Boycott of Chinese goods

Dr. Ashwani Mahajan
As per the reports coming from various quarters, sale of Chinese goods has gone down by 25-30 percent in the recent weeks. It’s being said that traders who import goods from China have already suffered heavy losses. Traders also say that given public position about Chinese goods, they would rather not import Chinese goods, next time. These reports say that this is the effect of campaign on social media such as WhatsApp, Facebook, Twitter etc., against unjust stand of China of not allowing Masood Azhar to be declared international terrorist in United Nation and blocking of Brahmaputra water against India. It’s notable that imports from China has been increasing in the last three decades and Chinese imports have increased from merely US$ 0.015 billion in 1987-88 to US$ 61.7 billion in 2015-16. Since exports from India were hardly US$ 9 billion in 2015-16, Chinese trade caused a deficit of nearly $US 52.7 billion in 2015-16. It may be noted that deficit from trade with China accounted for nearly 45 percent of total trade deficit of India, that is, US$ 118.3 billion.
If we leave aside exceptional period between2000-01 and 2002-03, when India’s balance of payment turned positive; India has experienced increasing deficit in the balance of trade and balance of payment on current account. Country’s deficit in BOT reached $US 190 billion and current account deficit in the BOP at 88 billion in 2012-13. Though, in the recent years due to declining oil prices, both trade deficit and balance of payments deficit have come down to US$ 118.3 billion and 22 billion respectively, country is yet not out of payment problems and rupee is still under huge pressure. Our foreign debt, which was only US$ 101 billion in 2001, reached US$485.6 billion by 2016. Every year country has to shed huge amount as interest on this debt, which further worsens our debt.
Now when the people of India have decided to boycott Chinese goods, even on the occasion of Diwali, the impact could be significant on imports from China. It is true that we import many intermediate goods and accessories, components and machinery, apart from finished goods. At present boycott is limited to the consumer goods, but if the same public sentiment continues, it is possible that the effect of boycott may be felt on the import of spare parts and machinery. The first effect will be on imports and the trade deficit. Today, when 40 percent of trade deficit is due to Chinese imports, a mere 20 percent reduction in Chinese imports may reduce our trade deficit by more than US$ 12 billion. Lesser imports from China may boost production and employment in the country. If 20 percent of Chinese imports are replaced by domestic production, our production may increase by rupees 130 thousand crores. Smaller trade and balance of payment deficit may reduce pressure on rupee. Today, when our imports are nearing 20 percent of GDP, 10 percent improvement in rupee may lower our inflation by nearly 2 percent. Prices of petroleum products and host of other imported goods may be cheaper.
Impact on China
Critics may say that India is not a very important trade partner of China, as Indian imports constitute hardly 3.4 percent of total exports of China. Today China’s exports total US$ 1845 billion, out of which India’s imports from China are hardly US$ 61.7 billion. However, we shouldn’t forget that at one point of time China’s trade surplus had reached US$ 627.5 billion, which has now come down to meagre US$419.7 billion. If we see Indian trade provides more than 12 percent of trade surplus of China. Therefore if Indian imports from China come down by even 20 percent, impact on China would be significant. Experts believe that declining exports from China is putting pressure on Chinese yuan. It’s notable that Chinese yuan has reached the weakest level in the past 6 years.
We witness an unprecedented feeling among the people of independent India with respect to boycott of Chinese goods; as people have never shown such feelings against Imports from any country except during war for independence, namely ‘Swadeshi Movement’. There is almost unanimity on this issue in the country, except for lone voices opposing this, as they argue that this may impact Indo-Chinese relations. But this is also a fact that the way official Chinese media is reacting to this boycott, even terming it as ‘barking dogs’; it seems that the same has started impacting China. This boycott call may even dither other countries also, which see India only as a market and continue to hurt our national and strategic interests at international fora and otherwise.
(The author is a Associate Professor, PGDAV College, University of Delhi)
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