Chinese Atmanirbhar endangering India?
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JANUARY 2025
Recent trade data from China has sent shock waves across the global economic landscape. With a staggering trade surplus exceeding $1 trillion, China has firmly established itself as the dominant player in global trade.
For India, this revelation is not just an economic wake-up call but a stark reminder of the multifaceted challenges posed by its northern neighbour.
From trade and manufacturing to geopolitics, the implications of China’s growing economic must demand urgent attention and action from India.
The Data Divide: A Question of Efficiency
While China continues to deliver comprehensive trade data with precision and efficiency, India’s struggle to provide basic economic statistics remains glaring. The Indian government has not released export-import data for months, with the October figures still pending.
This delay reflects systemic inefficiencies that hinder informed decision-making and policy formulation.
Earlier in 2024, there was problem in releasing the monthly GST collection data too.
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The development story if India is unverified or at best visualized by WhatsApp University
Moreover, India’s lack of a timely census, last conducted in 2011 and delayed from its scheduled 2021 update, exacerbates the problem.
Painfully three years late, the absence of this critical demographic data leaves policymakers and stakeholders working with incomplete knowledge of the country’s socio-economic landscape.
The development story if India is unverified or at best visualized by WhatsApp University.
Such lapses in governance contrast sharply with China’s meticulous planning. Data-driven strategies have allowed Beijing to refine its policies, maintain a competitive edge, and stay ahead in global markets.
They have been able to manage their currency value only to bring advantage to Chinese exports.
On the other hand, India’s inefficiencies, by contrast, leave it ill-prepared to address the growing challenges posed by its powerful neighbour. India is still day-dreaming the nationalism by making Rs Vs $ stronger. It looks foolish.
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India is still day-dreaming the nationalism by making Rs Vs $ stronger.
Understanding the $1 Trillion Trade Surplus
China’s $1 trillion trade surplus is a testament to its dominance in global trade.
To put this figure in perspective, it is nearly one-third of India’s GDP, which stands at approximately $3 trillion. Furthermore, China’s surplus alone equals India’s total trade—exports and imports combined—over the past three years.
These stark figures underscore the widening gulf between the two hostile neighbouring economies.
India’s trade relationship with China also reflects an alarming dependence.
The bilateral trade deficit stands at around $100 billion, with India importing $121 billion worth of goods from China while exporting a mere $18 billion in return.
This imbalance persists despite India’s ambitious campaigns like Make in India and Atmanirbhar Bharat, which aim to bolster domestic manufacturing and reduce reliance on foreign imports.
Instead, imports from China have surged from $77 billion in 2018 to $121 billion in 2024, while India’s exports to China remain stagnant at about $ 19 billion.
The numbers reveal a harsh reality: India’s manufacturing strategy is failing to deliver the desired economic strength.
How China Achieved Its Milestone
China’s economic achievements are no accident; they are the result of decades of deliberate planning and execution.
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...India’s exports to China remain stagnant at about $ 19 billion.
The country has systematically reduced its dependence on imports by developing robust domestic manufacturing capabilities. This shift is evident in its declining import-to-GDP ratio and rising export-to-GDP ratio.
They (Chinese) have learnt the skills and by that mastering the art of production of goods it once imported. China has not only met its domestic needs but also become a global supplier.
One illustrative example is China’s approach to steel production. The country imports raw materials like iron ore from nations such as Brazil, processes them domestically, and then exports finished steel products back to Brazil.
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But there are indicators of India slowing down and flight of foreign direct investments (FDI).
It is often at prices lower than if steel was made in Brazil. This strategy has undercut industries worldwide, including those in Europe, where Chinese steel dumping has led to factory closures like TATA Steel.
China’s dominance extends to high-tech and emerging industries. It has overtaken the United States as the world’s largest automobile manufacturer and is now the global leader in electric vehicle (EV) production.
Chinese EVs have flooded European markets, threatening established players like Tesla and forcing the European Union to impose tariffs. Similarly, China leads in solar panel production, with its components dominating global supply chains, including those used in India.
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...(Chinese) have learnt the skills and by that mastering the art of production of goods it once imported.
More than 80% of the digital screens in the world are made in China.
Economic Power to Geopolitical Power
China’s economic rise is intricately tied to its geopolitical ambitions. The Made in China 2025 initiative underscores its intent to dominate advanced industries such as robotics, military hardware, artificial intelligence, and aerospace.
