The Eastern path~ II

The Chinese economy still remains too strong and too large to be replaced by a single or a couple of Asian economies. That is why The Economist magazine came up with a term called ALTASIA, a network of 14 economies stretching in a crescent from Japan, through South Korea, Taiwan, Philippines, Indonesia, Singapore, Brunei, Malaysia, Cambodia, Thailand, Laos, Vietnam, and Bangladesh, and finally India, which can together counter and even outmatch China's economic and manufacturing strengths

- GOVIND BHATTACHARJEE

By 2024, the world has changed yet again. The geopolitical scenario has altered radically, and there may yet be a need to fine-tune our Act East Policy. The changes were first triggered by the US-China Trade War that President Donald Trump had started by imposing tariffs and other trade barriers on China in 2018. At the same time, China started showing increasing aggressiveness in dealing with neighbours. Its increasing bellicosity towards the Philippines, Japan and Vietnam in the South China Sea was bringing these countries closer to India, which itself had locked horns with Beijing at Ladakh since 2019. The Covid pandemic then severely disrupted the global supply chain of which China was the most important link, and ever since Western multinationals, which had created huge manufacturing bases in China taking advantage of its infrastructure and cheap wages, have been trying to relocate their factories away from China, benefiting other emerging economies of Asia.

China has been a global manufacturing hub for MNCs for a long time. Its stupendous growth during the last three decades was boosted by export of electronic goods. But Chinese labour was no longer that cheap – between 2013 and 2022, manufacturing wages have doubled to an average of $8.31 per hour. The trade war between the US and China continues and is forcing the high-tech companies dependent on the use of semiconductors to rethink their reliance on China. Apple is in the vanguard of companies shifting their bases away from China to India, but there are many other giant tech and manufacturing companies which are relocating a substantial part of their manufacturing away from China, among them Samsung, Dell, Sony, etc.