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Sunday, July 25, 2021
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Is Banning Trade With China A Good Idea?

Written by Prakriti Panwar, a grade 11 student.

In response to the brutal Galwan Valley attack by China, many have now resorted to banning Chinese products. On a larger level, the Indian government has been questioning and thinking about its trade with the country as well…

By I Kid You Not , in News Opinion , at June 24, 2020 Tags: , , , ,

Written by Prakriti Panwar, a grade 11 student.

In response to the brutal Galwan Valley attack by China, many have now resorted to banning Chinese products. On a larger level, the Indian government has been questioning and thinking about its trade with the country as well. Union Minister Ramdas Athawale even mentioned that restaurants selling Chinese food should be banned. While all these reactions are highly agitated and spontaneous ones, they might have negative repercussions on the economy.

But why did the talk of banning trade with China even arise?

China depends on its exports for profits. Naturally, if a country stops trading with them, they will not be able to export their goods , which will then lead to a fall in their profits.

When one looks carefully, they realise that almost everything that they own, use, or extract services from are either full or part Chinese. Several companies such as Zomato or Swiggy are funded by Chinese companies. So, can we really ban all Chinese products? Can a border attack be solved by an economic war?

Over the past few days, several state governments have even cancelled the contracts they signed with Chinese companies for construction purposes. These contracts were given to the lowest bidder. Finding a new bidder will obviously be more expensive and , hence, will cause losses as well as delays.

While decreasing trade with China for various finished as well as intermediate goods brings us closer to India’s  ‘Atma Nirbhar’ ( self-reliant) mission, they trade cannot be stopped in the spur of a moment.

Choosing Indian products over commodities such as fresh/packaged food, on a smaller scale is viable. However, this does not work for electronic and pharmaceutical companies. The very idea of trade was born because no nation is completely self-reliant. It is something that benefits both nations.  If this is put to a hard stop, India will suffer way more than China.  Numbers reveal that India will lose 14 percent of its exports, which is far more than what China will lose.

Moreover, the trade ban will not be particularly good for the poor and the middle class, who constitute a large part of the country. Replacing a Chinese product with an Indian one will sell at a higher cost and not everybody will be able to afford it. Hence, both producers, as well as consumers will suffer due to the abrupt transition.

Another thing potential foreign investors look for is reliability. If India does change its trade policies with China this quick, other investors may consider India  as unreliable and refuse to trade in the future.

So, while there is an immense rage among citizens regarding Chinese products and trade, a sudden ban on it will have several unknown consequences. However, on a more basic and local level, one can always choose Indian products over others. In the longer run, a well thought of policy change will definitely be better than a hurried and uncalculated one.

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