India-China Thaw: Opportunity Or Tactical Pause? || SNG Roundtable

0:00 China needs a market. It's being closed out of the US and European markets. We are the single largest untapped market in the world today. So they need us. >> Wangi said that his the purpose of his uh visit here was for the special representative talks. Special representative talks is for the border. But he ended up discussing the economy which means that they need this which is why they initiated this. And another good reason was that okay the SEO meeting is coming up so Prime Minister Modi is going to go. But even if it's the SEO let's not forget that it was Russia which got India in to the SEO while China supported Pakistan. Trade and tariff is just I think is the beginning of the real geostrategic asymmetries. we are going into you know

0:47 a much more black hole as far as IR is concerned and that's waiting for us and this should worry most of us actually >> what the US is doing uh and has done uh has done two things one it is I think uh virtually destroyed or almost destroyed the relationship that was built up over 20 25 years uh with a lot of effort >> Russia is a time- tested friend and that's precisely because of the US 1971 199 1998 uh dyani kobra incident so on the trust with the US was never really 100% there and India has always spoken spoken about strategic neutrality every country does that actually >> by going in for the ris particularly at this point where all that is happening uh we should not lose sight of we will

1:34 be actually putting our eggs in one basket you know and um to that extent um adversely impact acting our strategic autonomy whereas we can still move between the west and the east and all that once you join the ra again uh the old u you know demons will arise [Music] you're on strat news global and I'm surya gangadran welcome to our round table a series of conversations with people in various fields uh focusing on foreign policy security and of was tech. >> Uh today our issue is China and we have a stellar panel here. Uh J Ron at the

2:21 center for China analysis and strategy. He's also a former external intelligence officer. So he knows China very well. Uh professor Adwan Yeri of Javala University Center for East Asian studies and professor Patak of Jindel Global University. Uh I have one question for all three of you. Um given recent developments and the outreach to China that we have made uh what is your reading of this outreach um it does tend to give an impression in some quarters that we lack leverage. We're seeking support from some quarters that are frankly enimical to us. Uh Jadi Rand um that is a common perception uh Surya what you said but uh I'd just like to point out a couple of uh shall I say

3:07 correctives. Firstly, the um uh outreach or the signals for a thor uh came about 9 months ago when the Chinese u agreed uh to start discussing a disengagement in the dep planes and uh democ. So I think uh it's not just uh rooted in the current uh that's the first point. The second I think it's not so much a question of seeking support as it is a question of focusing on our economic development and u for that China as you know u we are dependent on it for a number of supplies u we were restrictive in our uh you know allowing Chinese uh companies to come in here Chinese funding to come in here that yes we have

3:55 uh I the talks indicate that we are going to ease some of uh in addition to the visas and the resumption of flights uh some FDI investments are going to be re-examined things like this and I think uh that is not so much of seeking support or as both countries looking to uh enhance economic development. China needs a market. It's being closed out of the US and European markets. We are the single largest untapped market in the world today. So they need us. As far as we are concerned, we are dependent on them for a lot of raw materials etc. which unfortunately uh we should have made but we haven't. Uh but I think uh uh that's

4:41 the way I'd look at it. Uh of course there are signals being sent. What the US is doing uh and has done uh has done two things. one, it is I think uh virtually destroyed or almost destroyed. the relationship that was built up over 20 25 years uh with a lot of effort and the naysayers for that relationship in India have again uh started pointing fingers and saying well you know that we had warned you how the Americans will behave and uh the second is that um you know they are sort of now uh questioning uh the value of having a relationship with India and um I think there are a lot of factors there but I'm sure we'll discussing this

5:26 >> prov of all thank you for having me on the show. There has been always a economic logic uh the way the supply chains are spread out and production lines are spread out and the recent problem of tariffs is not only you know disturbing the rest of the world but also is disturbing the American institutional and structure approach to the industries. um you would see that you know most of these approaches have been harming the American companies also. We take the chipcom making companies or other other companies into advanced value added uh sector and while this happens uh all these uh chains are disturbed it is going to create an alternative for emerging economies and again I would like to take

6:13 the point which sir had just mentioned India has been looking for markets and expansion in Russia and China both our anxiety is not only about trade deficit but also having an access to in these countries. For example, Russia is importing a lot of uh milk powder which we can provide it. But the issue is with the residue sector uh residue factor. So the same with China also China is you know importing a lot of things which in India can provide. The question is actually can we take leverage of these situation and get more access to these economies? an important thing. Are we actually running after these two economies after what we what happened after after Trump imposing extra tariffs on us? I don't really uh put into that

