Game Theory in International Relations
To Boycott or Not ~
On Bilateral Relations between India and China
Last year, India was not only grappling with the first wave of the pandemic but also the tense military and diplomatic standoff with China. Why China would engage in this skirmish amidst the Covid situation is another debate. The purpose of this article is to discuss the role strategic thinking can play in successfully signaling our condemnation and not harming our country’s interests, as negotiations at the border continue even after one year of the Galwan standoff.
Everyone is a strategist. And as the authors of The Art of Strategy state — and we wholeheartedly agree — it is better to be a good strategist than a bad one. Let’s jump right in.
THE SITUATION
The Line of Actual Control (LAC) is a line drawn on a map, which is (mis)interpreted in multiple ways on the ground. This ambiguity has given grounds for disputes for many years now. It was high time we shifted our approach from the “passive” to the “aggressive” on the 3,488 km long border. While New Delhi formulated a suitable response to Beijing, civilians rooted for a conscious boycott. Can a patriotism-driven ban on Chinese imports be effective in the long run?
In a pre-clash situation, the status quo, we assume nil profits and losses for both countries. We will consider different scenarios and in an attempt to (over) simplify the situation, we list these tangible and intangible factors playing their role in the possible payoffs-
Let us also assume when any one of these factors increases qualitatively, we add a +1 and when they decrease, we add a -1. ‘Attacks’ implies taking any action which could hurt interests.
Notes:
1. The ‘Pre-Standoff’ situation is different from the ‘Neither Attacks’ situation because the relationship between the countries has deteriorated. Not taking any action is also an action.
2. The nil payoffs when either country attacks are different (as shown with the differentiation of colours) from the pre-standoff nil payoffs as there is a boost in intangible factors. The factors should not be interpreted as canceling each other out.
This interpretation might come across as inane or even thoughtless, but it can be used to show why neither country has not announced a full-fledged war, or why they continue to engage in a low-scale tit for tat strategy (one country attacks and the other responds).
In situations of conflict, game theory can assist in arriving at win-win situations. Part of the problem is that the involved parties are not able to recognize the incentives for cooperating. The impetus to defect seems huge, even more so when an ongoing conflict is viewed as a one-shot game (finite game) as opposed to a series of one-shot games (infinite game). Thus, not only are significant benefits lost but also long-term interests are hurt immensely.
It is believed that unchecked misgivings between India and China regarding their foreign policies and international positions have led them into this. However, we see that China has continuously defected over the years, whereas we have tried to maintain the hope for mutual cooperation. India should perhaps reverse her strategy of obtaining the desired solution and “defect” for once, properly.
THE SOLUTION
Services and goods which have cheaper alternatives in India should definitely be made use of —
Having the twofold benefit of increasing our own economy as well as reducing our dependence. This is also a great opportunity for Indian businesses to step up and produce goods that can match China’s cheap prices. Given the hostile atmosphere, these businesses will definitely profit. Imposing higher import tariffs on Chinese imports will further reduce their competitiveness in the Indian market.
With the technology so advanced, there is a substitute for everything.
Even if not, this opportunity is begging to be seized as it will lead to unparalleled development in the country, paving the way for ‘Make in India’. Whatever the outcomes are of this skirmish, the ties between China and India are weakened and we would need to let go of those crutches at some point or the other.
Moreover, the USA is an anti-China ally of India and can be expected to help with critical imports and technology.
Even if this is a political mirage and Washington is using New Delhi for bigger plans of its own, China is a business and it needs to thrive. With the USA and India being the two biggest importers of Chinese goods, China is heavily dependent on us for business.
Various ministries of the government retaliated financially and have canceled various contracts that the Chinese bidders had won.
Since the contract went to the lowest bidders, this appears as putting the ax on our own foot. Now it is up to the government to decide whether it is willing to make expensive deals, to invest in research, and to provide the much-required policy support to home industries.
India must not burn all bridges by declaring a total open boycott -
As we need China to fulfill its neighborly roles as much as we need its investments. We can’t break all ties. Banning Chinese apps and restricting their entry into the telecommunications sector by quoting “national security concerns” might seem like a good strategy but till when will we hide behind our real intentions?
In Conclusion
India probably won’t make a dent in China’s economy by banning apps or knee-jerk reactions. However, cleverly planned policies when implemented carefully can do wonders. It appears that China has exhausted all tricks up its sleeve with India, as taking any other drastic step will land the dragon in trouble internationally. With a global image like ours, working on our relations with countries like Japan and Australia can dragoon the dragon. The resultant diplomatic pressure will ensure that China desists from aggressive border actions. India should be able to negotiate from a position of strength, to put China in a fix — in a take it or leave it situation, leaving no room for a better counter offer. We should randomize our play to put China in a flurry, not knowing where the next blow will be.
China has played his hand and there is little he can do now. India should use a mix of both hard power and soft power (like by imposing an indirectly measured ban and building international relations to ensure the viability of the ban). Our retaliation will not be free of cost, or pain, as we give up on the easy and cheap lifestyle China enabled. Having said this, the pain should be borne at all costs as it will strengthen our stance and unite the country in this almost real war.
This will signal the gravity of the situation and the severity of our threat to China’s inchoate hegemony.
Authors’ Note:
The article was written in June 2020 and revised in July 2021.
Opinion Disclaimer:
The views and opinions expressed herein are strictly personal and do not necessarily represent those of people, institutions, or organizations that the authors may or may not be associated with.
Authors — Nimisha Singla and Yogesh Narang
