Growing India-China strategic rivalry now sees India decisively blocking a flood of substandard and sometimes toxic and heavily subsidized Chinese products such as toys, truck tyres, steel, aluminium products, chemicals and medicines. With India growing at six per cent or less from the earlier eight per cent plus due to worldwide recession, it has resorted to protectionism that includes filing the most number of anti-dumping cases at the World Trade Organization (WTO) in the second half of 2008-09, nearly half of them against China.

China has smarted at this, and in one case, toys, India took half a step back, permitting only imports internationally certified as safe, because Chinese play products have been found with high lead content. In several other cases, India has clamped two- to five-year safeguard and other duties, and while China has protested and sought consultations and threatened to complain to the WTO, the Indian mood is not to make significant compromises.

The global recession has hurt mainstay Chinese exports to the US, and while the Indian market, which largely produces and consumes for itself, can never be as big, it has nevertheless aggressively been targeted by China, in the process hurting Indian manufacturing and increasing unemployment. The Indian toy industry, for example, has been mauled by unbelievably cheap (and toxic and substandard as it turns out) Chinese imports.

But there are two other developments/ trends that have turned India inward. One is the "Buy American" and "Buy Chinese" clauses in the respective US and Chinese stimulus packages that effectively block Indian products and Indian companies from participation in infrastructure and other government-funded projects. This is a more recent development. The other trend, at least three years old, is that India finds the trade balance with China skewed against it, importing more and exporting less, because China has no market economy to speak of. It both wildly subsidizes its exports and heavily manipulates its currency.

All this would be tolerantly fought on a commercial plane except that India believes Chinese mercantilism fuels its expansionism generally and particularly against India in the sub-continent and in gaining control of the Indian Ocean. While India has no effective counter yet to Chinese naval bases in Burma and upcoming in Pakistan and Sri Lanka, it is bolstering military power after decades in its North East to prevent a repeat of the 1962 Chinese aggression and to protect Arunachal Pradesh that China claims.

India recently fought China and won an Asian Development Bank (ADB) country loan partly to fund a watershed project in Arunachal Pradesh. Both the military build up in the North East and the ADB loan have provoked angry words from China that India, for once, has responded with coldly calculated trade action. India won’t permit China to grow at its cost and then choke its emergence as a world power.

At any rate, Indian action against China is hardly unique. The United States and Europe only days ago jointly complained against Chinese restrictions on export of such commodities as silicon, coke and zinc that are threatening to bust Western manufacturers of everything from steel to semi-conductors. Unless China relents, it may be slapped with trade sanctions. Its "Buy Chinese" diktat in its stimulus package is also being resented.

 China's growth story has usually been seen as a post-Tiananmen Square compensation for democracy, but inter-regional and urban-rural disparities/ divides have grown, workers have not benefited with wage rises, social safety nets are absent, so savings where feasible are a compelling necessity keeping demand low, which means a less spectacular domestic market than its powerhouse status would suggest. An economy critically dependent on exports and heavily subsidized to keep prices low has been stunned by the global recession, and closures and lay-offs in its manufacturing sector have been appallingly high. But there is little sympathy for China because of its mercantilist policies and its barely masked hegemonic ambitions.

Certainly in India, the sympathy for China is missing. While some state governments and private industry see advantage in dealing with China, the Union government frowns at too close commercial ties because of decades' old enmity and now openly exhibited strategic competition. In strategic sectors like communications, ports, IT etc, Chinese companies are discouraged, despite the exertions of pro-China political parties like the Communist Party of India - Marxist. Attempts at putting the past back and cartelizing, for example, for bidding for international energy assets have been scuppered by Chinese crookedness. While India is part of the BRIC alliance with Brazil, Russia and China, neither will that bring the two countries closer, because their political, economic, strategic, and trade paradigms are vastly and variously different.

To be sure, in deference to WTO obligations, India might make small trade concessions to China. But overall, India-China commerce will suffer because of their strategic competition, and contrary to conventional thinking, the loser may not be India if it learns its Chinese lessons correctly.