7:00 sequence. As s said correctly, we have been looking for opportunities to engage with the neighboring Asian economies for some time now. >> What we were trying to do, we were trying to maybe looking for relative benefit. You know we were always considering what these US administration thinks of us maybe how they would react it but now we have seen the reactions we are actually we are actually it makes case easier for us to look for our opportunities in a much more you know open and you know in transparent way and that's what I see it >> you know I would agree that there was an outreach from India to China I see it the other way around otherwise if the outreach was from India then our minister or our head of state would have gone to the PRC but the fact is that

7:46 Wangi came here you know the outreach from was from their side and there are a lot of reasons as to why China wants the Indian market right now first to begin with India is the world's fastest growing major economy contrary to Donald Trump's imaginations of course so given the fact that China is suffering deeply because of Donald Trump's tariffs you know other sorts of measures from other western countries and some of our partners including Japan etc um China needs a market which can absorb certain of its goods. India is the best. Now look, Wangi said that his the purpose of his uh visit here was for the special representative talks. special representatives talks is for the border but he ended up discussing the economy >> which means that they need this which is why they initiated this and another good

8:35 reason was that okay the SEO meeting is coming up so prime minister Modi is going to go but even if it's the SEO let's not forget that it was Russia which got India in to the SEO while China supported Pakistan so while there's a lot of halabaloo going around right now oh warming up and ties it's not like India has forgotten history it's all too recent in the past. But yes, if a particular country which happens to be a neighbor with which we have power differentials want to engage in wants to engage in dialogue, sure, why not? India has never said no to any of it with any country even Pakistan for that matter before operation Zindur and before Pahelam. So it's the China's it's the Chinese economy's needs which is why they have reached out and for us well Atiti Deuha sure why not. >> I'd like to bring my colleague Ramulan

9:21 Singh Gupta Ram. Yeah, you know, I quite agree with you Dr. about that because I've been noticing a lot of these uh major outreach from the embassy here, the Chinese embassy for a while now trying to connect with us and think but I'm going to ask you a se separate question for all of you given the current situation visually the US does it make sense for us to join the you know Russia India China perspective that they've been pushing us to do >> um again very interesting question and u look as you correctly said there's a lot of outreach happening since last year from the Chinese embassy especially since the new ambassador um took office and it's all to plate India because uh if you see historical patterns it's always happened this way that you know China makes this outreach there's a lot

10:07 of attempt to plate the Indian side and exploit you know the economy or other things and then there's a military escalation or any other economic sort of escalation are we in for the RA Russia is a time-t tested friend and that's precisely because of the US 1971 1998 uh dyani Cobra incident so on the trust with the US was never really 100% there and India has always spoken spoken about strategic neutrality every country does that actually so coming back to the fact would we choose an RA I think RME has also stated this that you know there's no format decided for this and there's no date decided for this so it's a very tacit way of saying that we are not in for this some of the things in Indian diplomacy can't be stated out loud so there are these sorts of ways even in the last 3 weeks roughly since Donald

10:53 Trump uh began his uh absolutely illogical tirades about India is you know fueling Russia's war machine hypocritical typically typical of the US what India has done is that there are a lot of these deals or agreements which are being signed with Russia which we've already had because of it's a time- tested threat that's not happening with the PRC there are you know there are in principle discussions which have happened but there's no agreement which clearly shows that yes we are willing to trust the Russia Russians as we always had but with the Chinese that's not happening so easily. >> Dr. >> Yeah, good question. U couple of these discussions with been part of Shri said correctly. We can trust the Russians but

11:39 that also means that you know Russians are going to play an important role if that is going to be the format because we could be pressing Russia uh to deliver certain messages when that format really gets activated. When it comes to SEO and rats also it was Russia which was on our side. For example when the defense minister went to China and you know there was no mention to April 22 incident. Russia was backing India. I mean China was not doing it. So if that arise it really takes place or it comes into formal format. We have to bank lot on on the Russians. Russians are well aware of this fact. You know the foreign minister Lavra he's well aware of this thing. He had been making trips to India and he knows that and we have been making and you know making him understand the our concerns that we do not really outrightly deny such a format

12:25 but the problem is the intention whether that intention is going to serve India's national interest and the strategic purpose if that is open and clear we are on it but that clarity has to come from the other side >> Dr. Nav, you know, the same question, but I'm wondering whether it it's a one of the reasons is that you don't really want the Russians and the Chinese to get too close. Is that one of the reasons why we might be avoiding the RC in some ways? >> Um actually um that's not the only reason and I'll explain why. Um I think you know we are already members of bricks, we're already members of SEO. uh do we really want to add on another uh

