Owing to India’s ambitious “Make in India” programme and subsequently leading to increased local manufacturing, the Chinese Communist party (CCP) has started to target India’s way of promoting indigenous businesses and calling it “protectionism” by means of curbing imports. Although India genuinely looks forward to lower its import reliance, it doesn’t qualify to be implementing protectionist policies since all developing nations, more specifically China, engage in self-sufficing tactics from time to time. Protectionism is the practise of implementing rules, regulations or laws with the intent of protecting domestic industries from foreign competition; and China has adopted and exercised all forms of it – be it tariffs, quota/volume limits, voluntary export variants or administrative barriers like regulations.
On one hand the CCP led China talks about liberalising the economy and favouring a market based regime, on the other hand it has strategically opened its economy only to a few sectors which it considers crucial for growth and development like the massive labour-intensive manufacturing units, technology and infrastructure. This too became a necessity to do when its closed economy failed miserably in the few decades following its independence. Since that juncture China has very slyly cut down on its protectionist policies and engaged selectively with foreign investors only if it could get a better deal out of it. For example, foreign markets can invest in China only if they can transfer technology or if the recipient nations would agree to “vote” in China’s favour at international platforms like the UN. Add to this the highly restrictive policy environment in China, lack of transparency and a non-rule abiding nation which has invented its own version called the ‘Piecemeal Liberalisation’ approach.
China was successful to a long extent due to its cheap labour supply but what we’re witnessing today is that an increasing number of multinational companies are shifting investments away from China. Major reasons being cited by these foreign investors include CCP’s protection against Chinese rivals, anti spying laws (quite ironically), security controls, red tapism and the lack of ease of doing business. The centralisation of power in China has led to the business environment becoming more and more “political” in China with abrupt raids in offices and unexplained aggressive actions taken against business people. China is actively engaged in the world’s largest chip war and due to Beijing’s over promotion of national self-reliance, it has stopped using some foreign products like Micron Technology’s chips, which is the biggest US maker of memory chips. In order to promote protectionism, China has also recently announced that it will ban the exports on gallium and germanium, which are essential components for the manufacturing of semiconductors.
Filled with naivety, CCP thinks that India and the world is practising protectionism as a means to counter China’s rising growth but what it needs to understand is that Chinese economy is showing chronic signs of spiralling down which is driving away potential investors clubbed with the human rights violations and other authoritative tendencies practised by the CCP is a great hurdle which stops people and companies to have a desire to work with China.
RLA condemns the CCP-China sponsored smear campaign against India and advises the CCP to accept India’s rise as a manufacturing hub and learn a thing or two from India on how to drive economic growth without subjugating and dehumanizing people, like they do in China.
