Has China finally acknowledged that it faces immense pressure from India, its competitor in the manufacturing sector?
At least that’s what a latest article in China’s state-run daily Global Times thinks.
“The competitive pressure on China’s manufacturing sector from India is perhaps much bigger than China imagined,” the article titled ‘China Should Reduce Production Costs for Manufacturers as Competition With India Grows’ reads.
While admitting that India’s low labour cost advantage caused China to step up their game in the manufacturing landscape, the article says:
“China’s low-end manufacturing industry is experiencing hard times as some multinationals move production from China to other Asian countries, India included. The increasing competition from India raises a tough question for China’s manufacturing sector of how to keep its competitive edge at a time when the nation’s labour cost advantage is shrinking rapidly.”
The article further goes on to suggest ways in which China can reduce production costs for manufacturers, to stay in the game with India.
One of the ways, the article lists out, is to reduce the economy’s reliance on real estate and “create a favorable investment environment for manufacturers.” According to the article, China’s “overheated real estate market has already had a spillover effect on the development of China’s manufacturing sector.”
The article then suggests the way in which foreign-backed companies can start showing interest in China, over India.
“The country should promote the development of its local manufacturers and encourage them to build plants in less-developed central and western regions where labour costs are relatively lower.”
But India’s competitive edge does not baffle the daily much.
Despite India being more “attractive to manufacturers than ever, it will be difficult for the country to build a complete industrial chain overnight.”
For its “nascent and growing” manufacturing sector, India will need to expand its imports of Chinese-made components and parts to support the development of the sector.
The article ends with a hopeful note:
“Hopefully this would lead to a new cross-nation industry chain and closer economic ties between China and India in the future.”
Source: Global Times
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