Some days back India banned 59 Chinese apps, TikTok being one of them for the reasons of national security. This had an expected effect on the public discourse as Indian mainstream and social media went berserk. Almost all political sides became bombastic about the app ban. Some calling it a masterstroke while some calling it trivial. Some cried for the ‘unemployed’ youth in India’s ‘small towns’ while some called the government out for not acting in a more stringent manner. But what is more important is that it caught the dragon’s attention.
The Chinese foreign department’s response to India’s Chinese app ban is evidence enough of the fact as it pushed back by saying that they are ‘strongly concerned by India’s actions’. Not only that but the Chinese global mouthpiece The Global Times yet again went bombastic about how India needs China in the larger scheme of things. This begs the question, why was China irked by this move? It is important to see this move in a certain context. I believe this move is a cog in the larger retaliatory strategy that India is using and probably will be using to send a very strong message to our northern neighbour.
CHINA AND THE WORLD
We have been scratching our heads to understand why is China doing this. Why is it picking fights with its neighbors all at the same time? To add my two cents to this thought I believe that barring certain short term political compulsions, this Chinese behaviour is more to do with how China looks at the world.
Most of us are familiar with China’s Middle Kingdom complex wherein it feels that it is the most superior and rightful ruler of the world. As Howard French mentions in his book, the Chinese followed a policy called as ‘barbarian management’. This was the cornerstone of ancient Chinese foreign policy. To control the barbarians, the Sage emperor punished those who came to invade and protected themselves when they left. If attracted by China’s civilization, they would be treated with courtesy.
The Chinese followed something called a tribute system where the ‘lesser people’ used to send embassies regularly to pay ritual submissions before the Chinese emperor. In return the emperor would grant trade rights and would include them in the larger civilizational fold. The sagacious Son of Heaven, the Chinese emperor was willing to intervene anywhere in the world where the Chinese hegemony was challenged.
This all came to a grinding halt when the Chinese empires started to corrode from within. The British and the French assaults proved to be the final nail in the coffin. The Chinese have been crawling their way back to dominance after the ‘century of humiliation’.
It is evident from the fact that the Chinese have always felt a moral, intellectual and civilizational superiority over the rest of the world and the thought is ingrained deep inside the minds of the Chinese people. They are are not willing to back down from thrusting this superiority down others’ throats if and when it is possible.
CHINA AND WORLD TRADE
Modern day China though is led by the axiom that was laid down by the late Deng Xiaoping- ‘Observe calmly, secure our position, cope with affairs calmly, hide our capabilities, bide our time, maintain a low profile and never claim leadership’. This motto has propelled China to become a powerhouse it is today. The world watched in awe as China became the ‘world’s factory’. It was able to achieve this by applying the Asian miracle model to the scale at which China operates. A combination of suppression of wages, high savings, massive investments in infrastructure, a weak currency and a solid industrial policy catapulted China to become the second largest economy in the world. But this is where the good things end.
The Chinese growth model essentially depends on China exporting excess production out of its country due to the massive industrial capacity it has built. Which means that relative to China the rest of the world will have to absorb all the Chinese goods increasing their trade deficits and making it depend on Chinese goods. This is precisely what happened in India when we slashed all duties on electronics imports rendering the market open for anybody who wants to sell in India. This resulted in a deluge of cheap Chinese electronics in India effectively pushing India’s trade deficit deeper into the red. China has also artificially suppressed its internal consumption of foreign goods by not opening up its markets for outside companies making trade with China a one way street.
Many experts claim that China is the future engine of growth based on the fact that it did provide a substantial help to the Asian economies post the 1997 Asian crisis. Though economic growth is achieved by creating new demand so that more and more goods and services are consumed thus providing economic opportunities to the the people who provide them. Surplus countries like China whose economy is heavily dependent on exports absorb the new demand, thus benefiting only itself.
This effectively makes the Chinese richer at the expense of the rest of the world. China engages in this blatant trade malpractice because it believes that the nations it trades with are mere vassals of the great Middle Kingdom.
TRADE AS A WEAPON
As we have seen, the Chinese growth model is dependent on other countries absorbing the cheap Chinese imports. It also implies that China in its current form is heavily dependent on external demand for it to pass on its excess capacity onto. But this model has run its course now as the US and EU the two main deficit markets which used to buy most of the Chinese exports, are starting to look inwards as the deep trade deficits are starting to hurt their respective economies. China has been using trade and industrial policy as a weapon against the whole world. Use of currency manipulation, debt trap diplomacy, dumping Chinese exports to drive the local industries down are not new to China. Of course the Chinese have not invented these techniques but they have definitely taken them to a different level. India is waking up to the fact just in time. Some of the policy decisions taken have shown a resolve that was absent during the previous administrations. Some of the decisions include,
- Chinese app ban
- Review and scrutiny of Chinese investments in India
- Loss of infrastructure projects for Chinese companies
- Reducing dependence on Chinese imports
- Encouraging manufacturers to set up shop in India
- A nation wide anti China sentiment
- Re-thinking of our 5G policy
And much more to come. This may not mean a lot in absolute terms but the symbolic importance is immense. It shows that India can cut off the Chinese from accessing Indian consumer markets.
WHY BAN TIKTOK?
China as a country is a two legged table. Which means that the national fabric of China is dependent on two main factors viz. A strong growing economy and nationalism. As China enters an era of long term structural adjustments, involving a long delayed departure from dependence on exports to a more sustainable approach of consumption, it is going to enter a phase of a much slower growth. Which means acts of blatant nationalism are only going to increase.
All of the above creates a context for India’s response to the naked aggression that China is making towards it. The app ban has to be seen as a step in a multi-pronged non military deterrence against China. As the world runs out of demand, India remains the only country large enough to absorb global exports. The Chinese app ban sends a message that India can easily close off potentially the future biggest consumer market to Chinese companies hurting not only their economy, but also their social fabric.
We as a country need to make exceptions like these for our own national security. We also have to observe calmly, understand the adversary, bide our time and build our capacities while we continue to do some ‘barbarian management’ for ourselves.