Opinion | Hasty divorce from China not the right path to US economic resilience

On Capitol Hill, both Republicans and Democrats hold polarised views on domestic and foreign policy. But there is bipartisan support for punishing China for alleged unfair trade practices. This support was on full display in the report from the US House Select Committee on the Chinese Communist Party released in December, calling for a new set of higher tariffs to be applied to Chinese imports.

In the name of national security, both political parties support the idea of “de-risking” from China by severing more economic ties. However, doing so at this juncture is laden with risk. The path to resilience lies not in a hasty divorce, but in a delicate dance, balancing the imperative to de-risk with the perilous consequences of complete disentanglement.

Firstly, let’s dispel the seductive but dangerous myth: India won’t be the new China, at least in the foreseeable future. While India’s vast, youthful population and ambitious economic rise raise its profile as a potential alternative manufacturing hub, the reality is far from a seamless substitution of China’s reliable and efficient supply chains.

India’s infrastructure lags behind, plagued by bureaucratic regulations, bottlenecks, and inadequate logistics networks. Productivity, the holy grail of efficient manufacturing, falls drastically short of China’s powerhouse performance.

Furthermore, relying on India or Vietnam, often touted as alternative manufacturing destinations, offers only a partial solution. Both heavily depend on imported parts from China.