13:10 >> bunch of >> platforms a bunch of acronyms uh to the relationship we can meet each other bilaterally and I think at least what I have been seeing the uh place where we make some advances in the relationship whether it's economic whether it's strategic whether it's diplomatic are when we have bilateral discussions so I mean maybe on the sidelines or bricks or whatever but there are enough opport opportunities for us to meet whoever we want to meet and we have been doing um I see I don't see the advantage and and let me put it in context for you for example we have bricks already where China is overwhelmingly the single economic power uh the rest of us are

13:57 there but you know it's China which takes the lead and sets the agenda more or less whether whether it's accepted or the ra will be more of the same uh but with a narrower focus where we will be um one of the you know I mean the players who are being told what to do I frankly don't see any advantage secondly by going in for the ra particularly at this point where all that is happening uh we should not lose sight of we will be actually putting our eggs in one basket, you know, and um to that extent um adversely impacting our strategic autonomy whereas

14:44 we can still move between the west and the east and all that. Once you join the RA again uh the old uh you know demons will arise. So I think it's not necessary for us to go into RA we have a good equation with the Russians. we are now, you know, having some kind of a, shall I say, tactical band-aid being put on our differences with the Chinese. Uh, so I I would sort of fight shy of that. And when when I said tactical band-aid, I would say that the latest little um uh well to and fro um you know, with J. Shankar's comment on Taiwan then the Chinese saying no he actually said this and issuing fairly strong clarification

15:30 after the MEA issued a clarification that points to in my view uh the future differences that are going to come and not in the distant future and the Chinese unwillingness to let go of those. So in a way uh we have to stay vigilant uh in this relationship that is being uh now again uh shall I say rewarmed uh if I may put it. Uh I want to ask a question about Russia. you mentioned time- tested partnership and generally the consensus seems to be that Russians are the trusted guys you know but um if you look back I think since 2017 I don't think we've signed any major deal with the Russians and uh the impression is that

16:15 the relationship has been devalued over the years so what's your what's your uh >> no deal has been signed but you know we've agreed to partner more on defense and uh you know even Russia has said that it'll give us more defense artillery and and this is all of this is in the last 1 month or so but you know the why I say it's a time- tested friend is the fact that it has been able to respect the fact that India is strategically earlier it was non-aligned now it's strategically neutral those examples which I gave 1971 is when India was practicing non-alignment and uh there was a side there was a time when China US and Pakistan were on the same side exactly the same as today and that

17:03 is when India sent out an SOS and you know the Russians or the Soviets they agreed to help they could have demanded a lot of things in return >> saying that you you you know you should lean towards us and all of that but they didn't even in the last 10 to 11 years when there's been a tilt towards the west particularly to the US which now stands on very shaky grounds even then the Russians didn't come and demand that oh you should give your strategic neutrality. I know that the Russians sell a lot to the Pakistanis. That's the thing about money. It's not like India also didn't sell to some of the partners which Russia won't really want India to sell to. That's the thing about money. Unfortunately, capital matters in international politics. But then the goodwill or the attempt to not force

17:49 India to give up its strategic economy stands important under Donald Trump. you know contrary to all expectations that were there from India and the world he's now pushing India to give up its strategic autonomy and to cout as if you know the US is some sort of an emperor or some sorts of things you he's using these narratives that oh India is friends with Russia as if he didn't try placating Putin at all as if he doesn't want to partner with Putin at all you know so those sorts of things the US and the west have done multiple times moral hectoring trying to tacitly push their narratives Russians haven't done that. The west says that oh Russia uses disinformation. Russia has done quite a lot of these things to change our policies. For India it's never happened. It's the West which

18:34 has done that and the China and the Chinese who have done that. Two sides of the same coin. So which is why it's a time-t tested friend till it doesn't stab us in the back in the ways that the US has. It stands as a time- tested friend. If it does then yeah my views will also change. any other brief to come in. I mean I mean I I want to add one more point to she's uh uh elaboration uh with the uh uh with Russia they weren't there they weren't too much of you know up and downs in relationship >> and you know whenever we approached the Russians uh we approached and we were reciprocated with the equilateral you know uh responses those responses were

