Today’s fractured global economy has seen two ways of economic fight. One is the Western approach, led largely by the US, through sanctions and tariffs. It’s loud, visible, and mostly a signal as much as a cost to the target country.
The other is quieter. Bureaucracy, weaponisation of rare earth supply, and experts that drop off at the last minute – that’s the Chinese quiet way of slowing things down.
In recent years, India — like many others — has felt the brunt in both ways. Much has been written and discussed about sanctions and tariffs. What follows are a few experiences of the latter style of friction, and what they reveal for India.
South Korea: Targeted Pain, Eventual Accommodation
After South Korea installed the US Terminal High Altitude Area Defence (THAAD) system in 2016, China responded by restricting firms like Lotte. Lotte had provided land for THAAD. China’s Lotte store closures and halted construction resulted in a $2.2 billion loss over 18 months.
Other businesses dealt with customs delays, stricter checks, product removals, cancelled events, and visa refusals, but sectors such as semiconductors were spared to protect China’s supply chains. Despite billions of dollars of losses, overall trade and chip exports to China increased.
South Korea responded cautiously by seeking WTO consultations, stockpiling materials, and diversifying inputs without escalating. In 2024, relations normalised after Seoul accepted that it would limit military actions against China.
Vietnam: Scale Without Control
Vietnam benefited from “China-plus-one” strategies, similar to India. However, it relied heavily on Chinese supplies. When China imposed export and technician restrictions, Vietnamese factories faced delays, quality issues, and higher risks as most components still came from China, squeezing margins.
Now, Vietnam has responded by taking state control of rare earths. It has the world’s sixth-largest reserves of rare earths. It has banned raw exports to encourage downstream investment.
Brazil: Dependency Continues
Brazil imports 85% of fertilisers from China, and when China imposed limits, Brazil faced high inflation. It also led to more subsidies and emergency imports, impacting the entire economy.
Brazil’s plan to reduce fertiliser dependence stalled due to environmental, political and financial reasons. Fertiliser imports have been rising despite all the plans.
Japan: A Decade-Long Adjustment
China’s rare-earth embargo on Japan in 2010 lasted just months, but it caused prices to surge and depleted stockpiles, putting auto and electronics production at risk. Over 10–15 years, Japan invested billions of dollars in technology, alternative suppliers and product redesign to cut its reliance on rare earths from 90% to about 60%, despite higher costs.
It goes to show that building real resilience isn’t a one-time fix — it needs ongoing effort, investment in new technologies, strong financial backing, and astable political environment to truly pay off in the long run.
India: Competition China Doesn’t Tolerate
After the 2020 border clashes, India’s economic ties with China became more complicated. India tightened controls on Chinese apps, investments, and procurement, while China restricted crucial supplies and expertise needed for Indian exports of electronics and pharmaceuticals. For instance, delayed component clearances and recalling Foxconn engineers disrupted electronics manufacturing, while fierce competition and limited API supply from Chinese pharma firms affected India’s pharmaceutical sector.
Recently, after US tariffs on India, the government eased tensions with China by reversing several Quality Control Orders on key goods and speeding up visa processing for Chinese technicians. Approvals for Chinese investments in electronics and EVs also resumed after long delays.
India is actively addressing supply risks by pursuing trade deals, launching a rare-earth magnet incentive scheme, opening mining to private companies, and making overseas acquisitions of critical minerals, such as lithium and cobalt in Argentina and Australia. These initiatives help reduce reliance on China-linked supplies in the long run.
India’s Hard Choices
Together, these steps reflected a turn toward pragmatism. India cannot avoid China and must keep factories running and exports competitive for economic growth. Unlike countries such as South Korea or Japan, India does not export anything that China critically needs and cannot easily replace, which limits its leverage.Add unresolved border tensions, repeated military stand-offs, and India’s Visible role in the QUAD, and China has fewer reasons to hold back.
That is precisely why easing trade frictions matters. Faster visas, smootherimports, and reopened investment channels are not about softening India’s geopolitical stance; they are about buying time and operational breathing space in an increasingly volatile global economy. The problem is that time moves quickly, and breathing space shrinks faster. The real question is whether this buys India time — or whether it quietly locks in a deeper dependence unknowingly.
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
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