Recent actions by China, such as the withdrawal of engineers from India, are not isolated events but a deliberate geo-economic manoeuvre. This strategy is driven by China’s apprehension of a rising India and its ambition to maintain a ‘unipolar Asia’.
Recent Actions Undertaken by China against India’s interest:
- Recalling over 300 Chinese engineers from iPhone manufacturing facilities in India.
- Restricting exports of rare earths and critical minerals to India.
- Informal trade restrictions on the export of capital equipment including high-end manufacturing equipment for electronics assembly heavy-duty boring machines and solar equipment to India.
China’s Geo-economic Manoeuvre against India:
“It is a meticulously calibrated stratagem, designed to arrest India’s burgeoning manufacturing ambitions.”
- Impending Technology Transfer: The withdrawal of the Chinese engineers reflects China’s calculated move to Disrupt technology transfer and Stall India’s capacity-building in advanced electronics manufacturing. By pulling out talent, it ensures that ‘India’s learning curve in high-precision, high-efficiency manufacturing remains steep.’
- Subtle yet potent strategy: As India positions itself in global supply chains through initiatives like Production Linked Incentive (PLI) schemes, any delay in technology adoption weakens India’s global competitiveness.
- Weaponization of Supply Chains: By restricting exports of rare earths, critical minerals, and high-end manufacturing equipment, China leverages its control over global supply chains to disrupt India’s industrial ambitions. These informal trade restrictions are non-transparent and hence are hard to contest, create uncertainty and increase costs.
- Weaponising Overcapacity: Price War as Strategy: China’s industrial overproduction is used deliberately to crash prices and drive out competition. BYD in electric vehicles is flooding global markets with ultra-cheap products. This makes it hard for nations like India to compete fairly, stalling local industries.
Difference in Manufacturing Ecosystems of India and China:
|
China |
India |
| Systemic Industrial Dominance:
1. Not accidental, but strategic: China’s industrial pre-eminence is not trivial, it has been built through decades of strong policies, investments, and planning. 2. Covers critical and emerging sectors: Like, Artificial Intelligence (AI), Quantum computing, 6G telecommunications, Electric Vehicles (EVs) 3. Controls global supply chains: China does not merely export goods, it orchestrates and controls global supply chains, from raw materials to finished products. 4. Weaponising overcapacity: Overproduction (a sign of weakness elsewhere) is strategically used by China to lower global prices, making it hard for other countries to compete. 5. Aggressive pricing = market capture: This stifles new competitors and helps China maintain dominance. 6. Economic statecraft by China: China uses its manufacturing power as a geo-economic tool to stay ahead globally and protect its export-driven economy. |
Challenges Faced:
1. Nascent Manufacturing Ecosystem: Compared to China, India is still in the early stages of becoming a global manufacturing power. 2. Facing many hurdles: Poor infrastructure infrastructure lacunae) 3. Complex government procedures (bureaucratic red tape) 4. High import dependence: India still imports many critical components like Semiconductors, Sophisticated chips, Sensors, Engines 5. Limited local capability: Even basic assembly-level manufacturing (referred to as “screwdriver technology“) depends on external help. 6. “Make in India” needs outside support: While the goal is self-reliance, India is still not fully capable of producing independently, especially in high-tech sectors. |
India’s Strategic Dilemma: Even as India tries to de-risk from China by aligning with the West, it faces challenges like US tariff hikes on Indian goods and Exemptions given to China despite its pro-Russia stance. This underscores the need for true strategic autonomy building resilient internal capacities rather than over-dependence on foreign goodwill.
Way Forward:
Based on China’s strategy of weaponizing its supply chains, India should adopt a multi-pronged response to enhance its own strategic and economic resilience.
- Bolster Domestic Manufacturing: India must double down on initiatives like the Production Linked Incentive (PLI) scheme to reduce its import dependence on high-value electronics and components.
- Diversify Supply Chains and Sourcing: Actively seek alternative suppliers and build resilient supply chains with like-minded countries to reduce over-reliance on a single nation for critical goods. For example, India is a part of the Supply Chain Resilience Initiative (SCRI), a trilateral framework with Japan and Australia.
- Invest in Strategic Alliances: India should utilize multilateral platforms such as the Quad and forge bilateral partnerships to secure access to critical minerals and technologies.
- Boost Domestic Critical Mineral Exploration: It is essential to intensify domestic exploration and processing of critical minerals through missions like the National Critical Minerals Mission (NCMM) to achieve self-reliance.
- Leverage Economic Diplomacy: India should use trade agreements and international forums like the WTO to challenge informal trade restrictions and protect its emerging industries from coercive practices.
China’s aggressive external policies are a direct result of its domestic problems, such as an aging population and economic overcapacity. This forces it to rely on exports, making any competitor like India a perceived threat. As Henry Kissinger said, “Empires have no interest in operating within an international system; they aspire to be the international system.” This highlights the need for India to build its own strategic autonomy and avoid relying on fragile alliances.
Value Addition:Quotes by Famous Scholars that can be used in the India-China Relation Topic: 1. “India lives in a tough neighbourhood. It needs to be wise, not merely strong.” — Shivshankar Menon 2. “In geopolitics, economics is not just policy — it’s a weapon.” — Henry Kissinger |
Mains Practice Questions:
GS2 (IR): “China’s geo-economic manoeuvres are a reflection of its internal compulsions and not just strategic rivalry.” Elucidate with reference to recent developments in India-China trade relations.
GS3 (Economy): “India’s ambition to become a global manufacturing hub faces challenges both internal and external.” Discuss the role of strategic autonomy in achieving self-reliance in electronics and high-tech sectors.
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