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As Xi Jinping Mends Fences with Donald Trump, Can India Still Take Advantage of US-China Trade War?

While the trade war did provide several opportunities, experts believe India seems to have missed the bus of which other smaller economies in the region took advantage.

Uday Singh Rana | CNN-News18@UdaySRana

Updated:October 12, 2019, 10:50 PM IST
As Xi Jinping Mends Fences with Donald Trump, Can India Still Take Advantage of US-China Trade War?
PM Narendra Modi gifts a hand-woven silk portrait to Chinese President Xi Jinping at Mamallapuram on Saturday. (PTI)

New Delhi: When Chinese President Xi Jinping was smiling for the cameras in Mahabalipuram with Prime Minister Narendra Modi, his Vice-Premier and Chief Negotiator Liu He was in Washington DC in the United States. After an intense round of parleys with the Americans, Beijing finally scored something of a victory. US President Donald Trump announced they will soon sign a “partial trade deal” with China, which will likely be inked by the two presidents at the Asia-Pacific Economic Cooperation (APEC) summit in November.

This has led to some easing of tensions on both sides, but third-party economies, including India, will be watching this closely. The US-China trade war, raging since 2017, has meant that other economies have taken advantage of the situation. But is the trade war coming to an end with “Phase One” of the deal? And can India still take advantage?

Jabin Jacob from the Institute of Chinese Studies said the trade war is far from over.

“It’s not going to end, the issues at hand are very complex. This (the announcement of a partial deal) is just temporary reprieve for the Chinese,” he said. “The Trump administration believes that China has been conning the system and under Trump, China’s con is up. China knows this. So even as they seek to mend fences with the US, they’re trying to explore other markets, including those in Africa.”

Jacob added, “There is also a realignment or a resetting of the US-China dynamic. Today, China sends technology to the US and the Americans send farm produce to China. This is a reversal of the trade relationship.”

Geopolitical analyst Pathikrit Payne said, “The trade deficit between the US and China is nearly $400 billion. Plus, Trump is facing an election next year. He will want to act tough. So, China will need a big market and India presents an opportunity.”

While the trade war did provide opportunities, experts believe India seems to have missed the bus that other smaller economies in the region took advantage of. “The countries in Asia that have taken the most advantage of the trade war are Vietnam and Bangladesh. India seems to have missed the bus because its own house was not in order,” Jacob said.

This is reflected in the growth figures as well. While India continues to fight its economic slowdown, Bangladesh emerged as the fastest growing economy in South Asia. The Bangladeshi economy grew at a rate of 7.9% in 2018 and its forecast for 2019 was a growth rate of 8.1%.

Jacob believes the answer lies in India’s federal structure.

“India needs to give more control to states and trust in the federal structure. India is a federal country that is very unitary in reality. China is a unitary country which is very federal in reality. Each Chinese province has its own foreign minister,” he said. “In India, the Ministry of External Affairs (MEA) has a state’s department but the MEA doesn’t even have an office in every state. We don’t need to keep so many tabs on states.”

“Most major schemes of the Indian government in the last decade or so are monitored by the District Collector,” Jacob further said. “We don’t need to bypass the states like that. We should, instead, let them negotiate on trade matters on their own.”

The impact of this will also show on India’s geopolitical and strategic interests.

“If India is able to exploit China’s position, it can get China to tweak its position on several other key geopolitical issues – these are positions that India finds undesirable. An economically stronger India will be able to demand a tweak in the Chinese position on Kashmir and Pakistan, for example,” he said.

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| Edited by: Moonmoon Ghosh
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