If China is, in fact, uncomfortable with India’s rise in the manufacturing sector, it makes sense from a Chinese perspective, even though India is yet to go a long way before it might present a substantial challenge to the Chinese manufacturing might, which is probably second only to the United States. So we should not be surprised by the exit of well over 300 Chinese engineers from Foxconn’s Tamil Nadu and Karnataka manufacturing facilities engaged in making iPhone 17, which could well be because China does not want to see viable competition from right across the border. And a disruption of the Apple supply chain diversification can indeed be a tool to arrest India’s manufacturing ascent.
China seems to be doing everything in its power to ensure that India’s manufacturing growth remains stunted, particularly in the area of technology. It is in line with its objective of dominating Asia in every field possible, which is more of a necessity than a fancy dream for it for the simple reason that China manufactures goods in way larger quantities than its domestic market can consume. So it has to expand to markets outside its boundaries and keep expanding. Now, if India can provide an alternative manufacturing hub, which it very well can, given the surplus of a large, young and talented population, it can be a major cause of worry for the Chinese.
Skilled technicians play a pivotal role in manufacturing complex, engineering-intensive devices, and not only enhance the technological capability of the manufacturing unit they work in, but also augment the overall technological sophistication of the nation. And China might see it as India’s use of Chinese technology workers to power its own technological advancement at the cost of Chinese capabilities, and China is quite sensitive about it.
After all, Chinese factories are churning goods and the market for those goods is not expanding suitably fast. In such times, if another nation steps up its manufacturing capabilities, the marketability of Chinese goods will definitely take a hit. That would not only cut into China’s economic dominance but might also deliver a setback to its long-term ambition of becoming an unchallengable Asian hegemon.
China dominates the production of rare earth minerals such as gallium, graphite, and germanium, which are critical for manufacturing general electronics and electric vehicles. To impede India’s access to these necessary electronic components and slow its manufacturing growth, China is leveraging its dominant position to enter into formal and informal arrangements with third parties, which strategy is indeed hurting India’s prospects of becoming a viable supply chain alternative.
As long as India remains dependent upon Chinese inputs for manufacturing, its ambition of being a truly independent nation would continue to be a pipedream. What’s even more interesting is that the said arrangement with the third parties are not formal but put in place verbally, making it hard for India to challenge the strategem and easy for China to offer categorical denials, calling the non-cooperation of the third parties their own call.
China’s trade surplus, owing largely to its lukewarm internal consumption and unabated manufacturing overcapacity, is now a problem for China, which even the repeated interest rate cuts by the People’s Bank of China has not been able to ameliorate, much less solve. So the only way for the Chinese goods is out. And the only way to sell as much as it manufactures is to lower prices over and over again, which has eroded the profitability of manufacturing across sectors. And now it has India next door, trying to shore up its manufacturing. So China has every reason to be anxious about.
Even though there are a lot of changes that India needs to make to present a viable manufacturing alternative to China, it seems to be making progress in that direction, even though the progress is not quite as steep as the Indians would like. But China is alive to the developments and is taking proactive steps to prevent India’s potential rise, or at the very least slow it down. Beijing knows that India would continue to make strides in that direction, which it would be compelled to progressively counter, if it has to maintain its manufacturing leverage. And if these backdoor and underhanded machinations do not bear fruit, it might fall back on military stands like an insecure 600-pound guerrilla might. So if manipulations fail, it might bring to bear open threats. How long it takes for China to get to that point would depend on how quickly India manages to put its house in order to make substantial strides in the direction of becoming a go-to manufacturing destination for multinational companies that are looking for an alternative.
