Protectionist measures to counter China a 'self-defeating' strategy: Report

Adopting protectionist measures to counter an aggressive China is a "self-defeating" strategy which will only "harm India more", a think tank said in a report on Tuesday.

The country's economic policy should rather be focussed on turning India into an advanced economy, the Pune International Centre (PIC) said in a special report on measures to counter the Chinese challenge.

It can be recalled that in the aftermath of the aggressive Chinese posturing in Ladakh, which also resulted in the killing of 20 Indian soldiers, India had resorted to measures, including banning over 100 Chinese websites and apps and avoiding Chinese equipment in telecom and highways.

"We believe a significant proportion of those (protectionist measures) are self-defeating and they will harm India more than they will harm China," former Indian Ambassador to China Gautam Bambawale, one of the authors of the report, told reporters.

The report argues for certain restrictions to be put in place like limiting state-controlled Chinese companies from taking a controlling stake in sensitive infra assets in India, staying clear of Chinese technological standards and blocking surveillance of Indian people and entities by Chinese entities, he said.

Admitting that China is way ahead in terms of its GDP and technological capabilities and the events in Ladakh are beyond the realm of military capabilities, Bamabawale said the strategy should be to have "less of China" in the Indian economy rather than becoming a "China-less" economy.

Economist Ajay Shah, a co-author of the report, said from a longer-term perspective, India has no choice but to push up its economic growth trajectory and added that two decades of high growth can get some "rough parity" between the two neighbours.

For that to happen, India will have to encourage the private sector and undertake efforts to deliver on the dream of being a prosperous and mature economy which is a liberal democracy, he said, stressing that this was also the vision of the founding fathers of the republic.

He said India will have to limit the "excessive involvement" of the government in business activities, restore the balance between the executive, judiciary and the legislature, and work on ensuring that the law applies to all equally.

"There is a great expansion of the power of the executive and this is something harmful and it goes against the concepts of the Constitution of India," he said.

Bambawale said from a short term perspective, India needs to build better coalitions of nations to counter China, based on shared interests. These should include groups of democratic nations, those neighbouring China like Russia and Taiwan, and also India's neighbours.

He said wherever required, domestic policies also need to be tweaked in order to accommodate the broader strategic aspects when working in such coalitions, and admitted that this will be a first for Indian diplomacy.

The coalitions need to go beyond economy and trade, and must focus on connecting people, he said, adding that efforts should also be undertaken to increase interactions in the fields of science, health and education.