A Grand bargain — a Ladakh DMZ for McMahon Line, is absent. Jaishankar’s peace on a piecemeal basis benefits China.

[Jaishankar: Making the wrong point?]

The one thing tried and tested diplomats are not supposed to do is use wrong words that convey or signal the wrong message, and provide ammunition to the adversary.

In the wake of the verified pullback (begun Sept 8, completed Sept 12) by Indian and Chinese PLA troops from the Gogra and Hot Springs areas of Ladakh, the external affairs minister S Jaishankar said this yesterday, to quote him in toto: “You have heard me speak many times about the border. I don’t think I would say anything new there today, except I would recognise that we had disengagement at P[atrolling]P[oint]-15 and the disngagement as I understand was completed and that is one problem less on the border.”

The inelegance of his statement [sure, it was extemporaneous, but diplomats are supposed to be able to think on their feet and, at all times, speak carefully] — repetition of words (engagement) and wrong construction (“new there” — where?; “new” about the “border” is, perhaps, what he meant to say) apart, what the minister said is disturbing, more so in light of the MEA spokesman’s statement of Sept 9 elaborating on the short press release issued a day earlier.

Take the most important point in the MEA statement, that India and China will “cease forward deployments in this area in a phased, coordinated and verified manner, resulting in the return of the troops of both sides to their respective areas.” What are the “respective areas” being referred to here? The area to which Indian units have retreated to are, of course, in India. But so is the “area” the PLA troops have got back to!

Thus, the Indian government has implicitly accepted a Ladakh remapped by China! Worse, another point in this MEA statement commits India to ensuring that there will be no attempt unilaterally to change the new “status quo” that’s obtained. A third important point promises talks to “resolve the remaining issues along LAC and restore peace and tranquility in India-China border areas”, including the PPs 10, 11, 12, 13, presumably, along the same lines. With the PLA controlling the Y-Junction — the entry point, as it were, to the Depsang Bulge adjoining the Xinjiang Highway, Indian units cannot access these areas.

The question to ask the Modi regime, therefore, is this: Has it first of all accepted the Chinese 1959 claim line? This latest agreement would suggest it has. It means New Delhi, in effect. has formally renounced India’s historic border with China. China has offered the solution of a buffer zone to be implemented piecemeal — as a means of separating the two armies and avoiding hostile encounters of the 2020 Galwan kind. One such partial buffer zone was earlier established with the Tibetan exiles-manned Special Frontier Force units climbing down from Rezang La, and other posts on the Kailash Range heights in exchange for the PLA withdrawing from the Finger 3 terrain feature on the northern shore of the Pangong Tso. That was a bum deal.

Now another swath of land running across Gogra and Hot Springs too is a buffer. Once fully negotiated, Beijing hopes the buffer zone would stretch all the way from the Depsang to the Pangong Lake. In fact, senior army officers indicate that the PLA commander at the recent 16th session of the corps level army commanders’ meeting communicated that China may consider vacating the Depsang Plains in return for India accepting such a buffer zone. The former Northern Army commander, Lt Gen HS Panag, too hints that such an arrangement may be in the works. (See https://theprint.in/opinion/no-war-no-peace-in-pp15-but-china-wants-more-in-depsang-plains-charding-ninglung-nala/1129023/ )

Presently, there are three claim lines — one that India has historically recognized as the Sino-Indian boundary (and so identified in the map below). The second line is the 1959 Chinese claimline (dotted yellow line) incorporating the entire mass of territory in northeastern Ladakh and Indian Aksai Chin totaling some 1,000 sq kms. And the third line is the Line of Actual Control (in red). Except there is a belt of Indian territory between the second and the third lines the Chinese have intruded into and are negotiating about. They would like to see this in-between territory converted into a Depsang to Pangong Tso buffer zone, in effect, a de-militarized zone (DMZ) a’la the 38th Parallel in Korea delineated for military reasons by US President Harry Truman, the Soviet jefe maximo, Josef Stalin, and British Prime Minister Winston Churchill at the post-WW II Potsdam Conference in July 1945.

[Map of contested Ladakh & Aksai Chin. Source: The Print]

It is in this context, that Jaishankar’s comment of “one problem less on the border” merits concern. Look at the map again. Would any government sign away India’s sovereignty on so large a piece of national territory without making a case for it, and participating in informed debates within Parliament and outside just because the Prime Minister needed to create a conducive milieu for his meeting with Chinese President Xi Jinping at the Shanghai Cooperation Organization summit in Samarkand?

