China - Manufacturing and Trade Powerhouse
China has a $1 trillion trade surplus , which has nearly tripled since the pandemic. It has a trade surplus of:
- $300 billion with the US
- $200 billion with the EU
- $500 billion with the Global South
China's only trade deficits are with Taiwan, South Korea (for chips & electronics), and Australia (for commodities).
Manufacturing sector share
- China: 32% of global manufacturing
- US: 15%
- Japan: 6.5%
- Germany: 4.5%
High-End & Basic Manufacturing Dominance
-
China's Market Share in Key Sectors:
- 65% in EV batteries, electrical equipment, solar panels
- 50% in apparel and basic materials
- China’s manufacturing is 10 times the size of India's.
Trade Strategy and Export Rerouting
- China has rerouted exports to the West via the Global South to bypass trade barriers.
- Example: China’s trade surplus with the Global South grew from $300 billion to $500 billion , while the Global South’s surplus with the US also grew.
- The West is now trying to curb this rerouting by imposing tariffs (e.g., Mexico, EU tariffs on Chinese EVs ).
Impact of Trade Barriers on China & India
- If China faces barriers in the US & EU , it will redirect excess production to the Global South, especially India.
Risk to India
- India already has a $100 billion trade deficit with China .
- Dumping of Chinese goods could hurt India's industrial growth and job creation.
- India must act fast to prevent deindustrialization and protect its manufacturing sector .
Policy Challenges & Recommendations for India
-
India must strengthen trade defenses :
- Faster anti-dumping measures
- Stronger non-tariff barriers
-
Enhance domestic manufacturing competitiveness by:
- Fixing factor markets
- Reducing regulatory burdens
- Boosting private sector investment
- India must increase its share in global manufacturing to create jobs and counter China’s dominance.
