Easing border tensions would be great news for India’s economic recovery
A view in Delhi, India on December 29, 2021 Photo: VCG
A positive signal recently emerged from the sustained border dispute between China and India, as Indian media reported that the armies of the two sides exchanged New Year’s greetings and candy on the first day of 2022.
The new situation “ahead of the 14th round of corps commander-level talks later this month is yet another attempt to defuse the 20-month military confrontation,” The Times of India reported.
Whether the tensions will see a clear and continued easing requires further observation, but it is certain that an improvement in bilateral relations is mutually beneficial and would be in line with India’s difficult recovery, especially when the South Asian economy has been hit hard by the COVID-19 pandemic.
Without a solid recovery yet from the first two rounds of infections with the novel coronavirus and its Delta variant, the South Asian country now faces new risks from the rapidly spreading Omicron variant.
According to the latest local media update on Monday, India has reported 33,750 new cases of COVID-19 and 123 deaths in the past 24 hours. Indian Prime Minister Narendra Modi has repeatedly urged the country’s population to follow COVID-19 protocols.
Meanwhile, global brokers recently downgraded Indian stocks including Goldman Sachs, Morgan Stanley, UBS and Nomura. And in early December, Fitch Ratings cut India’s GDP forecast for fiscal 2022 to 8.4% from the 8.7% previously forecast in October.
The gloomy outlook for the Indian economy is reflected beyond a series of cut indices. Additionally, the country has seen tens of millions of jobs lost during the pandemic as well as increasing pressure from inflation.
It is anything but an easy task for India to pull its economy out of the quagmire. In such a context, what India should think about in depth is its relationship with China. Bilateral economic ties have shown strong resilience despite the pandemic, New Delhi’s efforts to decouple from China, as well as the United States’ efforts to coax India into its anti-China clique.
Trade between China and India surpassed the $ 100 billion mark at the end of October 2021, which might have come as a surprise. Despite the Modi administration’s efforts to economically disengage from China and a series of boycott campaigns for products made in China, what remains is massive market demand for the products of the manufacturing power.
It is not an easy campaign for India to find alternatives both at home and abroad. India remains heavily dependent on China in around 86 product categories, including consumer electronics, computer hardware and telecommunications equipment, according to industry reports. India’s massive import of mechanical and electronic products from China, as well as Chinese investments in the country’s smart phone sector, not only met the demand of the Indian market, but also helped boost markets. Indian exports to third countries.
New Delhi might find the trade deficit with China undesirable; however, boycotting products made in China or clamping down on Chinese investment are clearly not the right choices. On the contrary, India is suggested to improve its economic relations with China in various ways, including intensifying cooperation in industrial supply chain. In addition, the two could also explore new areas where Indian producers could increase production to meet demand in the colossal Chinese market and reduce the trade deficit in a sustainable and mutually beneficial manner.
In a wider context, strengthening industrial integration has become an irreversible trend in the Asian region. The recently implemented Regional Comprehensive Economic Partnership (RCEP) will significantly boost economic integration and the development of economies under the agreement. The weakening of economic ties with China can only be isolated from the regional value chain and stifle its own growth prospects.
The author is an editor at the Global Times. [email protected]