19:20 measured and as well as you know something which we were expecting So the expectations were met with the reciprocal reactions and what does that built that built into uh you know bilateral stakeholdings uh here with with the US the moment we we approach and we try to build them or bring them into you know stakeholding they deny it so the deniability in stakeholding in bilateral relationship you know brings in lot of you know uh trust shocks between India and US it shouldn't have been otherwise we keep we keep talking about you We keep talking about parties, democracy and values but that really really is not the case when we try to talk to us but is the case when we talk to Russia and that's where this fact

20:05 comes in you know that you know time states the relationship and that's exactly when the EM also made a statement you know it looks like it is more stable relationship and that's what is being indicated now >> uh you know um Dr. you were I believe at the bricks summit I mean that happened recently did you get a sense that there is a sort of a disconnect about India saying we don't want to join the deolarization drive as the other countries are so uh our point has been very very clear you know there's untimely uh expansions of these organization let's talk about the bricks also okay and then then SEO also the fundamental questions behind having these multilateral ism whether that is breaks or SEO were were different and then we

20:54 we try to solve those problems which we these multilateralism started and then suddenly the expansion takes place. So India has been quite consistent that we have facing the problems which have not resolved and why to have the expansions and that is I think quite consistent with our stand since the bricks big started because you know now expansion in bricks if you look at the new economics which are that is going to create extra burden uh on the bricks that is going to create you know more challenges for the NDB also you know how that the shares will be divided when it comes to you know capital you know banking and extending finances also so that means that instead of we solving the problem within the old bricks we are pursuing the new problems and I think that is quite consistent stand of India

21:39 whether that is bricks or su is concerned >> mhm you have any thoughts on the dollar deolarization drive >> well I I'll just add to what he said I think one point which maybe he focused on the economy is that uh in the expansion of the bricks u if we look at the kind of countries that have been taken in it's into bricks and I would add SEO. Uh it has been China selecting or bringing in its friends uh who are not necessarily our friends and uh so that's an um a sort of you know makes it more of an uphill thing for us to go ahead and try and push our agenda. Uh and we saw that recently at the SEO where the kind of language used on

22:25 terrorism was in favor of Pakistan. and then we had to stage a protest as a founding member uh one of the not founding but as one of the original uh key key uh members. So um I think you know we have to take into account that that that it's going to be an uneven uh playing field for us and um I think as far as u uh I would like to make a point in Russia also that in addition to everything else that has been said which I agree with we have certain relationships with Russia which have continued uninterrupted and I think that's important and even when we are diversifying certain things we continue to get from Russia and And I think that's again uh an important point and your third point

23:11 which was uh if you could >> that you know whether whether we should now consider uh push joining the dolization right. >> Yeah dd dollararization I I don't know whether we are uh ready for it or not. I mean that's something that you know Arvind will be able to talk about but um I think that in the world today uh there is a sort of feeling that we need to move away from the dollar not just the developing world even the other countries because there is too much of a dependence on the dollar. Secondly, people are beginning to question why without making any contribution the United States get an interest gets

23:57 interest you know as a credit to it uh when two other countries are dealing. So people are thinking of it but there are two issues here. one it comes down to the credibility of the country concern whoever you're going to select as the prime currency and the simple question I'd ask you is that if you have savings and you have to put them somewhere would you do it in dollars or would you do it in Chinese yuan I think I know the answer but uh so that is going to be a question and um but the first step is that you trade in either rupee or yuan etc which is now coming in so I think um I won't say that there is a move towards ddollarization but it's some certainly something that people are concerned

24:42 about and they're looking at and I don't know if this cryptocurrency comes in whether that will accelerate the pace. >> Uh see just to add on to what he said I'm going to shift a bit to AIB right India has a 7.6% 6% stake in it and we want to do things in a collective way but a lot of those projects go for CPC which violates India's sovereignty we are not okay with that >> if we go in for this ddollization thing as uh ranades also mentioned are we okay with trading in yan we are definitely not okay with that >> so which is why even from way before Donald Trump took office from last year November onwards our MEA has been stating we are not for dearization unfortunately Trump couldn't hear that I don't know what else. Maybe we should

25:28 actually go with a trumpet and do it near his ears or something. But bullies generally don't listen. So that's the thing. India has been stating in the past that ddollization doesn't work for us. Not yet. Because a lot of our trade also it's still taking place in the dollar. Do we want to replace one bully with another bully? This second bully with which with who we have sovereign concerns. Right. That's that's one more thing. India and Russia. Again that's the bit about time tested friend. there we are trading we are doing the rupee rubal trade in our you know in our local currencies again one more reason as to why we're still okay with the ruble not with the Chinese yan dd dollarization we should try to move away from it because uh it's got a stronghold but we are not there yet so till we are not there yet

