Why India's boycott of Chinese goods will remain a fantasy for now

As relations with China sour over Beijing’s continued blocking of India’s attempts to sanction the Jaish-e-Mohammad chief Masood Azhar, public anger has manifested itself in viral calls to boycott Chinese goods.

Messages have even helpfully instructed consumers how to identify "Made in China" barcodes on products, while several regional trade associations, taking a cue, have asked their members to stop imports of Chinese toys and firecrackers ahead of the festive season.

Will the calls for boycotts succeed?

The idea of boycotting imports is usually aimed at creating pressure on a particular country, to hurt them enough financially and prompt a review of a current course of action. In this case, this would mean hurting China enough to make it rethink it recent stand on issues that have damaged India's interests.

Social media campaigns that succeed may, at best, make a drop in sales at low-end "Made in China" markets. (It is to be noted that such calls are far from new, and have often followed spats between India and China over the past decade. Past history has shown such effects have often been temporary before market forces once again take over.)

But even successful boycotts are unlikely to have any major impact on India’s overall trading relationship with China - even less so on Beijing’s trade surplus with India.

This is evident from both the composition of India’s trade with China and the current focus by both governments on pushing mutual investments.

The idea that India’s imports from China are largely made up of the low-end goods one finds in China markets isn’t entirely accurate, even if pervasive, because these are the Chinese goods that most consumers encounter on a daily basis.

Their contribution to the overall bilateral trade, however, is less so. Low-end goods are the usual targets of public boycotts, as they can easily be substituted with alternatives without drastic overhauling of supply chains.

But it is India’s large imports of electrical machinery, construction equipment, telecom and power equipment that really matter to major Chinese companies. The fact is that for Indian companies in construction, power and telecom sector, bottom-lines are likely to matter far more than the current public sentiment.

Writing in a Chinese newspaper on Friday, Zhen Bo, a scholar at the Institute of South Asian Studies, Sichuan University, pointed out that sales figures for Chinese products on the top three Indian online retailers in the first week of October hit a new record.

Chinese telecom companies like Xiaomi, Vivo, Oppo and Gionee are all reporting growing sales in India. Whether they take a hit in coming months remains far from certain.

More than that, the Indian government is pursuing big-ticket investments from China.

While the BJP general secretary tweeted - and then deleted - a call to boycott Chinese goods, the party’s chief minister in Haryana is going ahead with a $10 billion development plan with Chinese real estate giant Wanda group.

And while the Gujarat Chamber of Commerce issued a letter this week to all its members to stop Chinese imports of toys and firecrackers, the state government is going forward with major plans to rope in Chinese manufacturing companies for a dedicated industrial park for power companies and smart city projects.

A temporary fall in imports of crackers and toys may pinch a few small Chinese exporters in the commodity hubs of Yiwu and Guangzhou. But it is these big-ticket deals that really matter to China and its major enterprises.

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