Amicable Sino-Indian relations benefit both
India will reportedly clear 45 investment proposals from China now tensions have eased on the western section of the border following the disengagement of front-line troops. The proposals had been held up since last year after India tightened controls on Chinese investment in the country in response to the monthslong military standoff in the border area.
Other retaliatory measures New Delhi took against Beijing last year included holding Chinese imports at ports for extra checks, banning more than 200 Chinese apps including TikTok and WeChat, and blocking Chinese companies from participating in India’s 5G network trials.
Given the huge negative impacts of the restrictive policies, along with incessant calls by many in India to decouple from China economically, there was growing pessimism over the prospects for Sino-Indian economic and trade ties.
Yet despite all this, China regained its position as India’s top trade partner in 2020, with two-way trade standing at $77.7 billion, according to India’s commerce ministry. China lost that position to the United States in the 2018 fiscal year.
It is worth noting that Indian imports from China last year — at $58.7 billion — were more than the combined purchases from the US and the United Arab Emirates, India’s second- and third-largest trade partners, mainly because of the country’s reliance on Chinese-made heavy machinery, telecom equipment and home appliances.
The mutually beneficial trade and business relations between the two neighbors have been a major component of their strategic and cooperative partnership for peace and prosperity. The fact that bilateral trade has increased more than 30 times over the past three decades points to a broad alignment of their interests, especially as the two economies are becoming increasingly interconnected and interdependent.
Thus efforts by some politicians in India to hold trade hostage to the border issue are counterproductive, and will inflict bigger damage on its own national interests, especially given the significant role China now plays in the global industrial and supply chains. For example, about two-thirds of active pharma ingredients used by the Indian pharmaceutical industry are imported from China, and industry experts believe any sudden ban or restrictions on imports of these from China may cause supply disruptions resulting in huge price rises.
The latest step India has taken on Chinese investment is a welcome move to get bilateral trade and overall relations back on track. It serves both countries’ interests for them to be each other’s development opportunities rather than a threat.