Taiwan President Tsai Ing-wen's DPP did poorly in local elections in November 2022, and she stepped down as party chairwoman. Photo: AFP

China has reacted swiftly and decisively to reports that India could be considering a trade deal with Taiwan, which the world’s second-biggest economy claims as part of its territory. The Indian government has so far not commented on the issue.

A trade deal with the island territory could herald a decisive change in India’s longstanding China policy, which has long been a concern for Beijing. This has been particularly true since its incursion into Ladakh and occupation of Indian territories, staking a so-called historical claim. Taiwan, along with Tibet, is among the most sensitive issues for China.

Within the Indian government, those seeking to start formal talks on a trade deal with Taiwan are gaining an upper hand, Bloomberg reported. Taiwan has sought trade talks with India for several years, but New Delhi has delayed it to avoid antagonizing China and getting into a tussle at the World Trade Organization.

Chinese Foreign Ministry spokesman Zhao Lijian was quoted by China’s Global Times newspaper as saying, “China firmly opposes any country with a diplomatic relationship with China conducting official exchanges of any form and signing any agreement of an official nature with the island of Taiwan

“India should earnestly abide by the One-China principle and handle the Taiwan question prudently and properly.’’

India recognized the People’s Republic of China in 1950. It has had mainly non-governmental relations with Taiwan to facilitate business, tourism, scientific and consular and passport services. The two governments upgraded their relations in 1995 as India set up the India-Taipei Association in Taipei and welcomed the establishment of the Taipei Economic and Cultural Center in New Delhi.

Former diplomats and other foreign policy experts in India have been pushing New Delhi to invoke the issues of One-China, relations with Taiwan, and the treatment of minorities in Xingjian province and Tibet, which China invaded and annexed in 1950, as a counter to its unfriendly actions.

Prime Minister Narendra Modi’s government has been treading cautiously with China, especially after its incursion into parts of Ladakh and its refusal to pull out, despite seven rounds of talks between military commanders.

Taiwan and India have a lot in common, including being intimidated by a belligerent China.

Diplomats have been stressing that for China to seek adherence to One-China it should recognize the territorial integrity of other countries. China doesn’t recognize Ladakh, Jammu and Kashmir as integral parts of India, and sits illegally on Aksai Chin in north Ladakh.

China has been making public claims on India’s Arunachal Pradesh state, and describes it as South Tibet. India’s Defense Ministry has alleged that since its incursion into Ladakh, China has been coordinating with Pakistan to threaten India on both fronts.

China has been intimidating almost all its neighbors, leveraging the pandemic to encroach on their territories or gain greater access to the open seas. It remains embroiled in disputes in the East China Sea and South China Sea with Japan, Vietnam and the Philippines. Reports suggest it may have encroached on parts of Nepal.

Trade wars with the United States and disputes with some major global powers prompted the US, UK, and Sweden to ban Huawei and ZTE from bidding for their 5G networks. India too has barred Chinese companies from bidding for infrastructure contracts, including telecom, power and railways.

In April, New Delhi restricted investment by countries with land borders with India to prevent “opportunistic takeovers” during the pandemic. Weeks before this move, the People’s Bank of China raised its stake in the Housing Development Finance Corp, India’s largest mortgage lender.

In June India banned 59 Chinese apps, including the hugely popular Tik Tok, from ByteDance. Within a month it banned another 47 apps, and later increased the number to 118. India’s action was followed by the United States, which also ordered the closure of the Chinese consulate in Houston, Texas, after accusing it of spying.

The US and China are India’s biggest trading partners. Indians have been lapping up Chinese products over the years, and industries such as pharmaceuticals, automobile parts, smart-phones, telecom and tires are critically dependent on Chinese imports.

But following the Ladakh incursion, China has been steadily losing its goodwill in India and risks serious buyers’ aversion. Businesses are looking for alternative sources.

India has been making subtle moves to warm up to Taiwan, which has been waiting for Indian overtures for a long time.

In May, two members of parliament from the Bharatiya Janata Party virtually attended the swearing-in of Taiwan President Tsai Ing-wen for her second term. They said, “Both India and Taiwan are democratic countries, bonded by shared values of freedom, democracy and respect for human rights.’’ Tsai Ing-wen opposes Beijing’s aim of reunifying the island with mainland China.

India recently permitted investments by Taiwan’s Foxconn Technology Group, Wistron Corp, an information technology leader, and Pegatron Corp, which specializes in computer electronics.

Taiwan saw a sudden surge in greetings from Indians on Twitter on October 10, the territory’s National Day. Concerned by the deluge, the Chinese embassy in New Delhi said, “China firmly opposes any individual or any move trying to create ‘two Chinas’ or ‘One-China, One-Taiwan’ which violates this position.’’

Trade between India and Taiwan has grown from $4.78 billion in 2015-16 to $7.18 billion in 2018-19, and slipped to $5.72 billion in 2019-2020. A large part of Taiwan’s exports to India include electronic products, machinery and computer equipment. As many as 80 Taiwanese companies operate in India.