In recent years, in order to profit from the Sino-US game, India has deliberately provoked China to surrender its name to the United States, resulting in an almost freeze in Sino-Indian relations.
However, despite the cold bilateral relations, the economic and trade exchanges between China and India have not stopped. On the contrary, the increase in the share of Chinese goods in India's imports and the rise in India's trade deficit with China have greatly annoyed India, which wants to starve its master to death before becoming a good apprentice.
India's share of New Delhi's imports of such goods has risen from 21 percent to 30 percent over the past 15 years, as India's dependence on industrial goods such as telecommunications, machinery and electronics has increased over the past 15 years, according to a report by the Global Trade Research Initiative, an economic think tank.
Not to mention the past 15 years, India's trade deficit with China has also risen sharply between 2019 and 2024.
India's exports to China have barely budged, stagnating at around $16 billion a year.
However, India's imports from China soared from US$70.3 billion in 2018-19 to more than US$101 billion in 2023-24, accounting for 15% of India's total imports in the same period, resulting in a cumulative trade deficit with China of more than US$387 billion over the past five years.
This is really unexpected.
However, one factor that should be considered here is that due to the "decoupling and broken chain" between China and the United States, part of the supply chain of the United States has been transferred to India, and China's supply of semi-finished products has also been transferred to India. In other words, some of this growth may be from goods that are diverted from China to the United States via India. India is just an assembly plant and a transit point.
98.5 per cent of India's imports from China are major industrial products. In terms of subdivided industry categories, the key industries to be imported include electronics, telecommunications and electrical, machinery, chemicals and pharmaceuticals, iron and steel and base metal products, plastics, textiles and clothing, automobiles, medical, leather, paper, glass, ships, aircraft and surplus categories.
For example, between April and January 2023-24,
- electronics, telecommunications and electrical products, with a total import value of US$67.8 billion, of which US$26.1 billion were imported from China, accounting for 38.4%;
- the machinery sector, which imported US$19 billion from China, accounting for 39.6%;
- chemicals and pharmaceuticals, with a total import value of US$54.1 billion, and imports from China of US$15.8 billion;
- plastics and related items, with a total import value of US$18.5 billion, of which US$4.8 billion were imported from China, accounting for 25.8%;
- intermediate products such as organic chemicals, APIs and plastics, accounting for 37%;
- Consumer goods accounted for 12%, while raw materials accounted for less than 1%.
Indeed, every analogy is not low. What makes India feel even more "infuriating" is that India believes that these goods imported from China "can be produced by itself".
So why doesn't India produce it itself?
The report is also clear: "Overall, India imports a wide range of products from China from high to low, highlighting the huge disparities in India's industrial capacity across industries." ”
It's that India's strength does not allow it. Although the demand is already great.
What makes India even more anxious is that as Chinese companies enter the Indian market, these companies will buy goods from China, and India's imports of industrial products from China will accelerate.
In the field of new energy vehicles, which is currently the most advantageous in China, China's performance is more prominent.
"In the next few years, one out of every three electric vehicles on Indian roads, as well as many passenger cars and commercial vehicles, could be manufactured in India by a Chinese company, either alone or through a joint venture with an Indian company," the report said. The large-scale entry of Chinese automakers into India will impact Indian EV manufacturers, companies in the EV value chain sector, and battery development.
The report concludes that the growing trade deficit with China is a cause for concern, and that the strategic implications of this dependence are far-reaching, affecting not only the economy but also national security.
Faced with this situation, what does India plan to do?
Surprisingly, Indian experts have prescribed a similar prescription to the United States: to increase the resilience, resilience and diversification of supply chains.
Srivastava, founder of the Global Trade Research Initiative think tank, which released the report, said,
The Indian government and industry must assess and possibly recalibrate their import strategies to foster more diverse and resilient supply chains. This is not only to mitigate economic risks, but also to support domestic industries and reduce dependence on imports from a single country, especially from geopolitical competitors like China.
This prescription by Indian experts is ironic.
It is said that if the apprentice is brought out to starve to death, then the apprentice must learn the craft first.
I want to think that when China was reforming and opening up, it introduced foreign capital on a large scale, exchanged the market for technology, and learned management, management, technology, and innovation from Western companies little by little. In the end, he made little progress, practiced eighteen kinds of martial arts, and finally could stand up and compete with the biggest "master" almost on the same stage.
The United States really felt the feeling of starving the master to death when the apprentice was brought out, because the apprentice learned so well that he not only learned to imitate, but also learned to transcend, and took the master's path, so that the master had no way out.
In fact, it's not that the master has no way out, it's just that the master wants to let the apprentice be an apprentice forever and never let the apprentice come out. This is an unreasonable oppression of the apprentice.
However, India has not even learned the basics, and lacks even the ability to manufacture the simplest manufactured products, so it has begun to consider "over-dependence" on China, and it is too worrying to think about diversification. Think about it, except for China, who can take you to the road of modern manufacturing at the lowest cost and price.
Of course, Europe and the United States can also do it, but India is too late to start because it has to face China's competition at the same time, so it does not have an advantage.
India's economy has indeed made great strides in recent years, and is now ranked fifth, and is expected to overtake Japan as the fourth largest economy soon next year.
India has great power ambitions, and that's good. China will never suppress the development of other countries for its own interests, as the United States has done. China is now operating in India, but in fact, the biggest concern is that India's business environment makes it difficult to protect China's interests.
However, if India wants to truly become a strong country, it must work hard in the manufacturing industry, and the introduction of foreign competition is a must, which is a learning process and a process of providing a competitive environment. If this kind of competition is ruled out from the outset, it may not be good for India's development.
Contrary to the United States, China does not believe in bringing out apprentices to starve masters, China just believes that the more apprentices, the bigger the market, the bigger the cake, and eventually everyone can live a good life.
But no matter how India chooses to prescribe medicine, China's response is simple: follow the rules of the market. China has formed a certain competitive advantage in the face of Europe and the United States, and it has the advantage of dimensionality reduction in the face of India. We are open to whether India chooses to cooperate or not.