Vijay Kumar Gaba

Since my posts are mostly my personal views and observations, criticism does not affect me. I usually politely agree to disagree. I would thus avoid responding to criticism or the views to the contrary. Nonetheless, I may reemphasize my views as follows:

·         In the short-term (5-7 yrs) any business or investment strategy that assumes substantial decoupling of China from India’s trade specifically, and Western countries in general, may not be successful.

·         Presently, China+1 trade is confined to a few businesses (not sectors), where (i) China has explicitly implemented capacity shutdown, (ii) there are serious IPR violations or data security threats, (iii) Innovators have developed new markets and find it profitable to produce a part of overall production close to the new market, (iv) local government has offered meaningful incentives for building local capacities, and/or (v) a local partner has offered better terms/infrastructure as compared to the Chinese counterpart. All these situations are very normal business propositions and have little to do with geopolitics.

·         Increase in tariffs by the US post 2017 on the imports from China has reduced the US imports from China by ~5% (from 21.6% in 2017 to 16.3% in 2022). However, it has not changed the US dependence on China, as the new import partners have meaningfully increased their trade with China. (Read more)

·        In fact, China’s trade surplus with proxy countries (countries used by many countries to indirectly import from China) has increased meaningfully, implying some rerouting of trade. 

·         Insofar as geopolitics is concerned, it is important to note that China’s trade surplus with India and Western countries has not shown any meaningful change post Covid. Overall, China’s goods trade surplus has more than doubled since the pandemic, going from $400 billion a year to $900 billion (read more).

Also read China+1 ...rhetoric apart

https://www.investrekk.com/2024/01/china1-rhetoric-apart.html?m=1