China is trying to kneecap Indian manufacturing

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1. SS: authored by Noah Smith – Chinese companies are racing to build factories around the world and forge new global supply chains, driven by a desire to circumvent tariffs and secure access to markets. Chinese companies have been building manufacturing plants directly in large target markets, such as the EU and Brazil. And they’ve been building plants in “connector countries” like Mexico and Vietnam that provide access to developed markets through trade agreements. Morocco, for example, has emerged as a surprisingly popular destination…due to its trade agreements with both the US and the EU…Countries across the developed world and the Global South alike are eager for Chinese companies to build factories in their markets, with the promise of new jobs and new technology.

   Beijing is trying to shape the global expansion of Chinese manufacturers, including which countries they invest in and how. Beijing is encouraging Chinese companies to build plants in “friendly” countries while discouraging them from investing in others in a kind of “industrial diplomacy.”…India represents the most striking case of Beijing’s effort to shape the international behavior of Chinese firms…[A]cross a number of industries, Beijing seems to be discouraging Chinese firms making future plans to invest in India while also limiting the flow of workers and equipment…

   Beijing appears to be limiting Apple’s manufacturing partner Foxconn from bringing Chinese equipment and Chinese workers to India. Some of Foxconn’s Chinese workers in India were even told to return to China. This informal Chinese ban extends to other electronics firms working in India…Beijing has told Chinese automakers specifically not to invest in India…China has been reportedly blocking the export of Chinese solar equipment to India…[Tunnel boring machines] made in China by Germany’s Herrenknecht for export to India have been reportedly held up by Chinese customs.

   Western companies are desperately looking for a backup to China as the world’s factory floor, a strategy widely termed “China plus one.”…India is making a concerted push to be the plus one…Only India has a labor force and an internal market comparable in size to China’s…Western governments see democratic India as a natural partner, and the Indian government has pushed to make the business environment more friendly than in the past…India scored a coup with the decision by Apple to significantly expand iPhone production in India, including expediting the manufacturing of its most advanced model…

   [A]fter decades of disappointment, [India] is making progress. Its manufactured exports were barely a tenth of China’s in 2021, but they exceeded all other emerging markets except Mexico’s and Vietnam’s…The biggest gains have been in electronics, where exports have tripled since 2018 to $23 billion…India has gone from making 9% of the world’s smartphone handsets in 2016 to a projected 19% this year…

   Foreign direct investment into India averaged $42 billion annually from 2020 to 2022, a doubling in under a decade.

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