Boycott of Chinese goods: How it won't help India but can harm China

In the past two years, various right-wing organisations have called for boycott of Chinese goods to teach China a lesson for creating trouble on the border and aiding Pakistan.

Now once again, when India and China are locked in a standoff on the Sikkim border, many RSS-affiliated organisations have decided to boycott Chinese goods. At a meeting in Agra on July 8 and July 9 convened by Bharath Tibet Sahyog Manch, an all-India Tibet support group, many RSS supporters and others resolved not to use Chinese goods.

In a mistaken belief, many Indians think boycotting Chinese goods will put pressure on China. On the contrary, it will harm India as India is dependent on Chinese imports.

How?
India's trade deficit with China rose to $46.56 billion last year. China's exports to India totaled $58.33 billion, registering a meager increase of 0.2% compared to $58.25 billion in 2015. India's exports to China dropped 12% from 2015 to $11.76 billion.

India exports less to China (mainly raw materials) and imports more (mainly electronics and other manufactured goods which are in high demand). India's pharma sector has critical dependence on Chinese imports used in drugs manufacturing.

China's exports to India account for only 2 per cent of its total exports. So even if Indians boycott all the goods imported form China, it will not make as big an impact on China as to bring it to its knees before India.

Of course, China needs new markets for its manufactured goods, and India is one of those new markets where its electronic goods, especially smartphones, have found a large market. But China can find markets in other Asian countries and even in Africa. It is also trying to create a market for its good in Europe. It is in no way dependent on India.

Then is the boycott a totally useless idea? No.
Though the boycott can have very little direct impact, it can harm China in the long run.

China is emerging as a global power and it is trying to portray itself as a responsible economy. Any negative propaganda against China or any escalation in India-China conflict will harm China's bid to portray itself as a progressive nation and not an authoritarian dictatorship. This portrayal helps China attract western countries and take into confidence smaller Asian and African countries for trade and investment.

China's dream to emerge as the biggest global power is best exemplified by its One Belt One Road (OBOR) initiative where it tried to present itself as a responsible global economic force which is willing to work for greater economic good of all. An trade war with India, its biggest neighbour, will not sit well with China's image makeover.

But that's true for all kinds of conflicts and not just a boycott of Chinese goods. In the short term, the boycott is more harmful for India than China.