The invisible Chinese threat

Forget Pakistan, focus on China. This was a recent statement made by India’s Army Chief Bipin Rawat. Though he was referring to defence concerns and border disputes, the deeper issue is more than security issues.

In the last few years, China has moved ahead in sectors where India had developed strengths. From automobiles to pharmaceuticals to information technology, China has outclassed India in many ways.

The real threat from China that we don’t see is in its focus on high technology sectors. India is falling behind because of decades of neglect.

India’s information technology sector has been celebrated for many decades and for good reason. Indian IT companies created a model of software and related services and built a multi-billion-dollar industry.

However, India has lost out on quality of its talent. A study on competence by online recruitment and coding practice company HackerRank threw up surprising results. About 300,000 coders took up an online challenge to test their skills. The results were then broken down by country. The news for India turned out to be negative on two fronts. India was ranked a poor 31 among 50 countries. Indian coders fared worse than from Vietnam, Bulgaria and Chile. India was better than Ireland, Mexico and Nigeria. 

The big news, however, was that the country on top of the list with 100 per cent score was China. Russia and Poland were in second and third positions. US and UK were at 28 and 29th. The challenge had been divided into several tasks and puzzles in categories like algorithms, data structures and Artificial Intelligence.

Several experts in India can question the quality and relevance of this challenge. Now even if a test were created for such sceptics, one aspect would be clear. China’s software programming capabilities have increased to a level where it can offer more than a robust competition to India.

Take another sector where China has developed a strong base. There are over 100 automobile makers in China while India has less than 15 domestic carmakers. If we exclude the presence of global companies in the two countries, it is clear that the automotive sector is another area of rising strength in China. It is not just in the traditional automotive sector, China has surpassed India in electric vehicles too. Sales of vehicles that run on new energy were more than 700,000 units in 2017 and can be more than a million in 2018. The target China has set is 7 million cars sales per year by 2025.

Perhaps the biggest investment and growth seen in China has been in the robotics sector. China is investing billions of dollars in Robotics. It wants to build 100,000 robots annually by 2020. There are over 800 robot makers in the country that are scaling up rapidly. As a fast follower of technology, Chinese focus on robotics can take it ahead of reigning powers including Japan, South Korea and Germany. In 2017, the world’s largest robot-making company Kuka was sold by its German owners to China’s Midea. Kuka is now focusing on making smaller and smarter robots almost like a consumer appliance. It is no coincidence that Midea is the world’s largest consumer appliance company.

China is not just ready to become the largest maker of robots but also the biggest consumer. There are roughly 68 robots per 10,000 workers in China. The figure is 631 for South Korea and 189 for the US. However, the sales growth in China is much higher indicating the tremendous room for growth. China is now responsible for one-third of the demand for robots across the world with a 27 per cent increase. The demand for Europe was 12 per cent last year.

India is not in the reckoning right now. A few brave companies have invested in robots for industrial and commercial use. India could be a higher importer than a manufacturer of robots.

While public policy discourse about China is focused largely on borders disputes, the serious matter of economic security should get more attention. As China leaps ahead in software, manufacturing and robotics, India will have to step up its focus too. The Chinese strategy is clear. World domination on specific sectors and technologies that can allow it to control business and commerce globally. In this endeavour, it does not see India as competition. While it has moved ahead of India in building economic infrastructure and mass manufacturing, its move on technology fronts should raise red flags in India.

India’s economic security is linked to its ability to scale up investment and focus on technology-based manufacturing. Improving our talent in software and new-age hardware is as important as defending our borders. An India that is dependent on Chinese imports can’t really counter aggression on the borders. This is the Chinese threat that we don’t see but which must be kept in focus. In many ways General Rawat is right. China matters more than Pakistan. And one more thing. In the HackerRank, Pakistan was at the bottom of the pile of 50 countries.

The writer is an economic analyst and author of Kranti Nation: India and The Fourth Industrial Revolution