Amidst a global economic slowdown caused by the ongoing Covid pandemic, China’s stronghold as a global currency power is facing challenges. The United States, in its Cold War-like standoff with China, continues to maintain strict controls and tariffs on Chinese imports, a policy that was initiated by the Trump administration and has carried over to the Biden administration. Consequently, Chinese factories are experiencing closures, unemployment rates are soaring, and American investors are diverting their attention towards neighboring countries, particularly India.
Trade relations between India and China have witnessed significant growth. India incurred a loss of $100 billion in trade with China last year, while the United States reduced its imports from China, resulting in an estimated annual loss of $250 billion for the Chinese economy. Furthermore, the European economies, along with China, Russia, and America, are grappling with the effects of the Ukraine conflict, which has further compounded the global recession. Amidst this, India stands out as the only country that has experienced growth. The current Indian government, under Prime Minister Narendra Modi, has strategically procured crude oil from Russia at competitive prices, enabling the nation to bolster its agricultural production. By implementing timely export bans on crucial commodities, India has managed to safeguard its economy, positioning itself as the world’s fifth-largest economy and successfully navigating the recession. These developments have sent shockwaves through China.
Looking ahead, the upcoming U.S. presidential elections, scheduled for November next year, have further heightened tensions between the United States and China. Despite reaching the stage of being a Super Citizen, President Joe Biden remains firm in his policies. Speculation is rife that Biden and former President Donald Trump may face each other once again in the political arena. As a president affiliated with the Liberal and Democratic Party, Joe Biden has adopted a policy of constructive engagement. The administration has made significant efforts to improve relations with India, resulting in the signing of several bilateral agreements. These agreements focus on defense equipment production, technology collaboration, and enhanced bilateral trade, strengthening the ties between the United States and India. Such developments have dealt a blow to China.
China’s expansionist policies, its dominance in Pacific trade, and the increased presence of Chinese naval assets, including fighter jets and reconnaissance aircraft, in the South China Sea have raised concerns among neighboring countries such as the Philippines, Japan, Australia, South Korea, and Vietnam. Recognizing the geopolitical implications, the United States has extended a hand of friendship to India. India, along with Japan and Australia, under U.S. leadership, has intensified naval patrolling in the coastal regions through the “Quad” initiative. China finds itself increasingly isolated in this regard and has denounced the Quad as a miniature NATO.
As trade and investment relations between the United States and India flourish, American entrepreneurs previously entrenched in China are now eyeing India for its abundant supply of cheap labor and resources such as electricity and water. Following in the footsteps of Apple, American companies including Micron and Google have expanded their operations in India. Elon Musk has expressed interest in establishing Tesla car manufacturing facilities in the country by next year. The global community has high expectations for Narendra Modi, recognizing him as a prominent global leader. American media outlets speculate that American companies will closely monitor the outcome of next year’s Indian elections before making investment decisions. They believe that having a ruling party government in power would facilitate smoother investment processes in India.
Despite having complete control over the administration and the Democratic Party, President Biden has shown his diplomatic finesse by dispatching Foreign Minister Anthony Blinken and Finance Minister Janet Allen to Beijing to ease tensions with China at the request of leftist and centrist allies. This move showcases President Biden’s experience and political acumen. These visits are seen as crucial steps towards fostering mutual dialogue and reducing tensions between the United States and China before the upcoming elections. However, it remains uncertain how much impact these visits will have on Chinese President Xi Jinping’s stance on Taiwan. Although a section of observers remains hopeful, the deep-rooted issues between the two nations indicate that diplomatic efforts may not yield immediate results.
At the core of China’s Communist Party, President Xi Jinping remains steadfast in his belief that Taiwan is an integral part of Mainland China, under the “One China Policy.” China vehemently opposes any foreign interference in Taiwan’s internal affairs, including that of the United States. China expressed its displeasure over the visit of Nancy Pelosi, Speaker of the U.S. House of Representatives, to Taiwan and the promise of arms support to Taiwan in the name of democracy. Simultaneously, the United States recognizes the difference between defending an elected government and safeguarding democracy in Taiwan and understands the price and consequences associated with it.
Foreign Minister Blinken’s visit had a discernible impact, leading to a certain degree of unease in the diplomatic corridors of China. Blinken’s arrival, marked by astuteness and experience, impressed Chinese leaders, and high-level talks between Blinken and President Xi were held in a cordial atmosphere to address areas of mutual tension.
Janet Allen, former chairperson of the Federal Reserve, is a seasoned professional known for her direct approach to addressing issues. Upon her arrival in Beijing, she made it clear that she would not compromise on national interests. She emphasized that there would be no compromise on free exports from China or the reduction or removal of tariffs on imported goods. Chinese leaders, on the other hand, have expressed skepticism about the outcome of Janet Allen’s visit.
Tensions have been simmering between India and China for some time, particularly concerning the border dispute. Despite this, trade with China has continued to grow. China’s influx of cheap goods, including electronics, organic chemicals, pharmaceuticals, electrical equipment, toys, and clothing, has adversely affected the Indian industry. In response, the Indian government must take measures similar to those adopted by the United States, imposing tariffs on Chinese goods and controlling imports. While Indian consumers may experience some impact from the additional tariffs, this decision serves the long-term interests of the country. Such measures will revitalize domestic industries, boost employment opportunities, and safeguard national interests.