26:14 we don't want a dollization and Chinese yuan to come in even when the you know even when the bricks was getting formed and this year after the summit 30 more countries have said that they want to join M >> it helps us of course because we're getting more trading partners and we okay till there you know but 30 more countries all of us trading in yuan that doesn't work out for us the Chinese economy places you know it's not an egalitarian relationship between India and China even economically do we want to mess it further I think the answer is no >> time for a little short break uh don't go away you're on round table >> without logistics army cannot sustain even the frontline soldiers They also look for logistics until unless they will not be able to stand there and fight. So the logistic is a everyday

27:02 challenge. In high altitude uh it multiplies more because of the weather and because of terrain sometimes you know uh snowfall sudden snowfall or uh landslides just disrupts our plan but we have to sustain somehow. So we look forward uh we look for the different uh uh ways to provide to sustain forward troops. So we plan in that way the rotation of drivers, the rotation of vehicles and the number of manpower will participate in kind of operations. It includes lot of planning and foresightness. Logistic is no longer a support. It is it has become a strategic capability and force multiplier for modern military

27:49 operations. >> Welcome back. You're on round table and we're discussing China. Uh Professor Yer, you have a point to make. >> Yeah, a small technical point over here. I think the the tariff is just the beginning of US, you know, controlling or nosing around the global supplies and production. The next thing is finance and then the next thing is the dollar because if you see the treasury secretary have been hinting out saying that you know we are still dominant. Trump has been talking about please don't talk about detoleration soon after the Rio summit got got over he was he was very upset anxious one has to look at the structural u the sequences over here there has there is going to be

28:37 federal cuts as far as you know reserves are concerned are concerned what does that mean that dollar is going to be much more fluid and volatile in coming decades what it also means that what we saw in 2007 Seven global financial crisis that was one small uh tip of the iceberg. There a lot of problems are yet to come again what I pinned with what Shri said actually uh what is the alternative to dollar regulation. So when we talk about you know too much dependence and dollaration is going to create a lot of volatilities we are we should be also aware that you know what are the alternatives to this. India has been consistently developing these swap agreements but I think we have been bit slow. We need to really take those you know steps seriously to build our swaps because you know that is the

29:23 institutional mechanisms to keep aside these dollars keep aside the other dominant emerging currencies like rem and then start you know localizing the local currencies in bricks also we have been talking about it we are not talking about bricks common currencies we're talking about recirculating the local currencies which is the quite good strategy and I think that is going to h happen Again uh the Chinese are well aware that you know and they are doing theation at much more accelerated pace than others and you know in 2015 you know the remmp was included into the IMF reserve currency basket. So they have already fulfilled one step and they're going bit faster. Now what happens now dollar remmp international trade I'll give you the

30:09 Indian perspective while we are trading with China our trade with China is growing up. Essentially what it means that you know we are using dollar to trade with China. Now China is trying to displace dollar by telling us trade with remmp while we're doing buying going to buy the remmp's weight in the IMF you know reserve currency passcode is going to go up. So you know this is the small you know you know uh you know you know taps which are going to play an important role and create or exert more pressures trade and tariffing just I think is the beginning of the real geostrategic asymmetries we are going into you know a much more black hole as far as IR is concerned and that's waiting for us and this should worry most of us actually

30:54 no the other thing that I've been thinking about is that due to the tariffs there's a lot of countries in the global south what we call the global south who have been sort of watching that how are these people pushing back and how does it impact do you think we have lost that base in the way we are pushing back in the sense that Chinese have been very clear that you guys do something we right back have we been able to sort of set an example to the global south as to that look we can do it this way rather than pushing back directly >> so our agenda in global south is very clear while we we we are saying no to hedgeimony we are also saying no to the alternative hedgeimony >> that that message has to go very clear so if we're talking about global

31:40 systemic transitions we are not saying yes to the global another global systemic transitions where there is we can see a clear hierarchy which is absolutely not true global should south should not create a north within itself so I think we we have been consistently saying no to it. I mean that has been our case where EM went uh and spoke to couple of global south countries. We are doing lot of things uh with the global south countries in Africa. We are not only building uh uh roads which are leading to the ports, we're building schools and stadiums also. That is a real contribution to the global south which has not been the case of the alternate powers. And I think that's where we we we did not deny our role. We

