The Illusion of Actual Control: 3 Possible Implications of Banning Chinese Apps
- shailja singh
- Sep 4, 2020
- 2 min read
The ministry of electronics and IT on Wednesday, issued orders to ban 118 more Chinese apps after banning 59 apps in the first round. The new apps include popular mobile gaming app PUBG, and apps from the stable of Baidu, Tencent and Xiaomi. The ban on Chinese apps alongwith other measures such as restricting participation in road projects is likely to follow if tensions along the Line of Actual Control (LAC) continue without disengagement. Here are 3 possible implications of these economic measures by India against China.
1. Impact on the overall India-China Trade
In 2019-20, India’s imports from China accounted for $65 billion out of two-way trade of $82 billion. The India-China economic relationship trade is unevenly balanced in China’s favor as China’s exports to India account for less than 3% of its overall exports. Thus China could inflict immediate economic pain if it chose to but China’s coercive actions are always selective and focused on targets where the economic cost of coercing is low but the impact is high.
2. Impact on Investments
On the investment front, Chinese investment in Indian tech start-ups has crossed $4 billion spanning major investments in companies including Paytm, Swiggy, Ola and Flipkart.
3. Dependence on Chinese Goods
- India remains deeply dependent on Chinese goods, whether they are procured from China or through other countries. India also relies on China for crucial imports for many of its industries including auto components and Active Pharmaceutical Ingredients (APIs). Between 70- 90% of APIs needed for the pharma industry of India come from China.
The economic measures taken by India could potentially cost Chinese companies billions of dollars in contracts and future earnings. While losing a contract to India may cause some pain to companies, but will have a minimal impact on the scale they are operating. Thus, India needs to be very selective in its measures. For example, India can curb Chinese firms' involvement in the telecom sector in India, especially 5G trials. But at the same time a large part of the infrastructure India already has in place in the 4G network is all Chinese, so India will still need China for maintenance and servicing. The problem for India is it cannot inflict serious pain on the five-times-larger Chinese economy as a whole, even if it could hurt individual companies.
Nevertheless, the Schrödinger's cat considered to be both alive and dead simultaneously until it is observed because if you try to make predictions about the status of the cat, you're [probably] going to be wrong. On the other hand, if you assume it's in a combination of all of the possible states that it can be, you'll be correct.
"In any physical system, without observation, you cannot say what something is doing," explains Eric Martell, an associate professor of physics and astronomy at Millikin University. "You have to say it can be any of these things it can be doing—even if the probability is small." So, while the probability of India inflicting serious pain is low, only time can tell how these economic measures will play out.
References and further readings:
Comments