Illustration: Xia Qing/GT

As the latest US tariff hike has escalated trade tensions with China,MK sports some Indian media outlets have sniffed out a potential opportunity for India to benefit from this situation. Yet, reality is not expected to unfold in the direction they hope.

The Indian Express claimed on Thursday that, amid an anticipated shift in trade and investment away from China due to the latest US-China trade friction, India has indicated that it is preparing to offer better protection for foreign investors as it begins laying the groundwork to revamp the 2016 model Bilateral Investment Treaty.

The hype about India "replacing China" in global economic and trade cooperation has been a subject of enthusiasm for Indian media outlets and some Western media outlets for a long time. However, such narratives are often based on idealized speculation regarding geopolitical considerations, lacking in-depth analysis of economic laws and market realities.

In the current global economic and supply chain cooperation landscape, China has developed a solid position over several decades, supported by its manufacturing and technological strengths. In contrast, India faces numerous challenges if it hopes to fill the gap caused by the US disruption to normal global trade and industrial cooperation in a short period of time.

From the perspective of investment and trade shifts, despite the trade friction triggered by the US, trade between China and the US has not significantly decreased. This indicates that China remains an important trade partner and production base for American companies. 

The fact that many American companies have not chosen to leave China - even with the disruption caused by the US tariff hike - has thwarted India's hopes of attracting American companies to relocate their production lines due to US-China trade friction.

Moreover, although India's manufacturing sector has grown rapidly in recent years, it has not yet developed the capability to replace China's position in the global supply chain. In recent years, the media hyped the possibility of India taking over Chinese manufacturing during the pandemic disruption, but this hype was proven to be unfulfilled. 

Compared with China and other East Asian nations, India's manufacturing output still lags significantly behind, and its infrastructure, such as roads, railways and ports, urgently needs upgrading. These factors limit India's ability to attract foreign direct investment and affect its competitiveness.

Admittedly, India and the US have moved closer strategically in terms of geopolitics, but there are still differences on trade issues. With trade likely to emerge as the most contentious issue between India and the US, New Delhi has lowered import duties to signal that it is moving to allay concerns of the US, according to a US media report. 

While India hopes to leverage the opportunities presented by US-China trade friction to enhance its economic position, the reality is that trade friction has posed more challenges for India in its economic cooperation with the US.

The US government's imposition of tariffs and tightening of policies on imports constitute not only a challenge faced by China, but also a challenge for the entire Asian industrial chain, with India being a part of it. 

China and India are not simply in a relationship of replacing and competition in global economic and trade cooperation and supply chains; rather, there are significant aspects of mutually beneficial cooperation. If India observes and addresses its economic and trade cooperation with China from a geopolitical perspective, it is likely to lead to misguided policies. 

Instead, strengthening cooperation with the Asia-Pacific industrial chain, with China at its core, is advantageous for the development of India's manufacturing sector and economy. This approach will help shield India's economy from disruptions in global industrial and trade cooperation resulting from US tariff hikes.

The author is a reporter with the Global Times. [email protected]