India needs to leverage Trump’s China antipathy

US presidents are said to get more ambitious in their second term, and if the past is prologue, Trump 2.0 may have a profound impact on the US’s China policy. This is because, in his first term, Trump changed Washington’s fundamental engagement with Beijing. Since the normalisation of relations between the two nations in the late 1970s, cooperation in economic, scientific and cultural spheres flourished. Trump mooted de-coupling, meaning the gradual severing of the intertwining between the two.

He also sought to address challenges in trade, geopolitics and security. The Sino-US trade war escalated on the back of the Trump administration levying tariffs on Chinese imports to reduce the trade deficit. Under the terms of the trade deal that China signed, it agreed to increase purchases of American products, address issues related to intellectual property, and give American financial institutions greater market access. The Trump administration labelled Xi Jinping’s China as a strategic rival. Thus, national security concerns became paramount and led to curbs on Chinese investment in sensitive sectors, restrictions on Chinese majors like Huawei and ZTE, and a thrust on countering Chinese influence in telecom networks, cellphone app ecosystems, and cloud computing.

The Biden administration has built on this foundation, constricting flows of sensitive technology, investment and human capital to China. It is also seeking to have its allies on board with the curbs on semiconductors. As Xi’s China set much store by technology like electric vehicles, the US hit back with tariffs on the same. Thus, the political agenda across Republican and Democrat administrations has been to escalate measures that China perceives as seeking to contain it.

On the campaign trail, Trump sought to restore American primacy in manufacturing and zeroed in on Xi’s China Manufacturing initiative that seeks to build dominance in important sectors like advanced information technology, high-end numerical control machinery, robotics, aviation equipment, maritime engineering technology, sophisticated rail equipment, energy-saving vehicles, electrical equipment, agricultural machinery, biopharmaceuticals and high-performance medical devices. He has called for higher tariffs on Chinese goods. Trump’s China perception is also coloured by his notion that Xi’s mishandling of Covid-19 led to his rout in the 2020 election. This antipathy may translate into a tumultuous relationship.

For China, Trump’s return has stoked worries over its political and economic trajectories. Xi has expressed fears that there may be attempts to dislodge the Communist Party through regime change; this has found resonance even among the general public. Economists speculate that it may not achieve its intended gross domestic product (GDP) growth target of about 5%. The economic slump and deteriorating relations between the US and China have taken the lustre off Beijing as an attractive investment destination for American firms. European businesses operating in China have voiced concerns that diminishing returns for capital invested did not justify the risks of operating in the Chinese market. They believe the problems in the Chinese market will linger unresolved, and they will have to rethink staying invested in China on account of regulatory issues, priority to state-owned businesses in government procurement, market-access hurdles, and overcapacity. This is also compounded by US tech companies exiting China amid geopolitical tensions.

India should try to leverage the churn to its advantage. Prime Minster (PM) Narendra Modi has been one of the first leaders to connect with Trump after his win. Modi has sought to build on the relations developed during the first Trump presidency. The question is can India use the disenchantment of the West with China to attract more investment? Under the first Trump presidency, military cooperation flourished as evidenced by the signing of the foundational agreements. While India and China have taken steps to address the military standoff along the Line of Actual Control (LAC), Delhi must improve its defence-industrial complex to bolster its deterrent potential. A defining feature of Trump’s first term was the emergence of minilaterals in the Indo-Pacific. Under Trump, Quad was resurrected in 2017. As Pakistan goes under, and terrorism re-emerges in Kashmir, India must engage with Trump who was receptive to Indian concerns in his first innings. There can be much closer cooperation between Washington and New Delhi on India’s neighbourhood where divergences have been slowly emerging in the last few years.

Harsh V Pant is vice president for studies andKalpit Mankikar is fellow, China Studies, at ORF.The views expressed are personal

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