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Decoding PM Modi's Remarks On China And Supply Chain Worries

Aug 08, 2023

Prime Minister Narendra Modi addressed the B20 Summit India 2023 on Sunday and, without naming China, said, "A profitable market can be sustained when there is a balance in the interests of producers and consumers. This also applies to nations. Treating other countries only as a market will never work. It will harm even the producing countries sooner or later. Making everyone equal partners in progress is the way forward."

At the same meet, External Affairs Minister S Jaishankar also took a dig at China underlining its lending 'policies', which had reduced the Global South to being a consumer rather than a producer and saddled them with unviable debt that had resulted from China's "opaque initiatives".

It is significant that both the PM and the Foreign Minister have raised concerns regarding China. Unfolding geopolitical events and their critical impact on trade and business vis-a-vis China in the past years have compelled this stance.

It has been observed universally that China, led by President Xi Jinping since 2013, has shown complete disregard for international norms; an example being the protracted stand-off along the Line of Actual Control in Ladakh, Sikkim or Arunachal Pradesh. China has been muscling its way into other neighbours like Vietnam, Japan, and in the South China Sea as well, provoking strong protests and strategic re-alliance among these countries.

China has engaged India in border standoffs and a proxy war to further its policy of expansion. As China grew into a mighty economic and military power, what came to the fore was its insolence towards the rules-based international order and a shared commitment to conduct international affairs in accordance with laws, principles and practices embodied in institutions such as the United Nations.

China continues to flout regional security arrangements, trade agreements and multilateral financial institutions at every level.

India has always believed that the interests of the region are better served through a balance of forces rather than the dominance of any single force - whether it is the Americans or the Chinese. This is one of the pillars of India's Indo-Pacific vision.

External Affairs Minister S Jaishankar has been travelling the world listening to the problems of the Global South. (Global South refers to countries in Africa, Asia, and Latin America, which are developing, less developed, or underdeveloped. These countries have higher levels of poverty, income inequality, and challenging living conditions compared to the wealthier nations of the Global North).

Developing nations have always struggled to find a common agenda. Countries come together for a short-term goal or agenda but are rarely willing to coordinate and cooperate over the long term. India in its G20 presidency has gone all out to bring a perceptible change in international systems.

The PM and Foreign Minister also raised supply chain worries and called for a more balanced approach to doing business.

Supply chain problems emerged during Covid lockdowns due to shifts in demand, labour shortages and structural factors. For India, the pressure was felt when raw material imports from China were stopped. From wooden furniture to nacelle and blade of wind turbines to cells of solar panel modules, India has been dependent on China for the supply of huge volumes of raw materials, which was impacted by the disruptions due to Covid. The delay in procuring these raw materials from alternate sources had a multiplier effect, resulting in project delays and the rise in prices of the finished products in India. The continued ramifications of the Russia-Ukraine war have exacerbated the global divide of access to resources. Countries in the Global South, India included, have been at the receiving end.

China's Belt and Road Initiative (BRI) has often been seen as a project focused on benefits to China and not the countries that have provided access and infrastructure to build the road. The debt trap that many African nations have fallen into is for the entire world to see. The cost of capital has been so high that the debt trap seems perpetual. Pakistan, Sri Lanka, Zambia, Kenya, Laos, Mongolia to name a few, are the most indebted nations to China. In these countries, there are no jobs and inflation is skyrocketing, leading to waves of loan defaults and political unrest.

The agile response of China in anticipating and acquiring metals that will strengthen the industries of the future has already begun shaking up the powerful West. The Global South can't even comprehend the impending damage. China has been encouraging the use of its currency internationally, including in Brazil.

Evolving geopolitical factors are now causing new risks and pockets of stress. Affected sectors include metals and mining, chemicals, automotives, semiconductors and technology. China continues to secure its raw material supplies by buying 23 equity stakes in lithium, nickel and cobalt companies. China has bought half of the world's biggest lithium mines put on the market since 2018. This has given China an edge over the global battery metal supply chain. PM Modi is cautioning against this new model of colonialism when he says those who have the rare critical metals have the global responsibility for inclusive growth of all.

The Global North too has not helped matters. According to reports, "friend-shoring" has been on the rise in the post Covid era since late 2022, in which bilateral trade benefits the countries that share similar political and economic orientation.

At the recent BRICS summit in Johannesburg, there was no consensus between India and China on the expansion of the group. India's approach to promote cooperation among developing countries and engagement with the G7 is opposed by China, which wants countries inclined towards its policies and part of its BRI initiative to join the bloc.

This episodic 'tug-of-war' will continue. India, of late, has given up its decade-old stand of not being on the offensive on global forums. It is now showing signs of resistance and building allies across the globe to suit its internal needs. But it needs more allies to come out in the open and challenge China's hegemony in the economic sphere.

(Bharti Mishra Nath is a senior journalist)


Disclaimer: These are the personal opinions of the author.

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Disclaimer: These are the personal opinions of the author.