New Delhi: In this segment of ABP News' China Files series, we investigate how the country has been able to make the world financially dependent on it. It is well known that China is a global manufacturing powerhouse and that Europe, America, and the rest of the world is depended on Chinese production facilities which are built on cheap labour and a strong infrastructure. But the pandemic is a reminder to the world not to put their eggs in one basket. As First world countries such as the United States and European countries struggle with the virus their dependency on China increases with the shortage of essential medical equipment such as face masks, PPE gear, and test kits that have become important to deal with the coronavirus. Most countries have no choice than to turn to China for supplies and large consignments of masks and other equipment were shipped to Germany, Italy, India, etc.

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From Farms to Manufacturing Units

From a largely agrarian economy, China’s rise to a manufacturing powerhouse is considered as astonishing. After turning into a communist country, China ventured into a path of self-sufficiency based on withdrawal from the international market and nationalization of key resources in the country. This turned out to be a disaster that led to calamities such as the famine in 19050s and 60s. But after the death of Communist leader Mao Zedong, the country worked on a plan for economic revival by opening to the markets and creating special economic zones or SEZ with a focus on exports. At the same time wages increased in countries such as Taiwan and Hong Kong which used to be a hub of manufacturing. Naturally, European countries, the United States, and Japan which were looking for cheap production facilities turned to the newly emerged China. Over decades China expanded and strengthened its infrastructure and kept increasing its capacity. China now produces over 90 percent of world’s personal computers and mobile phone, 70 percent televisions, 53 percent of clothing, 45 percent cargo ship and the most important for the present situation almost 80 percent of masks. It continues to improve its capabilities and in 2018 was the second country in the world to spend over 22.42 lakh crore on Research and development. It is also continuously investing in its citizens and facilitates the education of its officers in top universities around the world. This has helped in making China be at par with the United States.



Coronavirus Outbreak

When the coronavirus outbreak began in Wuhan, the city and others in Hubei province went into a lockdown for over 2 months. The country shut down many production units during this time and ripples of this move were felt across the world as countries such as Italy, the UK, and the US faced shortages in supplies. The pandemic has not only brought to light the dependency on China but also how it continues to increase.

Economic expert Vijay Sarada says that China made specific changes to their policies that not only helped to increase the profits of the foreign companies but were also beneficial for its economy.

He says, “Many countries gradually stopped their production units and started using China’s manufacturing facilities. Once you do this on a mass scale, what happens is that you are left without any factories, technical skills and you become outdated. Despite the anger, we may feel about the current situation we know in our hearts we will be unable to function without China.”



Is there a lesson here for India?

Sarada says that India by improving infrastructure and solving existing problems faced by Indian companies it is possible to become an alternative to China.

“First we look at our imports and give incentives to companies for investing in those sectors. Once you become self-sufficient, we can then look at exports especially in those areas where China is presently supplying. We can then solve the issues faced by Indian companies in terms of supply chain and infrastructure and can gradually become an alternative to China.”

According to Shishir Sinha, it is important that the government focuses on ways to increase the disposable income of citizens which will, in turn, activate the economy and generate employment.

“What is important is increase spending by focussing on disposable income. Once demand is created in the market, companies are going to raise production, and this will help to generate employment. This will turn the economy around.”

With a carefully structured economic policy along with the measures taken by the Narendra Modi government such as ‘Make In India’, it is possible to lead India to the road of becoming the next global economic powerhouse.