Foreign Policy Watch: India-China

[7th August 2025] The Hindu Op-ed: Decoding China, the lessons for a vulnerable India

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:

  1. Recalling over 300 Chinese engineers from iPhone manufacturing facilities in India.
  2. Restricting exports of rare earths and critical minerals to India.
  3. 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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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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