32:26 are important player and a key stakeholder in glo creating global stakeholdership in the global south but we are denying that we do not want to create a hedgeimony within global south. I think that message we want to give it very clearly and I think that has been delivered so far. >> Are we seen as a leader in the global south? >> I would like to say that we are seen as an important stakeholder in the global south not a leader in >> and we don't aspire to that. No, we want to we we we we we aspire to be that but I think the way the shifts are taking place. uh the it is a global south for example you know recently after the debt crisis in in Africa it is the African countries are looking at us you know recently you know taikad happened in yokohama in Japan u Japan and India have

33:14 been seeing an important stakeholder in building the African community or African continent rather than just you know financing and creating the inverse model of you know financing which will be turned into debt traps. So we are aspiring to be an important stakeholder but not aspiring to be a a power or something which we would you know create you know a different kind of a food chain where we want to keep or about uh the emerging countries or the low-inccome countries in Africa or in global south there are two three things here I mean uh if you look at it I mean your question was very broad-based but um the I and I'd sort of say that the first is the uh diplomatic or uh diplomatic

34:00 perspective where the African nations there are large number of them and uh many countries want them to be with them in the United Nations and other such bodies. That's one and I think there whether you call it leadership or whether you call it um you know sort of vanguard role is another matter but certainly China and US are vying for that and South Africa is another country which is now trying it within Africa so that's one the second is the strategic perspective where of course China has a lead uh they have the money also uh but that is to exploit the rare earth and mineral resources that are available in these countries. We are late comers to the

34:45 game, but we are there and um as far as the Chinese are concerned, I think they're quite clear about it and brazen about it that they want to exploit it and someone mentioned here just now the roads being built. >> They're building it from the mines to the ports >> and then um of course the Chinese Navy steps in and says, "Hey, you know, we can make that into a overseas base." So but they done that in one case uh they may do it in others but this is the uh way it's coming out I think um in Africa uh America is falling behind if it is not fallen behind uh including the international institutions that exist and which are actually uh shall I say manipulated by the Americans or the

35:31 Treasury Department which are like the World Bank and IMF etc. So I think those are being pushed away by the Chinese who come in and with no strings attached put a lot of money there. So that that's how I see this coming. I'd like to make one more point about what uh which Arvin touched upon. I think what Trump is doing uh I mean apart from the tariffs this is his first step uh to actually restructuring the international monetary and trading systems and to ensure that America remains on top. So at one at one level he sees the Chinese challenge but he's trying to reorganize it so that they're at the top but I'm afraid um I I don't know whether he'll succeed but

36:18 what he has done is he has upset uh Europe and he's upset a lot of the other countries who till now had been favorably inclined towards the United States and I think now they're looking at the US and questioning whether it can be a dependable partner in future and they're not looking only at Trump he's here for 3 years or whatever and he's gone um but after that and they're saying the way the systems in the United States have crumbled u can America be a dependable partner I think that's a bigger question and as to what we are going to see and um you know there are two three scenarios one that we split into blocks I think which is what the American effort will result in if it succeeds the third is multipolar where

37:06 you have Europe going its way and others with their own. So I think it there are a lot of questions that are going to open up. >> Just related to all this uh many years ago there was the G2 plan by the US. Do you see that getting some kind of traction nowadays? >> I think the time is passed as far as the Chinese are concerned. If it's G2, it's temporary because Shijping has very clearly said that the last three party congresses which are the biggest outfits in China I mean on deciding on policy that by 2049 China has to be number one. >> So then where did that leave the United States except as a minus you know in G2? >> I I wanted to answer something from you know the previous question very briefly.

37:52 See whenever the the international system has been under extreme strain as we see it now 80 years war in Europe 30 years war in Europe first world war second world war cold war so on a new sort of international order or system has emerged that's why we have all these concepts about first sovereignity and the whole concept about international norm all of these things bipolarity multipolarity uniolarity right now the strains which have been caused we already have the term or the notion of the global south which is also new the Fact is that if India can withstand this storm and I believe it'll be able to withstand this storm wherein there are two bullies on the two sides, India comes out as a credible actor within the global south. India anyways has greater credibility than China which is also part of the global south in the global

38:38 south because even in Africa which you know Arvin was also mentioning in the terms of the projects or the investments which India has India doesn't take its own laborers it creates employment over there which China does not do. it has a greater credibility to begin with. US the lesser side the better right so maybe I think at the end of this all at the end of this conundrum there will be a more credible third choice now quickly to your question G2 you know all the signals which are coming from Donald Trump I tend to believe he wants a G2 but with China as a subservient partner and that is not okay with China what are the sorts of evidence first Xiinping was the only head of state who was invited to his swearing in then Trump has been fawning over Cinping. Oh, he's a smart

