I am sharing my Editorial published by Financial Chronicle on US-China Trade War, on 11th October 2018, duly updated. The URL is attached below.
http://mydigitalfc.com/editorial/twists-turns-trade-war
The updation
President Trump with ‘America First’ approach seems determined to reduce US trade deficit with China. With furious John Bolton, the US national security adviser keen to adjust the Chinese behaviour in trade and strategic arena, both sides do not seem to be interested in any high level engagement, especially after unpleasant experience of US Secretary of State Mike Pompeo’s brief talks at Beijing on 08 October 2018. The tempo has increased after the warship of the two countries, posturing in South China Sea came dangerously close to each other near Chinese-occupied Gaven Reef. US allies Britain and Australia also sailed through to make the point to keep international sea lanes open in the South China Sea. The US Vice President Pence’s accusation about China’s efforts to interfere in U.S. elections is another tipping point for US expansion of Trade War. The ongoing trade war seems to have intensified, as both sides have hardened their stand to compete for global dominance through strategic and military posturing, trade and information offensive. The speculations are that earlier proposed Trump-Xi Summit on sidelines of G-20 may not go through in such an environment.
How is India affected?
IMF has also estimated that other economies in Asia would also see their economies slowing substantially, but it is true for countries which are heavily dependent on Chinese economy/supply chain. The Indian economy has survived some global slowdowns earlier and should be able to sail through the present one. The bigger problem for India arising out of US policy is the sanction under CAATSA in dealing with Russia for urgently needed military hardware like S-400 and Iran for cheaper crude oil being paid in rupee terms, for which India has adequate refineries. The US option of buying shale oil does not suit India as it does not have adequate refineries and will have to purchase finished product in dollar terms. The port of Chabahar is also crucial for India for connectivity to Afghanistan and CAR. The silver lining is that US being our strategic partner will like to have well equipped Indian Forces to balance China and Indian connectivity to Afghanistan, in case Pakistan does not serve their strategic interest. On both counts I am hopeful that US will find a way out not to hurt its strategic partner, as some of its officials had indicated that CAATSA is not to harm its allies/strategic partners. For the time being President Trump, who is vested with the authority to sign the waiver is maintaining a surprise for everyone to speculate, by making misleading statements. India, however has given its intentions clearly of continuing to deal with Russia and Iran, and now needs to prepare for worst case scenario of being slapped with sanctions. An interesting development is that in competing with US, China seems to be cosying up to India more positively on trade.
View Editorial below
http://mydigitalfc.com/editorial/twists-turns-trade-war
Major General S B Asthana, SM,VSM, Chief Instructor, USI of India
(The views expressed are personal views of the author, and do not represent views of any organisation. Major General S B Asthana can be reached as Shashi Asthana on Facebook, LinkedIn, Youtube and Google+, asthana_shashi on Twitter. website http://www.asthanawrites.org)
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