In the light of recent events, it felt important to acknowledge the ‘Boycott China’ movement and its growing trend. The result of it is going back in time and starting from scratch.
Trade figures suggest that India is the biggest importer of Chinese consumer goods. India imports almost seven times more from China than it exports to China. India has a huge trade deficit with China. India’s exports from China are merely $16.7 billion, while imports are only about $ 70.3 billion, leaving a trade deficit of $ 53.6 billion.
Also, the fact left unacknowledged is that China’s exports to India account for only 2% of its total exports. So, even if Indians boycott all Chinese products, it won’t make a huge impact on China. Data also suggests that China is India’s largest trading partner, but the trade is heavily skewed in favour of China. Thus, initiating a trade war with China when India’s manufacturing ability is limited is not going to favour India.
Even if we wanted to, it is nearly impossible to keep China out of our daily lives. There is some amount of China in every product that we consume. The irony is that the laptops and mobile phones we are using to forward messages of ‘Boycott China’ are themselves made in China.
The answer to this is practical economics. China can produce most of these goods in a cheaper and more efficient way than India. Thus, the average consumer does not care whether the product is made in China or somewhere else, if he is getting the finest product at the cheapest price.
The only way to boycott Chinese goods is if we produce an alternative product at home, which is far from ideal for India. Even after knowing all these facts, if we boycott Chinese goods, we would be travelling back in time, and this would effectively harm our overall social welfare.
Not to forget, our economic condition is suffering since a long time now. It is essential to consider India’s national interest. If we define our national interest as the greater good (higher income) for the greatest number of people, then import substitution would just not work. Imported products allow consumers from all income levels the ability to consume these products at lower prices and retailers to maximise on their sales.
China’s actions are a result of political conflict and largely needs a political resolution. If we were to boycott trades from every country that harms India in the geopolitical realm, we would be left with no one to trade with. Harming one’s own citizens in order to extract revenge on another country seems to be an ill-advised move. Everyone can take a call on what they want to buy or not.
In conclusion, this dependence on China is not good, but as of now, we do not have a comparative advantage in producing goods we import from China. However, with the right policies and better implementation, we can produce some items or contribute to a greater amount in the global production value chain. We need to improve our productivity, promote skill development at a larger scale, free up labour laws, fix our credit system, and the list goes on. It is critical to think wisely before we follow a path with the help of some logical reasoning.