China frustrated as "Make in India" push cuts imports of laptops, gadgets

New Delhi: China faces increasing concerns as India implements strategic decisions to boost its domestic manufacturing and reduce its dependence on Chinese imports. So, China is not only getting nervous about India's strategic decision to increase taxes on Chinese spare parts imported to India but has also started indirectly through its media to write negative stories on India’s new business policies.

The Global Times, known as the official mouthpiece newspaper of China, regularly comes up with articles showcasing India in poor conditions to support the world's manufacturing units. At least two articles this week, titled “India's industrialization is bound to be a long and chaotic process,” and “China won’t be a cover-up for India's trade barriers,” were seen in the newspaper that handles and manoeuvres world current affairs.

India limits the export of China manufactured Laptops

India's recent move to limit imports of laptops and electronic gadgets has raised an abrupt concern among Chinese suppliers to India. In addition, the recent imposition of higher taxes on Chinese spare parts and the restrictions on imports of electronics has alarmed Chinese suppliers to the Indian market.

This development can be seen as a direct response to India's efforts to strengthen its domestic manufacturing sector, particularly in the production of smartphones, laptops, and other gadgets.

By liberalizing industrial policies and business laws, India has encouraged local manufacturing and attracted renowned global companies to shift their production operations to the country.

A prime example of this shift is Apple, which has not only established manufacturing units in India but has also shut down some of its production facilities in China. As a testament to India's growing significance, Apple showrooms have begun to appear in major Indian cities.

To further protect its domestic industries and bolster its economy, India has introduced import licensing requirements for laptops, tablets, and personal computers.

These measures are anticipated to decrease India's trade deficit with China, a notable development given that China currently accounts for about 60% of India's computer imports, worth approximately $10 billion annually.

This shift in policy has broader implications for the global manufacturing landscape. The new regulations potentially pave the way for other Western companies to consider relocating their manufacturing units to India, further challenging China's position as a dominant global manufacturing hub.

Geopolitical concern further decreases the trust

While China has been a key electronics supplier to India. It is crucial to consider the geopolitical context surrounding these developments. Tensions between China and India escalated after a border clash in the Galwan area in 2020, leading to calls within India to boycott Chinese products. It heightened anti-China sentiment in India, followed by clashes in December 2022 at the Arunachal border. As a result, Chinese goods that were flooding Indian markets created an atmosphere of distrust for Chinese products. This sentiment has driven India to take stricter measures against Chinese companies operating within its borders.

China is facing economic challenges

China is invisibly grappling with economic challenges on multiple fronts. Despite its success in managing the pandemic jolt, China's economic recovery has been divergent from the rest of the world.

Analysts initially feared China's increased demand for commodities and goods would elevate global inflation, but this concern has not materialized. Instead, China is struggling to meet its modest growth target of 5% for 2023, a challenge compounded by a property market slump and negative consumer-price inflation.

The Chinese government's response to these challenges has been multi-pronged. It has introduced various measures to stimulate the economy, including support for private enterprises and initiatives to attract foreign investment. Notably, China's State Council has announced measures to improve the business environment for foreign investors.

Despite these efforts, China faces the pressing issue of deflation, especially if the property market does not recover. The longer deflation persists, the harder it becomes to reverse, necessitating more forceful fiscal and monetary measures.

China's policy adjustments reflect a sense of urgency to stabilize its economy, yet the intricacies of achieving this balance amid global economic shifts remain complex.

China's economic and geopolitical circumstances have led to increased scrutiny of its businesses, particularly those operating abroad. Recent investigations into Chinese companies operating in India have raised questions about tax practices and compliance.

Furthermore, India's proactive approach to attracting foreign investment, particularly from the United States, adds to China's concerns. The growing presence of US companies like Apple and Tesla in India showcases the country's efforts to diversify its economic partnerships and reduce dependence on Chinese investment.

In response to these developments, Chinese media outlets have been critical of India's manufacturing conditions and trade policies, perhaps reflecting China's concerns about losing its manufacturing prowess to India.

In summary, China's anxieties about India's changing economic landscape and manufacturing policies underscore the evolving dynamics between the two countries. These shifts have broader implications for the global economy, especially as India seeks to bolster its manufacturing sector and reduce its reliance on Chinese imports. At the same time, China is navigating multiple economic challenges, striving to maintain growth while addressing concerns related to deflation, trade imbalances, and global competition.

In conclusion, the evolving economic and trade dynamics between China and India are indicative of significant shifts in the global manufacturing landscape. India's strategic decisions to promote domestic manufacturing and reduce dependency on Chinese imports have raised concerns within China and given an advantage to India.