The US is fanning flames of conflict between India and China

Neither India nor China gains from exacerbation of conflict between them

It is US imperialism which gains by weakening these two big powers of Asia

The border clash between Indian and Chinese troops that took place on 15th June in the Galwan Valley in East Ladakh resulted in the death of many soldiers on both sides. Even as governments of India and China have been trying to work out arrangements to ensure that such bloody clashes do not reoccur on the Line of Actual Control, the US is trying to fan the flames of conflict between the two Asian neighbours.

US leaders are accusing China of attacking India’s sovereignty and vociferously declaring their “support” to India. They are calling for India to abandon multilateral groupings involving Russia, China and India and strengthen its strategic military alliance with the US.  They are calling upon India to even more actively participate in a US led military alliance to encircle China. The US has sent its warships on a provocative mission into the South China Sea and is instigating other littoral states of the region against China.

The US incitement of India against China is part of its aggressive strategy to ensure its domination of Asia and the whole world. The US sees in China the major threat to its position. China has not only emerged as the factory of the world, it is fast becoming the leader in cutting edge technology in telecommunication and solar energy. The US has been carrying on a worldwide campaign to block various Chinese high tech companies including Huawei and Hikvision.

US leaders have been inciting India to break its growing economic ties with China, by boycotting Chinese goods and services. It is not without significance that the US Secretary of State Mike Pompeo praised Reliance Jio as a “clean telecom company” because it does not do business with Chinese companies like Huawei. Pompeo also hailed the Indian government for banning 59 mobile phone applications (Apps) created by Chinese companies.

Trade between India and China has been growing steadily over the years. The US looks at the strengthening of economic ties between India and China as being against its own interests. It wants US multinationals to dominate key sectors of the Indian economy. Therefore, it has been deliberately highlighting the dangers to India’s security from Chinese companies in various sectors of the economy. Of course, the danger to India’s security from US multinational companies is not talked about.

In April, even before the border clash, the government changed the rules for Foreign Direct Investment. The change was that government approval for FDI was made compulsory even for FDI permitted through automatic route, if it came from a country sharing a land border with India. This was obviously done to regulate FDI from China, since there is no FDI from any of the other neighbouring countries.

China was India’s largest trading partner during 2013-18.  It was a close second to the USA in 2018-19.  India depends heavily on China for import of not only consumer goods but also for intermediate goods and capital goods. China sees India as a big market for its commodities as well as for exporting capital.

In 2018-19, India imported goods worth $88 billion from China (including Hong Kong). This was more than 17% of India’s total imports, making China the largest source of imports. During the same year, India, exported around $30 billion worth of goods to China.

Indian companies have preferred to source products from China due to their lower prices. The Indian market is flooded with Chinese products ranging from firecrackers and idols of gods to hi-tech telecom equipment.

The automobile companies in India import key components from China. The pharmaceutical companies are dependent on importing bulk drugs from China. Indian telecom companies like Airtel and Vodophone Idea have used Chinese equipment to expand their network and offer services at low price.

India’s exporters depend heavily on importing components from China; and this dependence has grown over the years. The share of China’s imports in the value of Indian exports has increased from less than 2% in 2009 to 34% in 2019.

Chinese companies are providing equipment and construction services to a large number of mega infrastructure projects. Nearly one third of equipment for new power generating plants is imported from China. In many cases, Chinese capital goods’ prices are less than half of those of American or European suppliers.

More than 100 Chinese companies are operating in India.  These include Sinosteel, Shougang International, Baoshan Iron & Steel, Sany Heavy Industry, Chongqing Lifan Industry, China Dongfang International, and Sino Hydro Corporation. Three Chinese telecom companies, Xiaomi, Vivo and Oppo, have a 50% share of the mobile handset market.

According to the data from China Global Investment Tracker (CGIT), which tracks investments worth $100 million or more, Chinese companies invested $14.5 billion in India during 2007-19. The majority of these investments are in energy, technology (telecommunication), consumer goods, metals and real estate.

According to the Ministry of Commerce and Industry, automobiles, electrical equipment, book printing and electronics were among the leading sectors attracting investment from China.

Chinese capitalists have invested over $1 billion (Rs 7,500 crore) in Indian start-up companies.  Alibaba Company, owned by China’s biggest and one of Asia’s richest capitalists, Jack Ma, has made significant investments in Paytm, Big Basket and Zomato. Another Chinese company, Tencent, has made large investments in Ola, Flipkart and BYJU’s.

Indian big capitalists have also invested significant amounts of capital in China. These include leading IT companies including Infosys, TCS, APTECH, Wipro, NIIT, and Mahindra, as also big pharma companies including Dr. Reddy’s Laboratories, Aurobindo Pharma and Matrix Pharma. A survey done by Confederation of Indian Industry (CII) in 2017 found 54 Indian companies operating in China in manufacturing, health services, IT and financial services. The survey also found that most of the companies had planned to increase their investment in China.

It is evident that there is a broad range of economic interests which link India and China. There is growing economic inter-dependence of the two countries. Boycott of Chinese goods will have a negative effect on production and exports from India. It will increase the cost and prices of Indian products.

Indian pharmaceutical companies have pointed out that the government’s decision to physically inspect imports from China will lead to delays and negatively impact the production of essential drugs required from treating patients of Covid-19. The Automobile Component Manufacturers Association and Society of Indian Automobile Manufacturers expressed their anguish at the disruption in their manufacturing activities due to delay in custom clearance of their imports.

Exacerbation of conflict between India and China is not in the interest of either of our countries. All evidence points to the fact that US imperialism is trying its utmost to sow discord between India and China in order to advance its own interests.

Desperate to maintain its supremacy in world affairs, the US is keen to fan the flames of conflict between the major powers of Asia, so as to weaken them and pave the way for American domination of this continent.  India must not fall into this US imperialist trap.


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