The border tensions between India and China are increasing day-by-day. More than 20 Indian soldiers have lost their lives in Galwan in deadly faceoff against Chinese Army. Because of this, the sentiment of “Boycott China has started trending again in India. To express this emotion, some people are even throwing their Chinese TVs out of their homes. While some are breaking Chinese toys. If we want to make this Boycott china movement successful, then it is not going to happen by breaking TVs and toys. We need to understand the root causes first. How Chinese Communist Party wants to dominate the world and what dirty tactics they resort to for achieving this- Economically, Politically and Geographically.
Don’t harbour the misconception that only India is facing such problem. The border intrusions that China is doing in India. China is doing a similar thing with Taiwan simultaneously and what are the several tactics that China resorts to with other countries economically. Today, China is not just a threat for India. But poses a danger to all the democratic countries across the world. I am only referring to the Communist Party of China. A party that has established its complete dictatorship over the people. To understand the China’s dirty tactics first you need to know about ‘Trade’ and why would any country trade with other countries?
Basics of Trade:
Trade is a basic economic concept involving the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties. Trade can take place within an economy between producers and consumers. In financial markets, people trade securities such as shares, currencies, commodities and derivatives.
International trade allows countries to expand markets for both goods and services that otherwise may not have been available to it. It is the reason why an American consumer can pick between a Japanese, German, or American car. As a result of international trade, the market contains greater competition and therefore, more competitive prices, which brings a cheaper product home to the consumer. There could be three main reasons to any country trade with other countries.
First, the unavailability of a certain product in your country while it is available in another country. For example, bananas were not available in Britain, in the UK, prior to 1633, because their climate was not suitable for growing bananas. So, they would want to trade to import bananas.
Second reason could be the availability of a product or service in another country, at cheaper price as compared to your own country. A good example of this would be the call centers in India. US companies have set up their call centers In India because it’s cheaper for them to do so here, as compared to the US.
Third reason could be the availability of a product or service of a better quality in another country. That is why you would want to trade with them. So, advantages of trading are very clear. Consumers will have more choices and have access to cheaper goods.
.Every country will be able to specialize in its own indigenous areas and be able to build better products and this could benefit all the countries internationally. So economically it’s good for every country. Infact, trading is so beneficial that a research indicated that, for every 1% increase in the trade to GDP ratio, there is a 0.47% increase in the GDP to per capita ratio of that country. So, there is a clear-cut relation here- Trading increases the GDP of a country.
But this is a very simplistic explanation and there are many other complexities in the real world. For instance, what about developing and underdeveloped countries that cannot develop specialization in any sector on their own? If a country neither has a great natural resource, nor a specialization in anything. So they would not be able to export any product or service to other countries. They would only have to import. Under these circumstances trade will only result in losses for that country.
In such a situation several developed and developing countries levy import taxes, that are called tariffs. Taxes would have to be paid to import a product from a country abroad. This would make that product more expensive for the consumers. Imposing such taxes ensures benefit to the local industries of the country. There could be several other reasons for imposing tariffs. For instance, if a country wants to pressurize another country regarding a geopolitical decision, or if a country disapproves of an economic decision of another country. So, tariffs are also imposed for mounting pressure.
Trade Strategy of China:
China joined the World Trade Organization in 2001. Certain conditions were imposed upon China while joining the WTO. China promised to liberalize and open up its economy further. So that trade could be easily conducted between China and the other countries. But today, 20 years later, China has opened up its economy to some extent. But China has aggressively misused the WTO for its own benefit.
You can find made in China products in almost every country across the world. This is the extent to which China exports its products abroad. As far as imports go, the largest social media networks in the world- YouTube, Facebook, Google, Amazon are nowhere to be found within China. China has not allowed them to enter its realm. This is a one sided trade, in a way China allows the export of made in China products very easily. But restricts the entry of other countries within their own realm
Instead, China copied these companies and pilfered their technology and created copycat clones of these companies within their country. Today, Youtube is replaced by Youku, Amazon by Alibaba, Google by Baidu and Facebook by Weibo. These are all copycat companies that stole the entire concept and ideas and have created their clones to prevent the other companies from reaping benefits and to prevent the other countries from benefiting from trade.
China has indulged in IP theft -Intellectual property theft- in almost every sector. No matter which country a new technology is introduced in, clones will be developed in China. Normally it would not have been possible in a democratic country. For instance, if a company of the UK wishes to clone the product of a US company. Then the US company can file a case in the courts in UK. But there’s no question of court cases in China. The dictator government in China promotes these cloning companies and keeps them protected from these things. Infact, the rules have been twisted in China to ensure benefits to these companies. For example, according to one such rule, if any foreign company wants to set up a business in China, then they will first have to transfer their intellectual property to their Chinese partners. The European Union Commission had filed a complaint regarding this in the World Trade Organization in 2018 to highlight how China misuses these things. China forces the foreign companies to forfeit their technology to China. They would have to forfeit it for free if they wish to do business in China. It has been estimated that USA incurs a loss between 300-600 billion dollars annually due to this pilferage by China.
