Can India Weaponise The $110 Billion Bilateral Trade With Its Aggressive Neighbour?

Can India use an economic offensive against China to persuade its aggressive neighbour to restore status quo ante on the border?

- Raj Chengappa

Just before US President Donald Trump launched a trade war against China in 2018, he reportedly told his treasury secretary Steven Mnuchin, “The Chinese don’t give a shit about us. They are cold-blooded killers on trade.” Trump then went on to instruct: “You are going to China to kick ass.” Soon after, the Trump administration raised its trade tariffs and barriers on certain goods and services to coerce China into reducing the adverse trade balance of a whopping $400 billion the US faced against it. China retaliated with similar measures, but Trump claimed early victory when US imports from China fell by 12.5 per cent last year. The battle, though, is far from won.

Cut to 2020 and it is Prime Minister Narendra Modi who has to make the tough choice of, as Trump crudely put it, kicking China’s ass by weaponising for the first time India’s $110 billion bilateral trade with its aggressive neighbour. This is not just to set right the trade balance that has tilted heavily in China’s favour in the past decade—as Trump had sought to do—but, more importantly, to wield a stick to persuade China to restore the status quo ante on the border after it unilaterally altered the balance of military forces across the 3,448 km disputed Line of Actual Control (LAC). India has accused the People’s Liberation Army (PLA) of China of surreptitiously amassing forces in critical sectors on the LAC in the past two months in violation of bilateral border agreements. The PLA then made several egregious intrusions that resulted in military casualties on both sides in the first fatal clash between the two armies in 45 years. With India too mounting troops in large numbers on the LAC as a counter, the stand-off has become all the more dangerous.