The Chinese are seemingly working on the principle what’s mine is mine, what’s yours is also mine barring what you are ready to fight for, and India on the basis that whatever I can get from China is fine. Over the years,this fairly lax Indian attitude has enabled a mostly peaceful, because stealthy, takeover of Indian territory by the Chinese until the territorial creep led to the 2020 Galwan encounter, when the two forces began eye-balling each other over territory between Beijing’s 1959 claim line and the LAC in eastern Ladakh.

With India having lost so much territory already, the Modi government would ideally like China to agree on the LAC as border. Except, this requires a restoration of the status quo ante that Jaishankar has been iterating for a while now. But the Chinese, realizing that New Delhi can be pushed around easier than they had earlier assumed, have made it amply clear they are unwilling to ease their stranglehold on the Y-Junction and permit Indian access to the Depsang Plains short of India signing off on an extended DMZ that will prevent the Indian army from militarily exploiting proximity to the Xinjiang Highway or endangering the China-Pakistan Economic Corridor branching off at the Karakorum Pass.

Jaishankar may well argue that the territory lost to the Chinese in earlier years was owing to a force majeure situation — China’s marshalling an irresistible force. But if the argument is that this piece of Indian land has been under Chinese occupation since the mid-1950s when they built the Xinjiang Highway through it and an inattentive New Delhi let the PLA gobble up that part of Aksai Chin, and that realistically, India is not now nor will ever be in a position to get it back, then the issue becomes what is India getting for, in effect, accepting Chinese sovereignty over it?

There’s no sign of Jaishankar countering the Chinese proposal for a DMZ and India’s reconciling to Chinese sovereignty over the 1,000 sq kms of captured territory in northeastern Ladakh by demanding that Beijing recognize the McMahon Line in the east, as part of a grand bargain — a solution, incidentally, first offered by Zhouenlai to Jawaharlal Nehru in the Fifties and again by Dengxiaoping to Rajiv Gandhi in the 1980s. Such a final solution for a vexed border dispute would make sense, and not be difficult for Modi to sell to the Indian people. But there’s no such grand bargain on the anvil, which makes this particular deal in Ladakh more onerous.

The most alarming possibility is this: After firming up its Ladakh end, China will begin moving on Arunachal with a view to detaching the Tawang District where the main Tibetan Lamasaries are located, and which the Chinese call “southern Tibet” in the hope that here too New Delhi can be strong-armed into striking a territorial deal on Chinese terms. In that case, there will be war, the outcome of which though uncertain potentially favours the PLA, which is advantaged in every way. It may not be a military disaster for India on the scale of 1962, but could dent the army’s reputation in lots of ways.

It is precisely such a denouement that MEA may be worried about and why it is trying to distance itself from it. For instance, Jaishankar’s Ministry has already begun putting out commentaries via retired diplomats commentating in the media that it was the army commanders at their parleys in Chushul who hammered out the deal for the disengagement in Ladakh, without once hinting that the said army commanders negotiated strictly per MEA script and instructions. (See https://asiatimes.com/2022/09/disentangling-india-china-himalayan-standoff/ )

Still, it boggles the mind that the Indian government is party to realizing peace on the LAC on a piecemeal basis, which serves China’s purpose. By not linking negotiations regarding the western theatre (Ladakh) to developments in the eastern sector (Arunachal Pradedsh), Beijing can stretch out the negotiations concerning the LAC indefinitely — the tactics it has successfully used so far. This is not in India’s interest.

Modi has to see the wisdom in insisting that the deal is for all of the disputed border, or there are no negotiations at all, and let the local conditions then dictate whether there will be hostilities or not. But in that case, and looking holistically at the bilateral relations, New Delhi will have to begin ramping up punitive actions, trade sanctions, etc to slowly but conspicuously begin closing off the open access to the vast Indian market the Chinese Companies have so far availed of. Modi has to communicate to Xi that either China agrees to have all round good relations without the distraction of a militarily live border, or India prepares for all-round hostility, and that there’s no middle ground.