Dumping refers to the export of a locally made product at such ridiculously low prices. So that it would drive the local industries of that country out of business. Your market share would increase and you would gain monopoly in that industry. And, you would then take control of that particular industry in that country. For instance, take the example of the toy manufacturers of India who manufacture toys at a certain cost. But Chinese companies come in and sell these toys at much lower prices. So, the consumers would prefer to buy the less expensive Chinese alternatives. If this continued for a couple of years, if nobody wishes to buy the Indian toys. The Indian toy makers would be driven out of business and the Chinese would gain monopoly over the Indian toy industry.
You might wonder how China is able to manufacture goods at such low prices that enables it to indulge in dumping. There is a simple answer to this- The Chinese government supports dumping. The Chinese government provides export subsidies to the companies. They are provided with money and subsidies to export and dump in other countries. USB sticks, calculators, Vitamin C and E, nylon cords, measuring tapes, CFL lamps, caustic soda, kitchenware, tableware, solar cells- This is a list of items that China is believed to be dumping in India. Indian government has begun a review of them. A news report of yesterday stated that China has begun dumping of a very important medicine in India and the Indian government is considering a tax hike on it to stop the dumping.
India is not the sole country that is facing this problem. Investigations are currently ongoing in Australia over how China is dumping steel and aluminium in Australia. In fact, European Union has already increased the import tax on the steel that is coming in from China. Their investigation revealed how China was dumping steel in Europe and USA. So, due to the aforementioned reason and the dumping tactic, China is able to export so much more than what it imports today. Its trade remains in surplus when compared to most other countries. The local industries of the rest of the countries are destroyed by being driven out of business and makes the other countries dependent on itself. These are the methods used by it. The Indian government should keep its eyes open and remain alert and keep a tab of all the things that China is currently dumping in India. India need to raise taxes on them accordingly and stay vigilant regarding these things.
Currency Manipulation Strategy:
China is accused of deliberating undervaluing its currency in comparison to the US dollar in order to maintain its cost advantage. So, that the cost benefit of 30-40% is maintained whenever someone wishes to buy a made in China product. The low value of the currency that it maintains would not remain so, if viewed in the free market. So, this is another accusation that is leveled against China. As a result of these reasons- the unfair trade practices, dumping, pilferage and the currency manipulation done by China. These are the reasons due to which Donald Trump had declared a trade war against China. Donald Trump had hiked the import tariffs to prevent China from harvesting these benefits.
Politically, the Chinese Communist Party is trying to exert its influence in the internal affairs of the other countries through nefarious means. A great example of this is Australia. China is trying to manipulate the people in the internal politics of Australia. It has been alleged that China made several thousand Wechat accounts to defame and poke fun at the Australian Prime Minister. And not only this, China is accused of building their spy networks in the Australian universities to spy on the Chinese students.
According to a news report of last year, a Chinese student was studying in the University of Queensland, Australia. He participated in a protest against the Chinese government that was being held in Australia. The Chinese government reached his family home in China, pressurized the family to keep their son under control and threatened them with dire consequences. This is how the Communist Party of China is threatening the parents of the students studying in Australia. Australian Strategic Policy Institute released a report last week which revealed how China is employing covert and deceptive methods to infiltrate.
Taking advantage of the poverty of the African countries, China constructs highways, dams and large infrastructure projects at the expense of crores. That is loaned out to them and China is well aware that, these African countries would not be able to repay it back. When these countries are unable to repay their loans, China buys strategic locations in these countries. It assimilates them by physically occupying them. If there is an important port, China takes over it by sending its military and then puts it to its own use. This is called “debt trap of African countries by China”.
It destroys a country completely by trapping it in debt. There are several examples of this, take the example of Zambia- a country in Africa. A 2018 report revealed that the Zambian government was selling off the entire control of its National Electricity Company to China. Because it did not have money to repay China. The biggest and the most important port in Kenya- port of Mombasa was forfeited to China because Kenya did not have money to repay China. Nigeria is set to become the next country to fall into the debt trap of China.
A similar thing is happening with several Asian countries as well. An island in Maldives has been sold off to China completely. Hambantota is a very important, strategic port in Sri Lanka. Sri Lanka first got China to construct it and when Sri Lanka was unable to repay China. China took up the entire port of 15,000 acres on lease for 99 years. This port has a very strategic location which is extremely close to India. China can use it for anything- for its military warships, its navy or even its army.
China is questioned on the same premise over its Belt and Road initiative. It is believed that, the road that China wants to construct through so many countries would basically be used to lure countries into debt traps and would then occupy their areas for its military use. Furthermore, there is no free media or opposition in the country due to the dictatorship in China, which could hold the ruling party accountable in the wake of corruption or wrongdoing. This is the reason why, when the diseases like COVID 19 spread outside from their country nobody knew anything about what they had done or whether all information had been disclosed or not. There is no free media to report that. So, these are the ways in which the Chinese Communist Party is exerting its influence on the rest of the world.