China’s strategy in Taiwan could impact Indian economy – The Diplomat


The pulse | Diplomacy | South Asia

Last year, two-way trade between India and Taiwan was worth around $7 billion, with the two countries considering a free trade agreement and working to establish a semiconductor manufacturing hub in India.

Even before US House Speaker Nancy Pelosi visited Taiwan this month, Beijing had aggressively pushed countries around the world to reiterate — or adopt — a pledge of allegiance to its policies. of one China. Since 2019, Kiribati, the Solomon Islands and Nicaragua have all switched recognition from Taipei to Beijing, largely thanks to the latter’s political and economic support for their respective regimes.

In the wake of Pelosi’s controversial visit, that effort has only intensified. Earlier this month, Beijing called on India to reiterate its one-China policy. In his press briefing, Indian Foreign Ministry spokesperson Arindam Bagchi responded to this simply by saying, “India’s relevant policies are well known and consistent. They do not need to be repeated.

India’s ambivalent and taciturn attitude sets it slightly apart from the United States and its partners. A few days after Pelosi’s visit, US Secretary of State Antony Blinken visited the Philippines to strengthen military ties with that country. While in Manila, Philippine President Ferdinand Marcos backed Washington’s assertion that Pelosi’s visit to Taiwan was consistent with longstanding US policy and did not change the status quo.

In New Delhi, on the other hand, the Indian government would not comment in favor of Pelosi’s visit. Instead, he simply urged “exercise of restraint, avoidance of unilateral actions to change the status quo, de-escalation of tensions and efforts to maintain peace and stability in the region”.

Despite the cautious discussions, for years India has intensified its own ties with Taiwan, both politically and economically. When Taiwanese President Tsai Ing-wen first won elections in 2016, India’s ruling Bharatiya Janata Party (BJP) sent an official to witness her inauguration. That year, New Delhi’s Raisina Dialogue – a forum co-hosted by the Indian Foreign Ministry – featured a former Taiwanese foreign minister as one of its speakers. Last May, after Tsai Ing-wen was re-elected, two BJP parliamentarians attended his swearing-in ceremony virtually.

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The economic component of its engagement with Taiwan is arguably more important for New Delhi. Last year, bilateral trade between India and Taiwan was estimated at over $7 billion. Taiwanese companies have also invested over $2.3 billion in India. The two countries are even talking about a free trade agreement and finding ways to create a semiconductor manufacturing center in India.

Despite India’s cautious and non-committal diplomacy, much of that economic cooperation is now on the line as Taiwan remains on a knife edge. In the aftermath of Pelosi’s visit, China conducted several military exercises that effectively surrounded Taiwan, restricted access to civilian vessels and endangered its role in trade and the global supply chain.

These exercises were not an isolated case, nor was it the first time that Beijing had attempted a strategic encirclement. In May, China’s state-run Global Times reported that Beijing had sent in warplanes and ships, “thus encircling and enclosing the island.”

These moves increasingly look like a prelude to a potential future pressure tactic from Beijing. Barring an outright invasion – which could embroil the United States in a war and incur serious costs for the mainland – Beijing may well seek to restrict and threaten Taiwan’s economic ties with the outside world, thus gradually weakening the position of the island.

Such a strategy would also significantly threaten India’s own long-term economic plans and its partnership with Taiwan – and that looks likely to materialize. As he centralizes power in Beijing and grapples with economic difficulties both at home and abroad, Chinese President Xi Jinping may increasingly rely on militarism and warmongering. By doing so, Xi may be more willing to take on ever greater economic risk in pursuit of a military advantage over Taiwan.

India has so far been unwilling to formally engage in these dynamics, opting instead to walk on eggshells around Beijing’s sentiments while focusing on their troublesome bilateral border in the Himalayas. Wading into the Taiwan debate could spark more Chinese aggression in the Himalayas, according to New Delhi’s assessment. But if the Taiwanese crisis boils over in the coming months, New Delhi is unlikely to emerge unscathed.


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