About Bharat Karnad

Senior Fellow in National Security Studies at the Centre for Policy Research, New Delhi, he was Member of the (1st) National Security Advisory Board and the Nuclear Doctrine-drafting Group, and author, among other books of, 'Nuclear Weapons and Indian Security: The Realist Foundations of Strategy', 'India's Nuclear Policy' and most recently, 'Why India is Not a Great Power (Yet)'. Educated at the University of California (undergrad and grad), he was Visiting Scholar at Princeton University, University of Pennsylvania, the Shanghai Institutes of International Studies, and Henry L. Stimson Center, Washington, DC.
This entry was posted in asia-Pacific/Indo-Pacific, Asian geopolitics, Central Asia, China, China military, civil-military relations, Decision-making, domestic politics, Europe, Geopolitics, geopolitics/geostrategy, Great Power imperatives, India's China Policy, India's strategic thinking and policy, Indian Army, Indian Politics, Indo-Pacific, MEA/foreign policy, Military/military advice, Northeast Asia, Pakistan, Russia, society, South Asia, Tibet, United States, US.. Bookmark the permalink.

26 Responses to A Grand bargain — a Ladakh DMZ for McMahon Line, is absent. Jaishankar’s peace on a piecemeal basis benefits China.

  1. Amit says:

    Professor,

    As far as I can tell, India has banned Huawei in India’s 5G roll out. Also high speed trains, electrical grid equipment, 100s of apps etc. I think India is doing or will do many of the things you are suggesting. It is also investing in satellites, infrastructure, rocket force, drones, 5G, combat vehicles, light tanks, transport aircraft, AEWC&S, refueling tankers etc. In fact, it seems to be forcing the Indian military to buy Indian like you have suggested in the past. But all this takes time. Won’t happen overnight.

    In fact, as India develops all these capabilities while growing its economy, it will be in a better position to negotiate with China. Taking time to resolve the border issue may well work out in India’s favour.

    • Bhasku says:

      Till such “time” China may do many more things including something in A.P. as the professor mentions. India has to act sooner than later.
      Stopping China economically in India is one of immediate steps that can be taken.
      Everything we buy online or in the market is marked made in China/PRC! This has to stop.

      • Amit says:

        Have you analysed the types of goods India imports from China and what types of imports India has banned? Are you aware of the impact that stopping all imports from China will have on inflation in India? Are you aware of the link between inflation and economic growth and the potential impact on defence modernisation? Without this knowledge, please do not make grandiose statements.

      • Amit@ — the basic advantage of Chinese products, including base materials for pharma industry, is the price. The question for GOI to ask is what’s the strategic loss for a relatively slight savings in the hard currency outgo.

      • Amit says:

        Professor,

        I’ve not done a detailed assessment of which products India imports from China, but I do know about the Pharma industry a bit since I worked in it for some time in India. A big chunk of the API raw material was imported from China 10 years back as the prices were much lower. This gave Indian generic finished doses a price advantage in the market and India became the pharmacy of the world. And API raw material mfg capability in India was diminished.

        Now to bring this back will take time and also lead to higher drug prices. Maybe it’s happening but I don’t know. However, my point is that we can’t blanket ban all Chinese products as one it will lead to inflation, and two it will take time. Frankly, I do not have a sense for what products India has banned, is banning, or re supply chaining. It is doing it, but it has to be done with caution.

  2. A K BARDALAI says:

    A to-the-point and simple assessment of the situation. China gets more in the name of the buffer

  3. Amit says:

    Professor,

    Allow me to elaborate on why India should not counter anything to a Chinese proposal for a DMZ in Depsang immediately. India’s position is to go back to status quo ante and no normalisation of relations until then.

    China’s main strategy to become a regional hegemon is to first unify with Taiwan, not to dominate and capture territory from India. By controlling the South and East China seas and Taiwan, it displaces the US as the regional hegemon and diminishes US power, weakens any alliances and pulls away partners from the US. Attacking India first does not make strategic sense for China as India is much more powerful than Taiwan and the Himalayan region makes it difficult to wage a decisive war. All this salami slicing in Depsang, Galwan, etc. was to cow India down from joining an anti hegemonic coalition, in which China has utterly failed.

    Now let’s come to why India should not respond to a DMZ proposal from China in Depsang immediately. Because if this drags out, India becomes a stronger power and has a stronger negotiating position. Being stronger would allow it to negotiate a better solution. If there is no negotiated solution, it leaves the option of recapture open. The right time to recapture territory in the Depsang Plains or Aksai Chin would be when China tries to capture Taiwan. Not only does this play well into a denial strategy in Taiwan (as it opens a two front situation), it also increases India’s chances of recapture.

