What matters more in international relations? What shapes the contours of bilateral ties in contemporary times? Certainly trade is an important factor but it is not the most important factor.
It is always about the engagement on strategic levels that defines bilateral relations between countries or the international alliances of groupings of countries, be it US-Israel or US-UK or NATO and other similar ties and alliances. They have been rock solid ties weathering varying seasons with equal fervour because the cornerstone of these relations have been strategic concerns. Historical linkages are an added advantage.
Though NATO has seen some trouble recently with US President Donald Trump raising objections over skewed funding contribution in the world’s most formidable military alliance between countries where the US is the largest contributor, NATO is still sailing smoothly with regular high level US visits to the NATO headquarters at Brussels.
In contrast, trading blocs like WTO, NAFTA, ASEAN, APEC, SCO and so on are basically about commercial engagements and though have increasingly become important in a world globalized by economy, cannot replace the ties built on strategic interests, especially in the times of crisis, like prolonged border standoffs or any aggression inimical to bilateral ties.
Also, when countries are globally important and are slated to become poles in a multi-polar world of future, like India and China are, what is going to define their diplomacy and international politics is how they cultivate their strategic ties.
Because loss of commercial interests can be met with forging other ties and alliances but there is no replacement for a strategic tie that gives a country sense of security or tools to secure its borders and skies.
That is why China doesn’t matter for India in case the ongoing border tension in the Sikkim Sector between two countries escalate to severe levels resulting in localized, limited scale military hostilities (because the two nuclear powered nations cannot afford a full-scale war).
China is basically a country engaged in trade relations with India. Relations have failed to go beyond that. There are no cultural ties and people to people contact. Defence and other strategic elements are non-existent from the table. Coupled it with the non-existent India-China bilateral trade in services. All these factors make India to easily look beyond China when it comes to suspending ties.
The bilateral trade between India and China was around $71 Billion in 2016 with a trade deficit highly skewed in Chinese favour – $47.8 Billion. India basically exports diamonds, cotton, yarn, organic chemicals, iron ore and copper worth $12 Billion (2016). Chinese export to India includes fertilizers, antibiotics, electrical machinery, equipments and organic chemicals and the 2016 worth was $59 Billion.
When we see the items of import and export, especially in the context of the stagnating Chinese economy, it is quite clear that India can easily do away with its miniscule Chinese export. But it will be difficult for China to ignore India, the world’s fastest growing large economy now for many quarters. Add to it India’s projected middle class base of around 450 million people and the country becomes a promising market for any manufacturing hub like China.
The trade deficit with China doesn’t hurt us (and won’t hurt us), at least in the near future, till the country reaches to a stage where unemployment becomes chronic and threatening for the country’s weaving; till the time we have ramped up our infrastructure to be able to make for any future contingency on our manufacturing needs. Till then, it’s like we have outsourced our manufacturing needs to countries like China (and with manufacturing bases in many other countries, we can easily find alternatives).
But China has not this advantage. It is already the manufacturing engine of the world with its majority of population engaged in those small or large factories supplying to the world. They are as dependent on the domestic Chinese consumption as the international demand.
With a slowing down economy, the domestic consumption in China is going to ease and its manufacturing hubs are going to be ever more dependent on big overseas markets and India is a big imperative there. It is important to maintain China’s social fabric with flow of jobs and gains of economy in the society and is going to be must for its behemoth economy that needs global markets to lubricate its tentacles. Just a corollary would suffice to prove the point here. Four Chinese manufactures, Xiaomi, Lenovo, Oppo and Vivo, are in top five of the Indian smartphone market. India can easily find alternative smartphone manufacturers with a strong domestic industry to fill the gaps. But these Chinese manufactures cannot find a market like India that has emerged as the world’s fastest growing smartphone market.