China offensive may put India in a spot: Wolf

CHINA'S FRESH OFFENSIVE in its escalatory spiral against US President Donald Trump's tariff war could potentially push the trade slugfest between the top two global economies to a point of no return, and could end up singeing countries such as India, according to Martin Wolf, chief economics commentator at the Financial Times, London.

- ANIL SASI

He said the possibility of the global trading system getting split is a very plausible outcome after Beijing's latest salvo to match Trump's Liberation Day farrago.

"I mean, it seems to me the (most) probable outcome. With Europe interestingly in the middle. There are three major trading powers. The EU is not of course a major power but it's a very much a major trading power and it looks to me as though it's certain that what the US will say to all the other trading partners is we won't impose these reciprocal tariffs on you that we have temporarily waived if you put a prohibitive tariff on China. I assume that's what's going on. And completely predictably, China is saying, well, if you do that, we're going to retaliate against you. Of course they are! So, the countries will have to choose, it seems to me, whether they're going to be in a bloc with the US or in a bloc with China. And that's going to be a very, very difficult choice for many countries who have extremely important trading relations with both," Wolf said.

This sort of choice, he said, will also apply in some respects to India. "Now, I assume India will choose America for obvious reasons, but it will still be a very difficult choice. And having outright hostile relations with China in economics, as well as on security issues, the Himalayas and so forth, will be a very big issue, I imagine, for India, it's a terrible situation, and should never have been allowed to happen. But this looks to me what is going on. And the whole host of countries, Australia, for example, are going to find all this very, very difficult to handle."