    Now some may counter that China would do salami slicing in Arunachal or open some other front in its salami slicing tactics and that will lead to more loss of territory. Well, this is highly unlikely to happen. Why? Because Depsang and Galwan etc. happened because India was sleeping and downplaying the Chinese threat. It is not so now, and is much better prepared militarily and my hypothesis is that there will be counter salami slicing by India if China repeats a Galwan or Depsang.

    On the other hand, China has an interest in resolving the issue by offering a DMZ in its favour as the power balance is in its favour today. It won’t be in such a favourable situation if the power gap reduces. Of course, this whole logic falls apart if India does not modernise its military and fails to reduce the power gap.

    Another counter could be why did the Indian Govt. agree to an unfavourable DMZ elsewhere. This would be a good counter and all I can say is I don’t know. Maybe to diffuse pressure, maybe to buy time on Depsang, maybe because of a high power imbalance, or maybe bad policy.

    However, I’m betting that India will be successful in modernising its military. And reducing the power gap with China in the future. If that is so, it does not make sense to accept any Chinese DMZ proposal in Depsang today and keep the option of recapture open or reach a more favourable negotiated solution in the future.

  4. whatsinitanyway says:

    Tibet was buffer too… look what happened. I remember one story about a scorpion and a frog.

    • Sankar says:

      Absolutely!

      India at the time of independence (1947) of the “Dominion of India” under the British Raj inherited a security treaty with Tibet. But in 1949 when the Chinese PLA was invading Tibet, Dalai Lama and others in the highest administration in Lhasa wanted to fall back on that treaty for protection under Delhi. Nehru reneged giving Mao and Chou-en-Lai a free hand. In my reading of that history Sardar Patel raised objections. But Nehru dismissed him by using the term “suzerainty” as the interpretation of “sovereignty” for Tibet in the past rcords. But nobody knows the distinction between “sovereignty” and “suzerainty” in the international political world, and all the hell broke loose in the Himalayas in 1962 when China consolidated her occupation of Aksai Chin. In my discussion with one army officer some years back, the army man tried to claim that the naming “Chin” implied belonging to China. I later searched for the origin of the word and discovered that “Chin” stands for “White Rocks” in the Ladakhi-Tibetan terminology of that area. What a brain washing has the Indian Army undergone over time.

      I am really at a loss to understand Modiji’s capability to be the Prime Minister in the international world leading India as a nation state. He blames Nehru, Congress and the dynasty for all the evils and misfortunes facing Indiia today. But as far as India’s sovereignty is concerned in dealing with China, he follows Nehru on each and every step precisely, while hoodwinking his own public.

      It was only when Indira Gandhi was at the helm, China did not dare to make any move on India-Tibet border. Modi keeps mumm on that history and has yet to acknowledge her great contribution in winning India’s 1971 war 2500 years after the great Ashoke. I find this a great dishonesty in Modi.

      • Amit says:

        @Sankar, instead of indulging in smear campaigns, suggest what India should do. It’s easy to point out flaws, but hard to come up with solutions.

      • Deepak says:

        @Sankar,Keeping Tibet,Nepal,Bhutan and Sikkim as a Himalayan buffer against China did not benefit India but harmed it in many ways.

        Nehru has to be blamed for rejecting the offer of Nepal to merge with India just to showcase to the world that India is not a expansionist force.

        Indira Gandhi rightly annexed Sikkim but left Nepal and Bhutan Independent which should have been part of India as a natural border with Tibet.

        Modi is not a capable leader to lead the country to the best of its potential but there is no one else in opposition also who is better than Modi. Kejri,Raga,Nitish,Pawar,Mumtaz all are equally disappointing as well.

      • Sankar says:

        @Deepak:

        The right interpretation in international political affairs will be that Indira Gandhi integrated Sikkim with India and not that she annexed. The wording “annexation” carries different implication in world affairs which was not the case. In the ongoing war in Ukraine, Russia is in the process of annexation of its parts of Donetsk, Luhansk into the federation of Russia,

        That Tibet was a buffer for India in the past is an Indian view. It was an independent state albeit landlocked. Its main access to the external world was through India indeed, lots of the supplies went through Sikkim, Bhutan and Ladakh. It is for the Tibetans to lay down their history and the world must accept that. At present, Bhutan’s security is in the hands of the Indian Army to guarantee. But Delhi seems to be backing off.

