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China’s Lesson for India on Weaponized Interdependence

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The Pulse | Economy | South Asia

China’s Lesson for India on Weaponized Interdependence

Recent Chinese export curbs on capital goods and machinery to India amount to India’s biggest geoeconomic challenge since sanctions by the West following its successful nuclear test in 1998.

China’s Lesson for India on Weaponized Interdependence
Credit: ID 194539007 © BarksJapan | Dreamstime.com

Over the past few weeks, multiple reports have emerged suggesting that Chinese companies are restricting export of vital advanced capital goods and machinery to India. Indian manufacturers of electronics, solar panels, and electronic vehicles are struggling to keep up with their production, given the shortage in supplies of key machinery. After decades of failed attempts at industrialization, India is finally turning a corner with the rapidly growing electronics manufacturing services. But the recent moves by China could effectively stymie India’s nascent industrialization journey. 

At around $2,900 per capita income, India is still a lower-middle income economy, and needs a sizable manufacturing base to rise up the developmental ladder. China enjoys a position of dominance across most manufacturing sectors, and it is inconceivable to integrate with some of these production networks without having a deep trading relationship with China. If these de facto Chinese export restrictions are here to stay, it could amount to India’s gravest geoeconomic challenge since the sanctions imposed by the West following New Delhi’s successful nuclear test in 1998. 

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