How Beijing manages to stay the course of diplomacy and economy remains to be seen
Shankar Kumar | April 29, 2020 | New Delhi
In his interaction with Indian overseas students from the UK, Canada, Singapore, Europe and Australia through video-conferencing on April 26, union minister of road transport and highways Nitin Gadkari made a very weighty statement marked with geopolitical connotations. He said India needs to meet not only local demand but also “cater to global market as many companies and countries are looking to shift away from China”. Except for the Indian media, very few leaders or bureaucrats in the country openly talk anything that could prick China.
However, throwing caution to wind, the union minister spoke in a bold manner about developments that surround the coronavirus pandemic and growing buzz in the diplomatic corridors of the world about planned withdrawal of factories from China by many countries. In the first week of April, Japan, irked by disruptions caused to its manufacturing units in China’s Wuhan and other places due to pandemic, announced funding Japanese companies which are willing to shift their production units out of China.
Japan announced giving 220 billion yen to companies which shifted their production bases back to Japan and 23.5 billion yen to those seeking to move production to other countries from China. Several US companies, on account of trade war between Washington and Beijing, have already left China, while others are rethinking their reliance on that country. On April 21, European Union trade commissioner Phil Hogan said the 27-member bloc would seek to reduce its trade dependencies with China after the pandemic.
While all this indicates about possible changes of political and economic scenarios in the world after the coronavirus pandemic is over, China has emerged as a country facing huge trust deficit from its neighbours too. On April 20, it flashed its concern when India amended its FDI rules to make investment for companies from countries that share land border with India highly difficult.
Ji Rong, spokesman of the Chinese embassy in India, said Delhi’s new FDI rules “violate WTO’s principle of non-discrimination, and go against the general trend of liberalization and facilitation of trade and investment.” This was a clear cut, flustered statement by the Chinese official, which showed how Beijing was shocked by the Narendra Modi government’s carpet bombing to its plan to acquire India’s movable and immovable assets at the time when Covid-19 has led to cascading downfall of economy in the country.
On April 11, HDFC, India’s largest non-banking mortgage provider in the private sector, informed the stock exchanges about the People’s Bank of China decision to raise its stake to 1.01 percent from 0.8 percent. This sent alarm bell ringing in the ministry of finance. Before China-backed funding agencies could lay hands on other Indian interests, the alarmed Modi government came out with new FDI rules that watered down the Beijing plan to acquire assets in India.
This infuriated China. In its long rebuttal against India’s investment plans, the Chinese embassy spokesman said, “They do not confirm to the consensus of G-20 leaders and trade ministers to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open. Companies make choices based on market principles. We hope India would revise relevant discriminatory practices, treat investments from different countries equally, and foster an open, fair and equitable business environment.”
As if China suffered a huge damage with the launch of new investment law by India, Global Times, Beijing’s lone English tabloid paper, pried open a can of worms on the country’s political establishment. “The introduction of the policy reflects the development trend of India’s domestic and foreign affairs,” Liu Zongyi, who works with the Shanghai Institute for International Studies, said in his write-up in Global Times on April 26.
“On the domestic front, it shows the growing power of right-leaning conservatism in the Indian society. On the diplomatic front, this policy, like India’s withdrawal from the Regional Comprehensive Economic Partnership negotiations, demonstrates its determination to reduce its economic dependence on China and realize the ‘Make in India’ ambitions, taking opportunity of some western countries, led by the US, shifting much of the industrial chain out of China,” he added, hinting that India’s attitude towards China has changed since the outbreak of the Novel Coronavirus.
But New Delhi refused to take the Chinese authorities’ barbs seriously. In its attempt to protect national interests, it decided not to give sentiment a priority over ground reality, at least in its dealing with China. Some western media outlets like The Atlantic have though attempted to portray India-China engagement distastefully especially after the pandemic outbreak, yet, New Delhi has not uttered a single word against China.
“Like many countries, India doesn’t count China as a key ally, nor does it necessarily have much incentive to praise Beijing for its response to the pandemic,” the US-based news magazine, The Atlantic, said. Though India doesn’t subscribe to such opinionated perception of the western media, it gave cancellation order to Chinese firms supplying RT-PCR test kits, PPE kits and others after several states including those ruled by non-BJP parties complained about non-accuracy of coronavirus testing kits procured from Chinese firms. The Indian Council of Medical Research (ICMR) had already complained about under-performance of test kits supplied by Guangzhou Wondfo Biotech and Zhuhai Livzon Diagnostics. The Opposition parties including the Congress had also questioned the Modi government’s decision to waste public money on the purchase of faulty testing kits from China.
But remember, India is not the lone country that stopped the import of faulty test kits from China. Several countries including France, Germany, Spain, Italy, the Netherlands, Slovakia and Turkey returned faulty testing kits, masks and ventilators purchased from China. Such developments don’t reflect well with the nation which nurses an ambition to replace the US as the number one economic power of the world. Already, many countries suspect China’s role over Covid-19. They feel Beijing could have checked the spread of the virus had it maintained transparency about it and informed the international community about its contagiousness and deadly nature in December itself.
Clearly, Covid-19 has deeply impacted the world at all levels, yet how China manages to stay the course of diplomacy and economy amidst the mounting virus-related crisis, will have to be watched and noted.
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