Imposing costs on China | HT Editorial

The Indian government’s decision to ban 59 Chinese apps may seem like a curious way to send a signal to Beijing after 20 Indian soldiers have been killed. But India’s app ban, and related restrictions on telecom hardware and mobile handsets, is based on the recognition that data streams and digital technology are a new currency of global power. They also take aim at one of China’s most ambitious goals, namely to become the digital superpower of the 21st century. The apps were not the most important or most insidious example of how Beijing was accumulating influence in this sector. But purging a Chinese browser like UC, number one among Indian phone users, sends a warning that worse things may follow — e-commerce and digital payment restrictions, data movement regulations, and bans on 5G telecom equipment.

India has warned China of “consequences” if the status quo ante is not restored on the border. Beijing has not backed down yet, despite the military movements, diplomatic warnings and trade measures already taken. Multiple points of pressure need to be applied on many levels and over a long period of time. Digital action is only one of them. The app ban is a straightforward way to signal intent and leave room for escalation. China, India and most developed countries recognise that the next source of economic growth lies in the digital economy, that its raw material is data, and that whoever decides standards and builds the electronic backbone will have enormous advantages over everyone else. India has been relatively open to all players. China long ago drove out most foreign apps and software. Western countries have begun clipping the wings of Chinese products over security and privacy concerns. India was among the few large markets where Chinese apps were on par, if not ahead of its US counterparts. That edge has now been lost, possibly forever, in a market where numbers matter.

To be sure, there must be a recognition that India cannot afford to sever all its economic links with the world’s second-largest economy, even in the digital space. Chinese finance is presently essential to sustaining India’s start-up economy. Much of the present telecom infrastructure of the country is from China and cannot be replaced without enormous disruption. Threats that are double-edged are not credible and will only weaken India’s negotiating position. Which is why, though New Delhi will need to take many more actions on many more fronts to impose costs on Beijing, these actions must be weighed on scales of both smartness and strength.