HK, mainland stocks open higher amid Nasdaq highs
The Hang Seng Index started the week 87 points, or 0.35 percent, higher at 24,946. File photo: RTHK
Regional stocks mostly gained on Monday, taking their cue from a buoyant Nasdaq Composite Index, which posted a second straight record on Friday amid optimism over artificial intelligence and less uncertainty over trade policy.
Investors are growing confident that President Donald Trump's constantly-changing US trade policy will not derail the surge in investment around artificial intelligence.
In Hong Kong, the benchmark Hang Seng Index opened 87 points, or 0.35 percent, higher at 24,946.
Across the border, the benchmark Shanghai Composite Index opened up 0.05 percent at 3,637, while the Shenzhen Component Index opened 0.27 percent higher at 11,159.
Further afield, Australian shares rose to a record high earlier in the day as lithium stocks led index heavyweight miners higher following a report that battery manufacturer CATL had suspended production at a major Chinese mine for at least three months.
The S&P/ASX 200 index was up 0.2 percent at 8,827 by midday after hitting an all-time high of 8,852 earlier in the session. (Agencies/Xinhua)
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During Trump's first term (2017–2021), intelligence-sharing agreements and defense technology transfers deepened ties, while the Biden administration facilitated fighter jet engine technology transfers in 2023. These developments, coupled with India's active role in the Quadrilateral Security Dialogue (Quad) alongside the US, Japan and Australia, signaled a strategic alignment with Washington. The four foundational defense agreements, signed between 2016 and 2020, were pivotal. LEMOA enabled mutual logistics support, COMCASA facilitated secure communications, ISA allowed technology transfers, and BECA enhanced geospatial intelligence sharing. These agreements granted India access to advanced US defense systems, but they also tethered its military and strategic apparatus to Washington's orbit. Modi's government framed this as a step to counter China and elevate India's global stature. However, the cost of this alignment has become increasingly apparent, as it undermines India's non-aligned heritage and exposes it to US pressures, particularly under Trump's second term. Trump's first term was characterized by a 'carrot' approach, enticing India with defense cooperation, technology transfers and diplomatic gestures like the 'Howdy Modi' event in 2019. These moves were designed to pull India into the US-led Indo-Pacific framework to counter China. The US also enticed India by vowing it would encourage American companies to shift manufacturing from China to India during the Covid-19 pandemic, though firms like General Motors, Ford, and Harley-Davidson exited India, citing economic challenges. Despite these setbacks, the narrative of a robust US-India 'friendship' was carefully cultivated. In contrast, Trump's second term has adopted a 'stick' approach, marked by economic and diplomatic coercion. Trump has criticized India's oil and arms purchases from Russia, threatening tariffs first of 25% and now 50% on Indian goods and additional penalties. This pressure stems from India's continued engagement with Russia and its role in the BRICS grouping, which Trump perceives as an anti-American bloc. By leveraging tariffs and public criticism, Trump aims to curb India's economic autonomy and align its policies with US interests, particularly in ongoing trade negotiations with China. For instance, Trump's push for India to open its agricultural market to US products—such as genetically modified corn, soybeans, dairy, and fruits—threatens India's domestic producers. His demand that India halt Russian oil purchases in favor of pricier US alternatives further strains India's economy. Trump's rhetoric has also been humiliating. He has called India's economy 'dead' for not aligning with US economic interests and threatened 150–250% tariffs on India's pharmaceutical exports, a critical sector. Additionally, his deportation of Indian illegal immigrants via military aircraft and his repeated claim of halting India-Pakistan airstrikes in India's Operation Sindoor have embarrassed New Delhi. A particularly egregious slight was Trump's plan to host Modi alongside Pakistan's army chief at a White House dinner, an invitation Modi declined. These actions reflect a broader pattern of American exceptionalism, where the US seeks to subordinate India's ambitions to its hegemonic interests. What Modi fails to grasp is that friendship with America is like the Cuscuta plant (commonly known as dodder or amarbel in Hindi) — once it entwines itself around a tree, it eventually destroys its host. India has long prided itself on strategic autonomy, rooted in its non-aligned policy and balanced relations with global powers. Its participation in BRICS and continued trade with Russia and Iran bolster this narrative. However, the deepening US partnership, particularly through defense agreements, has eroded this autonomy. The US increasingly views India as a 'vassal state'—a nation that, while formally independent, aligns its foreign policy with a dominant power. The 2019 US pressure to halt Iranian oil imports, which India complied with, and current demands to reduce Russian oil purchases highlight this dynamic. India's compliance risks transforming it into a subordinate partner, undermining its multipolar aspirations. Modi's pro-Western tilt has exacerbated this vulnerability. By prioritizing US ties over regional partnerships like China's Belt and Road Initiative (BRI) or the Regional Comprehensive Economic Partnership (RCEP) trade bloc, India has isolated itself from alternative economic frameworks. The 2020 Galwan Valley clash with China, which greatly strained India-China relations, was a strategic misstep. Modi's decision to abandon earlier understandings from the 2018 Wuhan and 2019 Mahabalipuram summits with China, coupled with India's withdrawal from RCEP, reflects an overreliance on the US. This has left India economically exposed, particularly as US