Bhubaneswar: US-China stand off worsens in the tariff war. The trade war has entered a new phase as China has changed its posture. It is no longer playing defense. It has gone on to offensive mode to the US. China is taking the fights straight too the American consumers. By weaponizing the social media it is recruiting the Chinese suppliers to launch the tariff attacks. Now the social media has become the battle field. The Chinese suppliers are now reaching out to the American customers directly. The convey the message that skip the middle men and buy straight from China in cheaper price at the same time they are trying to degrade the other western brands like lululemon, Birkenstock, FILA etc by showing comparisons of prices between their products and of these brands. The reason behind these video that are circulating on Tiktok, is to humiliate the western brands and expose that how high they are charging for the products that can be available in much lesser price. But considering these claims and the products are coming from China it is not very much trustworthy to go about. China is well known for its knock off products and duplicates.
Yet, this campaign has struck a chord, as the Chinese diplomats have come into this war. These attacks are coming from all side, not just in social media but in American companies as well. They are being punished for Trump’s trade war. The latest victim is Boeing. Amid this Trump has reacted by saying “China is trying to screw the US because on top of all these social media war, Beijing has dictated all the Chinese air base to stop taking deliveries from all the Boeing planes. This is a big set back for Boeing as China’s aviation market is expanding rapidly in the coming 20 years China will account for 20% of the global aircraft demand. Boeing had a foot hold here that it had dozens of orders from Chinese airline. China’s three top airlines such as Air China had ordered 45 Boeing planes, China Eastern airline had ordered 53 planes, and China Southern airlines ordered 81 planes. Now Boeing could be losing them as its customers.
China also is supplier of rare earths to the US which has been stopped including a whole list of metal exports from China to US has also been suspended. The list includes rare earth magnets which is significant because it is used in a range of industries in US for making automobiles, drones, and missile assembling. China has halted the shipments of these materials at present. President of China Xi Jinping has called the tariff war by Donald Trump a unilateral bullying.
On the other hand, President Xi is on a tour of South East Asian countries and encouraging them to resist the Trump tariff. He is pitching China as a stable partner by offering the best of globalization to the countries , open markets, stronger bilateral ties and a unifies response to the American pressure. Xi Jinping has states, ” We are not afraid of trouble” when US was escalating tariff on China everyday. Then later US took a U turn by exempting all tariffs on most electronics which came as a relief to China but the later did not reciprocate by easing off the pressure then. Now China wants to keep the fight going and Donald Trump says,” He is not surprised by China’s actions”. This fight seems to be going to be a prolonged one as it is coming from al ends, trade, technology and now Tiktok.
One country’s trade war is another country’s opportunity. India should look at this situation like this. There can be a hit but there will be opportunity as well. The role of India is to hunt for those chances where can it get in. One possible area could be rare earth metals. As it is mentioned, China has halted the export of these metal to the US. This move has all the potential to cripple the business of US. But the question is could India intervene by plugging the gap left by China. These rare metal are extremely crucial to make things like semiconductors, EV motors, Fighter jets and missiles, wind turbines, LED lights etc. These rare the metals of the future. China dominates rare earth productions as it makes 70% of all rare outputs and make 90% rare earth magnets that made from rare earth metals.
Whether it is rare opportunity for India to shine the global market. India should play its cards wisely. India comes third in terms of rare earth reserves after China and Brazil at first and second respectively. So there no issue of availability of the rare earth metals in our country. Though the name is rare earth but the reserve is not so are. They are found across the earth but real issue is extraction and processing.
India and US are planning to collaborate on this. In recent visit of Prime Minister Narendra Modi to US this topic was discussed and both sides agreed to the collaboration. But as the process of its extraction is a long one it is going to take time. It is not a over night process. Although there is an urgency of creating an alternative rare earth supply chain other than China. India can certainly make this opportunity work but time is the essence here.
It is not just about the rare earths but also about the other broader manufacturing pivots. India wants to become an alternatives to Chinese factories. Most policy makers feel that the time is right by pointing to Trump’s hefty tariff on other Asian producers. India was imposed tariff by 26% but others faced a much higher tariff. So on paper this will help India. It will make Indian goods more competitive. But that will not be sufficient for the companies. Producers will look for other factor as well like the cheap prices of the raw materials, good public infrastructure, easy acquisition of lands for business, settling disputes easily etc will affect the final decision of a business more than just tariffs. So the central focus of India should be on creating a robust manufacturing environment. Public infrastructure has gown rapidly in the last ten years in India. Ease of doing business has also improved. But much more needs to be done. If these areas are not corrected then India could miss the manufacturing bus again.
-OdishaAge