China’s Dominance
Over the years, China has come to dominate technology-centric sectors, and is at the forefront of Artifical Intelligence (AI) and quantum computing, not to mention 6G telecommunications and green energy marketplace. It has gained such dominance not only by relentlessly pursuing technological expertise but also by suppressing and uprooting competition by all means necessary. China has also leveraged its economic might to spread its political influence across Asia by lending large sums of money to the countries in need and then trapping them in its debt (also referred to as “debt-trap diplomacy”), which it periodically leverages for setting up such installations that can sometimes be quickly refashioned for military purposes. So China is, in a way, as dangerous an ally as it is a foe.
It is also known not only to gear economic advantages towards political gains but also to employ political hold to make further economic gains, and the cycle continues until a sovereign country starts acting like its satellite state, or about that, thus eroding the national sovereignty of the nation in question. The strategy presents a risk not only to the subject nation but also to its neighbouring countries on account of China’s tendency to expand its sphere of direct control rather than just influence.
China, being the manufacturing powerhouse it is, can employ such aggressive economic strategies as needed to destabilize the polity of the target nation because once it controls the vital supply chains, it can extend the threat of squeezing them to arm-twist a nation into doing its bidding, thereby exercising indirect control over the political outcomes in a region. China is fully aware that the source of its political power is its economic might, which is founded principally upon its manufacturing capabilities. And that explains why China is so sensitive about India’s rise and why it’s trying to impede India’s rise as early in the day as now, when India is just about stirring to move its manufacturing muscle.
How is India Placed?
To put it brusquely, India is not placed all that well against Chinese multipronged, and largely indirect economic assault on its nascent manufacturing efforts in the technology sector. We are still hugely dependent upon foreign nations for inputs to make things at home. Let’s just say, for all talk of “make in India”, we are more of “assemble in India” than “make”. That’s why it is surprising that China has already begun undercutting India when we are not exactly a sizable threat to its dominance. Two possible conclusions follow: Either China is way too insecure and is overreacting to a minor threat; or China just cannot afford to have its export market shrunk even a bit; or perhaps both.
Way forward for India
India has to brace up for an increasing number of indirect roadblocks China is likely to put in India’s way when it comes to developing manufacturing ability, particularly in the technology sector. And with China bringing its considerable economic might to place roadblocks in India’s way, things have gotten harder than they already were, given that despite efforts and government schemes, the demand side of the Indian economy has been slightly shaky in the recent past, even though things are now improving on that front.
But even then, India’s overall growth across all sectors has to improve quite a bit for it to compete with China’s mature supply chain. Doubtlessly, the Indian market is still robust, and while the economy might be ebbing and flowing rather than gushing on, it is still pretty much in the reckoning with robust GDP growth and resilient economic fundamentals well in place.
However, we also need to understand that the economy does not operate in isolation, and there are other things that need to be taken care of for the economy to keep functioning smoothly. Economic capability, including manufacturing, is a function of robust, long-term capacity building, which involves fostering a keen sense of inquiry and scientific temperament so that the young emerging from the educational institutions can come up with fresh ideas with increasing frequency.
Another thing that plays a crucial role in building and maintaining a strong economy is an independent and fair adjudicatory system governed by an unwavering commitment to the Rule of Law as opposed to the whimsical diktats of ever-changing government policy, like we have been seeing in the Trump America that is being supposedly made “great” in all the wrong ways.
While India has a fiercely independent judiciary, the commitment of the Indian government to the Rule of Law and fair play has not been as unwavering as needed. The government is seen as playing fast and loose with the law, depending upon what best serves its political ends. One can argue with the accuracy of the impression, but the point is, right or wrong, that is the impression. And the impression matters because people do not want to put money where there is an uncertainty of outcome as well as uncertainty regarding what factors are in play.
So if we truly want to be self-reliant and mount an effective pushback to China’s designs on being a Asian hegemon, we have to work on a lot of things together, and not just on the economic side of things, but also on the political front. Simply reframing “Make it India” of 2014 as “Atmanirbhar Bharat” in 2020 is surely not going to cut it no matter how hard we trumpet our oft-projected Vishwaguruness.
Originally published on Medium on August 8, 2025.
