Source: The post China blocks Foxconn shift and India gains global ground has been created, based on the article “Choking China+1?” published in “Business Standard” on 7th July 2025
UPSC Syllabus Topic: GS Paper2- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
Context: China’s move to block Foxconn’s shift to India reflects its strategic weakness. While it may create short-term disruptions, it raises long-term doubts among global firms, reinforcing India’s appeal in high-skill manufacturing.
For detailed information on China’s restrictions threaten India’s manufacturing and growth read this article here
China’s Tactical Moves and Strategic Weaknesses
- Foxconn and China’s Coercive Measures: China has interfered with Apple and Foxconn’s plans to expand in India by controlling Chinese citizens and blocking specialized shipments. This is driven by insecurity over declining dominance.
- Growing Concern Among Chinese Elite: From being 15 times larger than India in US imports in 2009 to only five times in 2025, China’s shrinking lead has raised alarm. Domestic turmoil under Xi Jinping has made India’s rise more worrying for Chinese observers.
- Delays Without Strategic Gains: While China’s moves may slow India’s immediate manufacturing progress, they reinforce the perception of China as unreliable. This will encourage global firms to seek alternatives.
Evolving Trade Trends Between China, India, and the US
- Shift in US Import Patterns: In 2007–09, the US imported 15 times more from China than India. Since then, India’s share has steadily improved, particularly after 2018, during the onset of the “Third Globalisation.”
- Recent Developments in 2025: In March–April 2025, China’s exports to the US were only five times higher than India’s. This signals rapid gains for India amidst disruptions in Chinese supply chains.
- India’s Emerging Role in Global Trade: These trends suggest growing trust in India’s capabilities and stability, strengthening its position as a global manufacturing hub.
Limits of Chinese Economic Statecraft
- Weak Coordination Among Allies: China’s alliances with Russia, North Korea, and Iran lack deep coordination. Unlike the West’s cohesive 65% share in global GDP, China’s solo efforts have limited reach.
- No Intellectual Edge: China lacks leadership in rare, high-end knowledge essential for global manufacturing. This hampers its ability to wield effective economic statecraft compared to the West.
- Global Resilience Against Chinese Barriers: When China restricts access to key inputs, others adapt by investing more and sourcing from alternate suppliers. These short-term costs quickly fall as non-Chinese firms enter the market.
Broader Policy Lessons from the Chinese Model
- Short-Term Wins vs Long-Term Impact: Chinese policies may create short-term disruption, but they damage China’s credibility. Firms like Apple and Foxconn now view China as a high-risk environment.
- The Need for Rule-Based Governance: Effective policy requires fairness, rule of law, and predictability. China abandoned these principles, which were part of Deng Xiaoping’s reform legacy.
- Importance of Strategic Thinking: Sound public policy prioritises long-term trust over short-term muscle. China’s reliance on coercion undermines its global appeal.
India’s Path Forward in Global Manufacturing
- Rethinking Manufacturing as High-Skill: Modern manufacturing demands complex knowledge and skilled operations, not just cheap labour and simple processes.
- Learning from Global Partners: Indian firms must collaborate with foreign technology providers, advisors, and employees to climb the productivity ladder.
- Precautionary and Strategic Investment: Firms should invest in upgrades before constraints emerge. Choosing partner countries with stable policies is crucial for uninterrupted growth.
Question for practice:
Evaluate how China’s recent actions against Foxconn reflect its strategic vulnerabilities and influence global manufacturing decisions.
