Japan, India and Australia have started discussions on launching a trilateral "Supply Chain Resilience Initiative" (SCRI) to reduce their reliance on China's supply chain in the post-epidemic era, Indian media revealed recently. According to the respective advantages of Japan, India and Australia, how feasible is the establishment of supply chain alliance? After the formation of the supply chain alliance, what impact will it have on China? How will China respond? Find out the answers to these questions in this European economy tea house.
The experts of the European economy tea house:
Sang Baichuan, dean of The Institute of International Economics, University of International Business and Economics
He Weiwen, chief expert of Expert Committee of China Institute of International Trade
Bai Ming, deputy director and researcher of International Market Research Institute, Chinese Academy of Commerce
Ling Shengli, director of the Center for International Security Studies at China Foreign Affairs University
Chen Fengying, researcher of the China Institute of Modern International Relations
Japan is building groups to compete with China's supply chain status
Japan's Kyodo News agency said that Japan, India and Australia held a meeting of economic ministers in the form of video conference on Monday, and agreed to consolidate cooperation measures to strengthen the supply chain in the Indo-Pacific region this year.
According to Chen Fengying, a researcher of the China Institute of Contemporary International Relations, the Japan-led alliance has something to do with Japan's economic recession and strategic adjustment.
As a result of the COVID-19 outbreak, countries' dependence on each other has been severely impacted. Sang Baichuan, dean of the Institute of International Economics at the University of International Business and Economics, pointed out that China is the major or largest trading partner of Japan, India and Australia, and they feel too much dependence and instability on Chinese supply chain during the epidemic, especially in the early stage of the epidemic, many Chinese enterprises stopped production and their exports were blocked. In order to establish a more secure and controllable supply chain system and maintain the stability of the supply chain, Japan, India and Australia hope to reduce their dependence on China by adjusting the structure of the supply chain.
He Weiwen, chief expert of the Expert Committee of The China Institute of International Trade, stressed that Japan's initiative is a flexible supply chain, not a replacement, not to replace the current international division of labor, but to strengthen the proportion of investment and trade in the supply chain between them. This is an arrangement designed to accommodate the risks to world supply chains in the wake of the pandemic and the uncertainties associated with trade frictions in China.
It is difficult for Japan, Australia and India to form an alliance in the short term
Experts interviewed by European Times all said that it is undeniable that Japan, India and Australia do have their own advantages in terms of supply chain, and they are complementary to some extent.
Experts hold different views on the possibility of forming a supply chain alliance.
"More likely." Chen Fengying believes that the current development strategy of China is industrial upgrading and transformation, and the development advantages of low-end manufacturing industry are no longer there, and the development is more toward medium-high level industries. Therefore, it is normal for a small part of industries to be transferred. At present, India does have some capacity to undertake.
Sang Baichuan believes that this is unrealistic. He pointed out that the rapid development of economic globalization since the 1990s has not only formed a global supply chain system, but also rapidly globalized trade, investment and value chain. If it is divorced from the system of economic globalization, it is unrealistic to establish the so-called complete supply chain system only in a local region or a few countries. If the market is confined to a relatively small regional scope, it is not conducive to economies of scale and mass production, and is not conducive to optimizing the allocation of resources. As a result, the economic value of creating a so-called flexible system of supply chains that excludes China would be greatly reduced.
Bai Ming, a researcher and deputy director of the International Market Research Institute of the Chinese Academy of Commerce, said that the real industrial and supply chains should be cooperation based on comparative advantages. To promote cooperation, the key is to have industry segmentation docking. The reason why "Asian Tigers" moved their industries to China was China had the appropriate technology and platform to undertake.
In addition, Japan, India and Australia will open the initiative to the 10 members of the Association of Southeast Asian Nations (ASEAN) when the idea is agreed among the three countries, sources said.
Japan, India and Australia not only want to establish a flexible supply chain system, but also want to expand its scope, such as strengthening cooperation with The Association of Southeast Asian Nations, Sang Baichuan said. In fact, ASEAN has become China's largest trading partner. The trade relationship between asean and China has been developing rapidly, and the industrial and supply chains have become increasingly close. Therefore, it is unrealistic for the ten ASEAN countries to simply choose to establish a supply chain system with Japan, India and Australia instead of economic and trade cooperation with China.
Globalization is unstoppable and unfeasible
In recent years, there have been frequent calls for India to replace China as the new "investment hot spot". In a recent speech, Indian Prime Minister Narendra Modi also mentioned that many companies have begun to see India as a potential global "supply chain hub".
Ling Shengli said that if Japan, India and Australia formed a supply chain alliance, the impact on China is still a strong negative one. Because it will weaken China's advantage in the global industrial chain, especially in the manufacturing sector. At the same time, considering that the diplomatic relations between these three countries and China are not very good, it is inevitable that there will be some political and security implications.
But Sang Baichuan thinks, this need not have too much worry. From the micro point of view, enterprises in the global supply chain system to consider the maximization of investment returns. Through the "visible hand", the government requires enterprises to change their original investment, trade and market structure. In fact, the government lacks effective micro-foundation, which is bound to be rejected by enterprises. As long as China maintains an open mind and strengthens cooperation with other countries, including Japan, India and Australia, enterprises and markets, and strengthens economic and trade cooperation with ASEAN, EU and other countries and regional organizations, it will not be simply excluded from the global market.
Experts say a future model of Japan-India-Australia competition with China would be bad for the global economy.
"For China, Japan, India and Australia are all important trade and investment partners," Sang said. "If we form an alliance against China together with the United States, there will be pressure on China's development and international space." At the same time, it will further squeeze China's market space in international economic and trade activities, which has certain constraints on China's economic development.
But China's domestic market is large and its industrial system is relatively intact.Businesses and citizens do not want to make smaller gains at higher costs and costs, so they must play an important role in supporting an open world economy.Without public opinion, without the law of economic development, without artificial containment of economic globalization and excluding any country from the global market system, such ideas and practices are bound to fail.
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http://www.oushinet.com/china/eiec/20200904/362232.html
