From UPSC perspective, the following things are important :
Prelims level : Friendshoring
Mains level : Not Much
In her visit to India last week, US secretary of treasury Janet Yellen reiterated her country’s stance of pushing for “friendshoring” to diversify away from countries that present geopolitical risk.
What is Friendshoring?
- Friendshoring is a strategy where a country sources the raw materials, components and even manufactured goods from countries that share its values.
- The dependence on the countries considered a “threat” to the stability of the supply chains is slowly reduced.
- It is also called “allyshoring”.
- Apple’s announcement to shift its iPhone manufacturing facilities from China to India.
US push for friendshoring
- In the current case, Yellen said that Russia has long presented itself as a reliable energy partner, but in the Ukraine war, Putin has weaponized the gas “against the people of Europe”.
- Another country Yellen mentioned in her speech was China.
- She said it currently controls over 80 per cent of global solar panel production.
- However, there are reports that in parts of the country, like Xinjiang, the production of panels takes place through forced labour.
Issues with friendshoring
- Friendshoring may push the world towards a more isolated place for trade and reverse the gains of globalisation.
- It is a part of the “deglobalisation” process.
- While moving supply chains away from East Asia could increase security in the long run, an ill-conceived implementation of this friendshoring strategy could result in price hikes and a stronger China over time.