Saturday, 2 July, 2022
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India, Japan and Australia are working on a supply chain pact to counter China

The intensifying US-China conflict & worsening diplomatic relations across the region are forcing companies to reconsider whether they can continue doing business in China as before.

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New Delhi/Tokyo: Japan, India and Australia are seeking to build stronger supply chains to counter China’s dominance as trade and geopolitical tensions escalate across the region, according to people in Tokyo and New Delhi with knowledge of the matter.

The three nations are discussing building a “supply chain resilience initiative,” according to the people, who asked not to be identified because they are not authorized to speak to the media about internal discussions. The talks are at a working level currently, but Japan would like to bring them to a higher level at some point, according to a person in Tokyo.

India’s government is considering the plan and will make a decision soon about whether to participate, some of the people said. An Australian official declined to confirm the talks.

The discussions were earlier reported by The Economic Times.

The intensifying U.S.-China conflict and worsening diplomatic relations across the region are forcing companies to consider whether they can continue to do business in China as before. In addition, the disruptions to trade caused by Covid-19 brought home how dependent many nations were on China for essential goods such as ventilators or masks, spurring talk about diversification.

Factory diversification

Japan is trying to pare its reliance on Chinese factories, with the government subsidizing some companies to shift or expand operations in Japan and Southeast Asia. So far 87 firms are participating in the program, which will pay out 243.5 billion yen ($2.3 billion).

Both India’s and Australia’s trade and diplomatic relations with China are fraying. Prime Minister Narendra Modi’s government restricted some Chinese imports and banned several Chinese apps after a deadly border clash with its neighbor. In Australia, exports like beef, barley and now wine have been targeted by China amid deteriorating ties between the two nations.

The quad

Along with the U.S., Japan, Australia and India are members of the Quadrilateral Security Dialogue, or Quad, a loose grouping for national security consultation.

Two calls and a text message sent to India’s trade ministry spokesperson during business hours were unanswered.

A spokesman for Australia’s foreign ministry said the nation is working with a range of partners to ensure supply chains are kept open and resilient during the recovery from Covid-19, but did not confirm whether it was working on a deal with Japan and India. There’s no clear agreement between the three nations on any action yet, an official from Japan’s trade ministry said.

Earlier this year Australia and India agreed to work together on diversifying supply chains.

The new proposal will seek to lean on such bilateral agreements between countries and put in place further measures for trade facilitation and attracting foreign direct investment in the Indo-Pacific region, the people said. Nations from Southeast Asia would also be invited to participate, they said. –Bloomberg


Also read: China’s loss is turning out to be India’s gain as supply chains start shifting


 

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2 COMMENTS

  1. This is the right time that like minded and loyal countries should join together to stand against china and make the countries not dependent on china . China is a copycat and thier cunning nature should be stopped. They are funding and expanding into Africa Asia and other countries and make them their puppets . This is very danger. Game

  2. Need of the time is that Western Europe,japan,US & Australia should work on finding alternative to China & India is in a position to take on manufacturing & provide a supply chain alternative.China has criminally misused her position now to bully the world.Dragon is using his economical power to expand out of proportion & shatter the world economy.

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