39:24 man. He's an intelligent man, you know. Then now he completely withheld the Tik Tok ban which was supposed to kick in. He's not even taking money from biteans for that matter. Over and above in the last one or two months, what he's also done is that he's lifted all the curbs on critical chips and those sorts of things from the US. all sorts of signals he wants to pleate the PRC and to you know form some sort of a G2 and they bully the world together but with China playing a lesser role because he possibly assumes that it's not being otherwise easy to make the Chinese bend so which is why throw this tidbit let's have a G2 we'll bully the world together but you'll be a bit subservient but would the Chinese agree to it they're not okay with it which is why Wangi and all of these things yesterday also their

40:10 Chinese envoy said oh we back India against US hedgemony. >> Okay. So, India gets pulled in over here also. They want to be the hedgemon. China wants to be the hedgemon. India doesn't like hedgemony or even if there's a hedgemon, India doesn't like being bullied. So, I see all tendencies of G2 in Trump. Xinping not so okay with it. Right. >> You know, I was interviewing a gentleman a couple of weeks back and his question was that given the tariffs that Trump is imposing can India sustain the pain that it will inflict one and B his argument was that it's just a question of time after the tiles actually start hitting the US because the consumer prices there will go up. So he says just you know wait

40:57 till then and then you guys can do what you want because then the people would you agree with that argument that >> I absolutely agree you you need to see you know how calculative the tariffs are uh they have excluded uh the medicines the pharma sector so it was very measured well thought uh step to levy tariffs on Indian products now there are two qu two answers to this thing first thing can we survive or out survive the pressure. Uh it bit difficult because you know Indian market or Indian producer do not have you know shock absorbers or the deep pockets as the Chinese have I mean we do not have state or enterprises to absorb the five or 10%. Maximum we can absorb

41:43 78%. But 25% then minus 78% where the 15% of shock being absorbed it is different difficult not possible it is beyond our capacities. Let's talk talk about textile. Textile employs about 200 million people and which is a large second largest industry in India which is also an important factor when it comes to India's exports to us and now since last few years since US withdraw the general tariff you know profits which India was acrewing through that system and the tariffs coming in we it is beyond our uh capacity to you know take that absorption. Put similar example in China they are able to take it because they have a deep pockets. Banks are there you know they have multiple financial mechanisms some are

42:29 overtly some are covertly supporting them. So beyond the limit we cannot take that shock. Second thing that the repercussions in uh US there are two sorts of repercussions in the in the US. The the the the CPI and the inflation is drastically going to change in the US in coming few months. That means the consumer prices will go up because it's already started climbing up and this is a capitalist state which what does that mean is producers or importers will push the last penny to the consumer right there is no India is at least a welfare state right there is some way of you know banks and the state will thinking okay we can delay it but US will not

43:14 delay it the moment there is a prices inflation they'll immediately pass it to the consumer consumer that is going to create a problem most of the products let's talk about the value added product talk about the green tax and talk about the EVs most of the peripheral products and the parts are coming from outside uh US that means that EVs are going to get costlier all right so this is going to go or pass to the consumers that means that this is certainly not going to go well second part of that question what is this doing this is trying to uh distract the American enterprises instead of looking for the novelty in the supplies or novelty in the productions they're looking at novelty in absorbing the

44:01 shocks. What is that going to be is that structurally it is going to have lot of impairments as far as American business are concerned. Trump may be very happy to get the manufacturing get to or maybe 50% manufacturing focused in US but he's in he's intentionally I'm saying intentionally killing the innovative spirit ideas and cycles ecosystems longer ecosystems and the bigger ecos shorter and the longer ecosystems he's killing it so it is going to create lot of problems for the US economy and then you know see the midterm results are coming out and he's not using the legisl to pass. He's using the executive orders to pass it. There are a lot of animalists within the US you know how

44:46 this is being done. So this is not only about the economics this is also you know a structural major structural problem with uh with the US apart from you know the personality problem problem and disorders. >> I think we've almost run out of time but can I ask a question? And I mean based on what we just said that you know suppose Trump dials the pressure up further by revoking H1B visas would that add to our pain? >> Uh it is but you know we are opening up recently Taiwan announced that you know it is ready to take our H1B visa holders. >> Okay >> there will be a lot of people there. So I think you know USC is not you know I think I think I I suspect you know how much there is an institutional intention

