Big Business is a moth drawn to China’s flame

Given the strained relationship of the past 50 years between India and China, nobody will ever go bankrupt betting against a dramatic reconciliation or an overnight diplomatic détente between the two Asian giants.

For all the ritualistic articulations of goodwill during Premier Wen Jiabao’s visit last week, and for all the spin put on the billions of dollars in trade agreements signed, the unvarnished reality is that the two countries are, if anything, drifting farther apart at a political level.

In addition to the long-festering border dispute, new wounds are constantly opening up. China was unwilling to allay Indian apprehensions regarding its motives in recent years in questioning Indian sovereignty over Jammu & Kashmir (by offering stapled visas to Kashmir residents travelling to China).

India, in turn, held back from its ritualistic affirmation of a ‘one China policy’, which would have acknowledged Taiwan and Tibet as inalienable parts of China; in substantive terms, however, India’s action doesn’t amount to much — except to signal disquiet over China’s intentions.

Eager to showcase some forward movement, the two sides are tom-tomming the exponential growth in bilateral trade in recent years, and have set an ambitious target to elevate it further over the next five years. They also constituted an India-China CEOs’ Forum “to deliberate on business issues and make recommendations on expansion of trade and investment cooperation”.

But betting on bilateral trade to cement the political relationship is a losing proposition, particularly if — as happens with China — that trade relationship is skewed by unalloyed mercantilism and a wilful disregard for international trading rules. The worthy Indian CEOs who will grace the India-China advisory forum will do well to learn from the recent experience of short-sighted Big Business corporations that are flocking to China with an eye on the billion-plus market, but find themselves outwitted and outmanoeuvred by the shifting of goalposts in China to favour local enterprises.

Even when they realise they’ve been robbed of their intellectual property rights — after being forced to transfer their technology as the price for a piece of the China action — these Big Businesses linger on, in the hope that the Pearly Gates of the China market will be opened to them. Worse, in their short-term pursuit of their interests, they become ‘spokespersons’ for China, speaking out against trade retaliation for its mercantilist and protectionist policies — of which they themselves are victims! It serves to advance Chinese trade and strategic interests to the detriment of its trading partners’.

China has demonstrated that it is exceptionally skilled in leveraging its trade clout — and Big Business’ short-sighted, profit-driven dependence on it — for strategic gain. And today, having gained the upper hand on the trade and commercial front, it is asserting itself politically and militarily. There’s a lesson in that for those who see improved Sino-Indian bilateral trade as an antidote for irreconcilable political strains.

All this is not to say there isn’t a case for deepening the Sino-Indian trade relationship. Yet, any effort at advancing bilateral trade should be driven by pragmatic promotion of national self-interest, not short-term, profit-driven interests of corporate entities. Our desperate eagerness to be seen to be improving our trade relations with our trans-Himalayan neighbour comes with the risk that we could end up compromising our interests at a strategic level.