to be too poor to buy their own country’s products. Once the Chinese rulers are unable to find buyers for their goods, their economic power will decline and their arrogance will evaporate. Let “Gandhigiri” prevail over Chinese “dadagiri”.