India stands to gain from US-China trade tensions, says former US Ambassador to the ADB

India is poised to benefit from the ongoing trade friction between the United States and China, according to Curtis Chin, the former US Ambassador to the Asian Development Bank and a Senior Fellow at the Milken Institute.

Speaking to CNBC-TV18, Chin highlighted the potential for India to attract manufacturing as companies look to diversify their supply chains away from China.

“As a big fan of India, I think that is all within the scope as we think about diversification of manufacturing away from single markets,” Chin stated. He pointed to reports suggesting that companies are already considering India as a production hub, including the possibility of Apple making India its primary manufacturing location for phones destined for the US market.

However, Chin also cautioned that China might attempt to impede the transfer of manufacturing knowledge to India in the short term. “I’ve seen reports already about China slowing the export, the ability to move some of that manufacturing knowledge from companies, manufacturing lines in China — kind of stalling or delaying that movement to India,” he noted.

Despite such potential hurdles, Chin believes that the structural shifts in global supply chains, accelerated by the trade war, will have long-lasting effects. He emphasised that the move away from reliance on a single market like China, a trend that gained momentum during the pandemic, is likely to continue. “This trade war will end… And when that happens, the reality is that the steps being taken by companies to shift away from China — to shift into India or elsewhere — those steps will continue to play out in terms of decisions made now,” Chin explained.

He also suggested that the tariff war is damaging China’s reputation as a dependable partner, just as some have accused the United States of similar behaviour. This situation necessitates that countries in Southeast Asia and elsewhere consider diversifying their supply chains, potentially moving away from both China and the US as primary sources for crucial components.

Chin underscored that China’s primary focus remains on domestic stability, especially concerning employment. He also raised concerns about the credibility of China’s official growth targets, noting the International Monetary Fund’s recent downward revision of China’s GDP projections. In response to the economic headwinds, Chin anticipates that China will likely implement further measures to support its economy.

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