‘India could win from a US-China trade row’

Bloomberg

The prospect of a trade war between China and the US elicits frequent warnings of the risk to the global economy. India sees it somewhat differently.
Senior officials in Prime Minister Narendra Modi’s party say India stands to benefit from the tensions. President Xi Jinping will need India’s huge market as President Donald Trump threatens punitive measures against Chinese manufacturers and US firms that produce goods offshore, according to Seshadri Chari, a national executive member of the Bharatiya Janata Party.
The requirement for Beijing to maintain economic growth and domestic political stability also gives New Delhi geopolitical leverage as it seeks to counteract China’s inroads in South Asia, including in Pakistan, he said.
“China’s production strength requires a market, and the US is no longer a Chinese market,” Chari said in an interview. “China at this stage cannot risk a meltdown in its economy. It’s too politically risky for Xi Jinping. They need a big market. And in Asia, we are the largest market.”
China and the US have both indicated they are keen to avoid a full-blown trade war, and Trump is yet to follow through on campaign pledges to take action against Beijing. But with Trump meeting Xi on Friday after a renewed bout of Twitter criticism and a pledge to review US trade deficits, the future of the trade relationship is unclear.
In South Asia, potential changes to US policy toward the region could prove a boon for New Delhi, particularly if Washington decides to erect protectionist measures against Chinese manufacturers — or cuts military aid to India’s rival Pakistan.

‘A POSITION OF STRENGTH’
Yashwant Sinha, a senior BJP member who served as both foreign and finance minister in previous governments, said if the US-China relationship “were to implode,” India would not be the only country trying to profit. Still, India’s vast domestic market means it has an advantage with both countries, he said.
“The consuming class in India is far, far bigger than the population of many countries, so we represent a huge market, we don’t have to go around advertising it,” Sinha said. “That is our big leverage. That gives us the heft to demand concessions in return for Indian goods and services” and the movement of personnel.
The statements from Sinha and Chari offer a glimpse into the BJP’s foreign policy calculus at a time of global uncertainty. They also reveal the confidence India brings into trade negotiations, where it has often held back from signing or moving ahead on deals granting greater access to its more than 1.2 billion people.
Still, there are potential risks to India if China and the US engaged in a fully-fledged dispute. And more broadly, India has found itself in the cross-hairs of Trump’s efforts to clamp down on visas often used by Indian technology workers in the US
Prime Minister’s Office spokesman Jagdish Thakkar and Commerce Ministry spokeswoman Mattu Singh did not respond to requests to comment.
The US-China tensions come as Modi’s rhetoric becomes more explicit about Beijing’s $55 billion investment in the China Pakistan Economic Corridor. China is funding infrastructure in the Pakistan-administered part of Kashmir, which India claims as its territory. “If China wants to hurt India’s economic interest” by investing in CPEC, then “we will hurt China’s economic interest,” Chari said, without giving details.
The view that India could benefit from a deteriorating relationship between the world’s two largest economies crosses party lines. Shashi Tharoor, a lawmaker with the opposition Congress party and chair of India’s parliamentary standing committee of foreign affairs, suggested China-US tensions could push both countries toward India.
“If the US and China don’t get along, the US will turn increasingly to India as a large Asian actor,” said Tharoor, who was a junior foreign minister in the previous Congress government. “And China, if its US market contracts, will need to diversify its markets and investment outlets, including towards India.”