Spur for China to move up the value chain

During her visit to the United States last week, Indian Finance Minister Nirmala Sitharaman made it crystal clear that India is presenting itself as an alternative to China in the global supply chains.

Sitharaman pointed out that India was planning to take on China through New Delhi's Production Linked Incentive and the growth of its domestic consumer market. The initiative covers 13 manufacturing sectors, including semiconductors, and aims to bring global value chains into India.

The Indian government is now promoting production through providing subsidies, and is committed to advancing bilateral free trade agreements with countries including Australia, the United Kingdom and Canada.

That India refused to join the Regional Comprehensive Economic Partnership agreement, which includes China and most other major economies in the Asia-Pacific, and made itself a key member of the "Indo-Pacific Economic Framework for Prosperity", a geopolitical tool the US has created to contain China's development, clearly shows that India's ambition to compete with China in the global supply chain is based on the US' geopolitical strategies targeting China, rather than its actual conditions.

The truth is that the reshuffle of the global supply chain has resulted in the relocation of some lower-end manufacturing industries from China to Southeast Asia, Mexico and Bangladesh rather than to India.

India has not prepared the necessary infrastructural and institutional foundation for the development of manufacturing, such as improved infrastructure, stable policies and the opening of its market. China dominates the world's major mid- and low-end manufacturing resources, but India is not friendly to Chinese companies. New Delhi has banned more than 300 Chinese apps, checked and punished Chinese mobile phone companies on various grounds, and introduced policies to restrict Chinese companies from investing in India. That means few companies from China would like to relocate to India before it proves its commitment to providing Chinese investors and enterprises with fair treatment.

China's strengths in manufacturing also stem from the scale effect of a large number of suppliers that have thrived around the key companies. Something India cannot form in a short time. Take Apple's suppliers as an example. Last year, its suppliers from the Chinese mainland accounted for 47.03 percent of its global total, and the number of factories in the mainland accounted for 48 percent of Apple Inc's top 200 core suppliers around the world.

Still Chinese enterprises need to attach more significance to cultivating their own brands and innovation-based competitiveness to strive for higher positions in the global value chain.