45:31 behind such tapes. Uh I I feel these are not sustainable in the long run definitely not I mean America is not acting as a wise power. It looks like you know it is acting you know it is just acting >> juvenile. So essentially what I'm hearing is that like Chinese like the Chinese are doing their option see change seems to be that okay at the best we can wait out till this guy goes we can just you know handle the pressure and I mean uh maybe we should follow the same >> yeah so but but the Chinese they say something and do something else right they are projecting that they'll wait it out but all of these curries that you see including Wangi's visit is because it's not being able to take the pressure another thing is uh since you had

46:17 mentioned in trade also. Yesterday, India announced that it's now going to invest and it's going to trade with 30 other countries in Latin America and in Africa. Yeah, maybe we should have not trusted the US in the past and done our own things. But okay, at least there's this pressure which is why these sorts of things are now coming out. And to answer whether India will be able to withstand this pressure should it increase, let's again compare with the PRC and the Chinese. The sorts of goods we export to the US, they're not the same as the PRC. The biggest component of India's economy is the tertiary sector 54 54.5% I think or 7.7%. So it is not those cheap made in China sorts of goods that we export. So bring it on. US has that specifically excluded

47:03 pharmaceuticals and also all all sort all all sorts of other things. Textiles okay textiles there is a good consumption base within India itself. China's domestic consumption is not as great which is why it's an export reliant economy. India is not an export reliant economy to begin with. Our domestic consumption is what saved us from the fallouts of the global financial crisis. So at best and I think he would be able to do this sort of regressions better. There were a couple of articles and a couple of regressions which I was reading. At best it'll hit 1% of India's GDP. >> Fair enough. We're still the world's fastest growing major economy. there are steps which are being taken to mitigate and look none of this was you know no one could have foreseen this that Trump will go on this sort of tangent and he'll be the irrational actor which

47:50 China is generally thought of to be or this revisionist power that you know we generally assume China to be so now we have two revisionist powers so that being said it's right now a push comes to sharp sort of movement India is trying sector is our you know strength as much as we might say oh there are no jobs India should have had unleashed its manufacturing prowess. Maybe it was Destiny's plan to land us in this situation to make us realize some things happen for the best. >> I just like to make two points. One, you made a remark about China. Uh I don't think China is just uh being passive about it. You know, uh China has turned the screws on the United States. And um when Trump began

48:35 making a lot of noise or his administration about denying visas to Chinese students and began targeting them, the Chinese did uh reach out and say that you know you're being unfair etc etc. And um instead of getting them to pause and rethink u they got emboldened and then China you know just applied a comprehensive ban on rare earths and what did you see in 24 hours the US capitulated 24 hours and Trump went on TV saying I've always wanted the students to come here. >> I mean you know people don't remind him about it but that's uh what happened and the Chinese haven't lifted the ban. They've said yes, we will lift it for American companies on a case-byase basis

49:22 subject to their filling an application form. Only one company has got it so far. So the Chinese are not uh a pushover. I don't think they're just going to they'll wait it out. Yes, they are wise guys, but they're not going to uh not inflict pain on America. pain is coming and the rare earths in itself is the first step and it has helped by the way the Chinese EV uh sector whose prices now are much lower than Tesla. So I think that's one thing we need to keep in mind. And second point I'd mentioned is about us with I said we I think we are capable of withstanding the pain. We've been through this earlier. Uh our rise has started now and um uh according to calculations back of the envelope

50:08 calculations it between 1.5 to two will be the worst case scenario um impact on growth. But you know it also means that whereas one quarter we may be down two quarters we may be down but as we explore other markets we'll compensate for it and we'll be able to move ahead. Hopefully this is also a wakeup call to us to uh you know rectify a lot of the u you know thicket of clauses that we have and we are able to build it up but I think uh uh it we will come out of it and the United States is already beginning to feel the pain. The prices are going up. People are quite unhappy there. I mean I was there just last month and there are a lot of uh questioning of Trump going on may not

50:55 be by his MAGA base but they're uneducated the heartland people but when they start feeling the pinch in their pocket they will also turn. So I think the consensus we have is that uh things are not as bad as they may seem. uh India needs to keep its head uh think through the future trajectory of its relations whether with the major powers or with its neighborhood and reform reform from within Jade Rade Arvin Galeri Sria thank you very much also my colleague Ramanand thank you very much uh that's all we have for you in this series of the round table do join us for further such conversations in the weeks ahead thank you very [Music]