Syllabus: GS2/IR
Context
- The summit between the U.S. and China in Busan, South Korea ended with several outcomes for bilateral ties between the two countries.
Major Outcomes
- The U.S. has reduced tariffs on China to 47%, making India (and Brazil) at 50%, the highest tariffed country.
- China has agreed to keep exports of rare earth minerals (used in a range of key global industries) flowing to the world as part of a one-year agreement.
Significance of the Summit
- The G-2: US President called the meeting “G-2”, borrowing from groupings like G-20 and the G-7, the latter of which constitutes some of the world’s most advanced economies.
- For China, the acknowledgement was a recognition of its power status.
- No US President has publicly acknowledged China’s status in such terms, making it a major win for Beijing.
| The G-2 – The G-2 or the idea of creating an exclusive U.S.-China club to work on global issues was floated as a concept about 15 years ago around the summit between U.S. President Barack Obama and Chinese President Hu Jintao in 2009. – During this time trade, climate change and nuclear proliferations were pressing concerns for the U.S. 1. Subsequently as U.S.-China tensions increased, the administration dropped the idea entirely by 2011. |
- Stance of US President: Given the previous interactions the US President had with some world leaders in the past, an accommodative stance towards the Chinese President was a sign of limitations in dealing with the world’s second-largest economy.
- Delay on Restrictions of Rare Earth Metals: The summit suggests that US has been able to delay the matter of China restricting its rare earths exports, which was an important concern given the chokehold China has on global supply.
| Rare Earth Metals – Rare earths, a group of 17 metallic elements, are used to produce magnets and other components that are a must for manufacturing everything from missiles to aircraft to cars and refrigerators. – Amid the tariff tug-of-war, China had instituted limits on its exports to show the leverage it possessed, impacting global industries. |
Implications for India
- Relevance of QUAD: This uncertainty questions the relevance and future of the Quad, the key strategic framework where India partners the US, Japan, and Australia to counterbalance China’s influence in the Indo-Pacific.
- Tariffs on India: With China’s tariffs reduced to 47%, India now has the highest tariff rate at 50% among major Asian economies.
- This erodes India’s competitiveness and pressures India to accelerate trade negotiations with the US.
- The use of the term “G-2” signals potential U.S.–China accommodates a concern for India, which champions multipolarity, not bipolar or shared hegemony.
- A G-2 framework could lead to division of global influence into “spheres of influence”, which would challenge India’s independent role in world affairs.
Way Ahead
- India must rethink its foreign policy approach in light of this power equation to maintain strategic autonomy.
- Engage the US for defence and technology cooperation, market access and investment, Indo-Pacific maritime security.
- Engage China pragmatically in trade and regional economic frameworks where interests align, climate, infrastructure, and multilateral diplomacy.
- Deepen partnerships with powers such as Japan, Australia, South Korea, ASEAN, and European partners (France, EU) to diversify strategic options.
- Strengthening domestic economic competitiveness is key to sustaining India’s external leverage.
Source: TH
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