China has already launched its passenger jet, thus giving challenge to like of Airbus and Boeing.
Amazingly their stealth fighter jets have taken to the skies along with other innovation driven growth stories like the hundreds of Bullet Trains crisscrossing the country.
This strategy not only positions China as a technological leader but also enables it to challenge traditional powerhouses like the United States, Japan, and Germany.
The Belt and Road Initiative (BRI) exemplifies China’s strategic use of economic tools to expand its influence. By financing infrastructure projects across Asia, Africa, and beyond, China has ensnared many nations in debt traps, increasing their economic dependence.
For India, the BRI’s encroachment into its immediate neighbourhood—from Pakistan and Sri Lanka to Bangladesh, Maldives and Myanmar—represents a significant strategic security threat.
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China has already launched its passenger jet, thus giving challenge to like of Airbus and Boeing.
Coupled with frequent border skirmishes, China’s economic and strategic manoeuvres create a multidimensional challenge for India. Already there 77 hotspots on the Indo-Chinese border where the two neighbours have had some sort of clashes like the one at Dhoklam and Galwan Valley.
Hence, India’s economic vulnerabilities, particularly its reliance on Chinese imports to ‘make in India’, could easily translate into geopolitical leverage for Beijing.
The Role of Innovation and R&D
A critical factor in China’s success is its focus on research and development (R&D). By investing heavily in innovation, China has built a knowledge-driven economy capable of competing with the world’s most advanced nations.
In contrast, India’s investment in R&D remains woefully inadequate. This lack of focus on innovation undermines the country’s ability to compete in high-value industries, leaving it reliant on imports for critical technologies and components.
India must recognize that economic self-reliance is impossible without a strong foundation in R&D.
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Already there 77 hotspots on the Indo-Chinese border where the two neighbours have had some sort of clashes like the one at Dhoklam and Galwan Valley.
The government needs to prioritize investments in education, scientific research, and technological development to build a knowledge ecosystem that can drive long-term growth and competitiveness.
Of lately, India is witnessing poor quality of engineers and science graduates, who are not fit for industries.
Learning from History
China’s economic trajectory bears striking parallels to Germany’s rise as an industrial powerhouse in the early 20th century-in 1800s and 1900s.
Germany’s manufacturing dominance fuelled its geopolitical ambitions, ultimately leading to global conflicts like World War I and World War II.
Similarly, China’s growing economic clout is reshaping global power dynamics, with its ambitions extending far beyond trade. It’s a caution for all and especially India.
History also offers cautionary tales for nations that fail to adapt. The United States and Britain, for instance, lost millions of manufacturing jobs to China between 2000 and 2012 due to its reliance on outsourcing.
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In contrast, India’s investment in R&D remains woefully inadequate
India too risks a similar fate if it does not address its economic vulnerabilities to China.
Wakeup Call !
India cannot afford to delay its response to the challenges posed by China. A comprehensive strategy is needed to strengthen domestic industries, reduce dependence on imports, and build economic resilience. Key steps should include:
1. Reformulating ‘faulty’ Manufacturing Policies: Transition from Make in India to a true Made in India approach that emphasizes local production and value addition.
2. Enhancing R&D Investment: Allocate significant resources to research and development to foster innovation and technological self-reliance.
3. Streamlining Governance: Improve data collection, transparency, and efficiency to enable evidence-based policymaking. Public has right to know how their economic data looks like.
Example - What is the true population of India-it is only a guess.
4. Strengthening Trade Policies: Implement measures to protect domestic industries from unfair competition while promoting exports through targeted incentives and market access initiatives.
Even if the others in world shouts foul, protectionism is the need of the hour.
Donald Trump 2.0 too is calling for American protectionism in his “America First” doctrine.
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Germany’s manufacturing dominance fuelled its geopolitical ambitions, ultimately leading to global conflicts like World War I and World War II.
Indians must realize that China’s trade dominance is not just an economic statistic; it is a fore-teller of shifting global power dynamics.
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Transition from Make in India to a true Made in India...
For India, the stakes could not be higher. Economic dependence on China undermines not only India’s economic sovereignty but also its strategic autonomy.
India must seize this moment (especially after COVID) to transform its economic and strategic policies, build resilience, and assert its rightful place in the global order.
But there are indicators of India slowing down and flight of foreign direct investments (FDI).
Failure to do so risks a future where India remains overshadowed by China’s relentless ascent to power, compromising its economic security, geopolitical standing, and ultimately sovereignty.
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