In recent years, amidst profound shifts in the global geopolitical landscape, China and India have grappled with new roles and challenges. Against the backdrop of a dynamically changing world, the relationship between these two nations is evolving significantly, writes ANBOUND Think Tank founder Kung Chan, one of China’s renowned experts in information analysis.
The current status of China-India relations is characterized by a complex tapestry of contradictions and enduring disputes. These conflicts extend beyond the domains of geopolitics and diplomacy, casting a significant impact on bilateral investments and trade alliances.
In the economic domain, India is known for its long-standing tradition of trade protectionism. Indian government agencies often restrict the development of foreign companies under the pretext of “tax issues” and this has disrupted Chinese companies like VIVO, OPPO, and Xiaomi, as well as South Korean giant Samsung. Xiaomi, in particular, has frequently faced interference from the Indian government. In 2020, India blocked Xiaomi’s Mi Browser. In 2022, the smartphone maker was asked to pay 6.53 billion rupees in import taxes. In 2023, India’s financial crime agency continued to withhold 55.51 billion rupees from Xiaomi, citing violations of the country’s foreign exchange laws.
The current pattern of India-China relations is likely to persist for the long term. Given the current trajectory in the Indian market, Chinese enterprises and investments might encounter challenges spanning economic, trade, and investment sectors.
One possible approach for China in response to this situation would involve the restriction of Indian-manufactured Apple smartphones from entering the mainland Chinese market. This would be justified under various pretexts, such as unfair cost competition, worker rights violations, alleged support for terrorism, conflicts with climate change goals, or any other reasons deemed suitable, while simultaneously permitting non-Indian manufactured smartphones to be sold in China. This action would explicitly point to the rationale behind the ban, which primarily revolves around India’s tax-related justifications, impacting not only Xiaomi smartphones but also entailing the seizure of a significant portion of the company’s profits.
From a geopolitical and strategic perspective, this measure would aim to exert pressure on the Indian government through Apple. It would convey to the Indian government the substantial risks associated with its measures against Chinese companies. Even if the Indian government remains indifferent to these risks, its client groups would undoubtedly feel the repercussions. This signifies a potential loss of access to the Chinese market, and if India were to lose this market, it would necessitate a shift in its competitive dynamics, leading to a more direct rivalry with Western markets. The ramifications of such direct competition would become apparent for India in the near future if such a move is taken by China.
This hypothetical approach would be significantly influenced by geopolitical considerations. It arises as a strategic response to India’s specific measures aimed at Chinese enterprises, occurring alongside a surge in nationalist sentiment within India. If China chooses to implement this move, it would entail not only the insistence on the return of withheld funds and assets belonging to Chinese companies but also a demand for compensation to address the losses incurred in India. This multifaceted approach underlines China’s intention to rectify economic imbalances resulting from targeted policies in India.
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