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India, stricken in poverty and illness,
can hardly become global supply center
印度：遭受贫困与疫情困扰 全球供应链中心难成
Dai Yonghong
22:10 Aug 30
2021
美西威逼利诱遏华小集团
印度投名雄心勃勃大目标
脱贫基建民生勿扩军备战
中国共同富裕消费大市场
经济韧性营商环境活力强
资本用脚投票逐利性难移
合作共赢世界繁荣大趋势
Since the US
imposed higher tariffs on trade with China in 2018, there have been voices
claiming it as a great opportunity for India to catch up or even replace China
as center of the world's critical supply chains.
With barely
progress to be seen, the topic was raised up again in a report by The Hindu,
claiming that "India could benefit from US investment that is leaving
China."
The US is likely to
continue its confrontational policy toward China after it pulls out troops from
Afghanistan, "and India could benefit from US investment that is leaving
China if the Modi government becomes more transparent in policy-making and 'open
for business'", the report said, citing Mukesh Aghi, leader of the
Washington-based US India Strategic Partnership Forum.
Indeed, the US-led
small Western clique has their strategic agenda to cajole India against China,
while India itself has set an ambitious goal of growing into a leading global
power. However, profit-driven capital does not care to play along with hollow
political slogans, as shown in the past several years.
Being hit hard by
the COVID-19 pandemic, India recorded a 7.3 percent GDP contraction in fiscal
year 2020-21. Before the resumption of production was completed, India plunged
into a second and more severe virus outbreak in March, with total death toll
exceeding 430,000 as of Monday. Multiple international institutes have slashed
GDP forecasts for India due to the unbated spread of the virus.
Meanwhile, China
has proved its economic resilience and its capability to maintain a stable and
vibrant market for businesses from both home and overseas.
A good deal of
examples showed that the potential Chinese market cannot be given up by
multinational companies in spite of the China-US diplomatic tensions. For
instance, the US-based Tesla recorded more than doubled car sales in China last
year and company CEO Musk said in March that Chinese market is likely to be the
electric vehicle (EV) brand's biggest market over the long term.
More importantly,
with China vowing to promote the "common prosperity" agenda, the
series of policies will unleash consumption power across China's massive market.
Given these
circumstances, a large scale of capital outflow from China is unlikely. But it
is normally to see a proportion of the capital or production capacity flow out
from China due to China's ongoing industrial upgrade. Southeast Asian
countries, instead of India, are enjoying much more preference from
multinationals with their better infrastructure, sounder industrial facilities
and closer connection with China's supply chain.
By contrast, India
faces a series of problems which need to be addressed before "benefiting
from US investment that is leaving China" - including India's unfriendly
land regulation and tax system, constant wrestling between New Delhi and Indian
local governments, insufficient skilled labor, and poor infrastructure.
Before these
problems are addressed, it is simply meaningless to play up India's role in
replacing China's supply line. What the former Australian Prime Minister Tony
Abbott once claimed that "India is perfectly placed to substitute for
China in global supply chains," has proved to be a joke.
Not only that New
Delhi has long adopted a protectionist approach toward foreign investments, its
market simply has been overrated as being dubbed as the "next China."
Though India has a similar mass of population with China, the country's
purchasing power is much lower. India's per capita GDP in terms of purchasing
power parity recorded only $6,454 in 2020, while China's has risen to $17,312,
according to data from the World Bank. Therefore, there remains a long way for
India to catch up with China.
The author is
director of Institute of Bay of Bengal Studies, Institute of China's Overseas
Interests, Shenzhen University. bizopinion@globaltimes.com.cn
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