tariffs loom and trade deficits grow. India's strategic miscalculations under Modi's leadership are stark. Despite being the world's fifth-largest economy, with a GDP of approximately US$3.5 trillion in 2025, India lacks the economic and military heft of the US or China. Modi's government projected India as a $10 trillion economy by 2025, capable of rivaling China, but economic growth has fallen short. Unlike China, which adopted a 'Hide Your Strength, Bide Your Time' strategy until its economy surpassed $10 trillion, India has prematurely positioned itself as a global power. This hubris has invited US scrutiny, as rising powers challenging the hegemon are rarely tolerated. Modi's pro-Western orientation was partly fueled by Western media and leaders who lauded him as a global statesman, a narrative designed to draw India into the US-led order. India's strategic location in the Indian Ocean and its 1.4 billion population made it an attractive partner to counter China. However, this flattery obscured the risks of aligning too closely with the US. Modi's rejection of BRI and RCEP, driven by fears of Chinese economic dominance, has backfired. India's trade deficit with China has ballooned, and its absence from these frameworks has limited its regional influence. Meanwhile, the US has exploited India's alignment without offering reciprocal benefits, as evidenced by the withdrawal of American companies and now escalating tariffs. At the core of US-India tensions lies American exceptionalism—the belief that the US is the preeminent global power tasked with upholding its so-called rules-based order. Trump's 'America First' policy amplifies this, prioritizing US economic and strategic interests over allies' aspirations. India's own sense of exceptionalism, rooted in its ancient civilization and emerging power status, clashes with this framework on the global stage. India's pursuit of a multipolar world, through BRICS and ties with Russia and Iran, challenges US hegemony, making it a target for coercion. Henry Kissinger's adage— 'It may be dangerous to be America's enemy, but to be America's friend is fatal'—rings especially true for India. The US seeks to limit India's autonomy, ensuring it remains a subordinate partner rather than an independent power. Trump's pressures—on trade, oil purchases, and agricultural markets—are designed to align India's policies with US interests, even at the cost of India's economic and strategic sovereignty. India faces a precarious future with limited options, each fraught with risks. The first is to maintain the status quo, enduring US insults and pressures while hoping for a shift in US leadership post-2028. However, even a Democratic administration is unlikely to deviate significantly from the current hegemonic approach, leaving India vulnerable to continued American coercion. For example, in April 2021—less than 100 days after Biden entered the White House—the US Navy's USS John Paul Jones conducted a Freedom of Navigation Operation (FONOP) near the Lakshadweep Islands, inside India's Exclusive Economic Zone (EEZ), asserting navigational rights and freedoms in a move widely seen as a breach of India's sovereignty. The second option is to diversify partnerships with Russia, the European Union, the UK and emerging market economies to bolster strategic autonomy. This requires economic reforms to boost domestic consumption and replace US trade with alternative markets. However, this path risks short-term economic losses and demands bold policy shifts, which Modi's government has been reluctant to pursue. Montek Singh Ahluwalia, who served as the Deputy Chairman of the Planning Commission of India under Prime Minister Manmohan Singh, frequently highlighted the political challenges in implementing bold economic reforms in India. One of his notable observations was that 'There is a strong consensus in India for weak economic reforms,' reflecting the cautious, incremental approach often adopted due to political and social resistance to more radical changes. So Modi can't undertake radical reforms immediately. The third option involves accepting the US tariff in the short term while investing in military and economic capabilities to reduce dependence over time. This requires long-term planning and resilience, which India's current economic constraints may not support. A fourth, more radical option is to pivot toward regional frameworks like BRI and RCEP, deepening ties with China and the Global South. This would require overcoming domestic political resistance and addressing security concerns with China, a challenging prospect given the 2020 Galwan armed confrontation. However, such a move could enhance India's economic prospects and regional influence, leveraging its strategic location in the Indian Ocean. Finally, a theoretical but implausible option is to wage a trade war with the US, akin to China's approach. India lacks the strategic resources, technology and economic power to sustain such a trade war, making this unfeasible. Instead, India must adopt a pragmatic approach, learning from China's strategy of understated strength and strategic timing. In sum, the US-India relationship, once hailed as a strategic partnership, has devolved into a complex game of coercion and dependency. Trump's carrot-and-stick approach—enticing India with opening up the US economy, defense and technology transfers in the first term and imposing economic and diplomatic pressures in the second term—has exposed the fragility of India's strategic autonomy. Modi's pro-Western policy, driven by an overestimation of India's capabilities and an underestimation of US hegemonic ambitions, has placed India in a vulnerable position. To navigate this crisis, India must recalibrate its foreign policy, balancing relations with the US, China, Russia and other regional powers while accelerating domestic economic reforms. Failure to do so risks reducing India to a vassal state, undermining its aspirations to be an independent global power. The path forward demands diplomatic finesse, economic resilience and a sober reassessment of India's place in a multipolar world.