  5. Email from Vice Admiral Harinder Singh (Retd)

    Sun, 18 Sept at 8:43 am

    Bharat,

    Thanks. Enjoyed reading it.
    The only issue that bothers me is that all security experts seem to want, is in fact a variation of JLNs exhortation of ‘throw them out’. We must face the fact that we are unequals in military and security terms and to disregard this could result in another 1962 – ofcourse no politician will admit this.

    We must accept that we are not going to back get any land occupied by the Chinese. In fact , as we well know, there has never been a border agreed by both parties though we harp on an agreed line

    • Sankar says:

      Please explain why did the Army abandon the strategic Mount Kailash after occupying it a few months ago where the local Tibetans gave heroic support to the Army? Was it for an acrobatic show only? Or, did the Army get scared that the PLA would attack them?

      Also, when you say “the fact that we are unequals in military and security terms and to disregard this could result in another 1962 “, why does the Army Chief beats the drums in the publc view that the Indian Armed Forces are preparing for a two-front war? And how have you concluded that ” we are unequals in military…”? The outcome of wars are never decided by the books.

      Your history is wrong whaen you claim “there has never been a border agreed by both parties though we harp on an agreed line”. The historical reality is there was Tibet as neighbour of India in the north, not China. Hence, the question of an “agreed line” with China does not arise. The agreed line with Tibet was the McMahon line and China after occupying Tibet has settled her border with Myanmar on that McMahon line.

      Also, could you please explain why Pakistan had to sign a treaty with China in 1953 for ceding Shaksgam Valley to China – does that not tacitly imply that the Valley erstwhile belonged Maharajah’s Kashmir so far sovereignty is concerned?

      • The Shaksgam Valley was ceded by Ayub Khan in a 1963 accord with China in the context of two developments. Firstly, Nehru’s repeated rejection of a joint securitypact against China first offered in the late 1950s. Except Ayub’s offer was conditioned on a “fair” settlement of the Kashmir dispute. And Secondly, China’s 1962 War and India’s defeat. The Pakistan Martial Law Administrator felt that if he didn’t cut a deal with beijing on half-way favourable terms, China would take the strategically located Shaksgam Valley anyway.

  6. It is precisely because India is militarly incapable of vacating Chinese annexation is why the Modi regime needs to strike a grand — LAC for McMahon Line — bargain.

  7. Email from Lt Gen Vinod Bhatia (Retd)

    Sun, 18 Sept at 8:24 am

    Thanks, enjoyed reading your prespective.
    You are one of the few looking at a pragmatic Chinese strategic intent as also a plausible end state
    Regards
    Vinod Bhatia

  8. Email from Commodore Anil Jai Singh (Retd)

    Sun, 18 Sept at 9:54 am

    Thank you for this informative asessment. However, the silence in Parliament if this is indeed the case is deafening. Not a squeak. I read a humorous WhatsApp on this when it was announced which pretty much sums up the situation ” while China is withdrawing from India, India is also withdrawing from India”.

    Warm regards,
    AJ

  9. Email from Lt Gen Syed Ata Hasnain (Retd)

    Sun, 18 Sept at 9:04 am

    Bharat Sir,

    Enjoyed the article. Circulating to my network.

    Warm regards

    Atamail from Lt Gen

  10. The only thing that the Government of India can now do is to vitiate the ab initio illegal and null and void map published by one Mr. Jawaharlal Nehru in 1954 in collusion with the Regime in China as ultra virés the sacrosanct Constitution of India and non est in Law and initiate proceedings for treason against Mr. Jawaharlal Nehru and restore the International Boundary of India with East Turkistan on the Kuen Lun Range in northern Kashmir wherein are the Taghdumbash Pamir near Dafdar and the Kukalang, Yangi, Kilian, Sanju-la and Hindu-tash Passes in northern Kashmir and tell the Chinese to their face that Aksai Chin 36°40’03″N 78°23’29″E in Ladakh in its entirety is an integral and inalienable part of India and there is nothing to talk to the Chinese about Aksai Chin and that India will drive away and throw the Chinese out of Aksai Chin at an opportune time of her choice, and that the fact that Aksai Chin is an integral part of Ladakh, Kashmir is uncompromisable & unnegotiable!

  11. Andy says:

    About Indian army vacating Kailash range for some kind of pull back at Pangong tso ‘that was a bum deal’ sums up the whole scenario. What’s puzzling is why stop after a taking over Kailash range? Why not repeat the same tactic in other areas of intrusion by the Chinese?

    That was prime real estate being being sold off in a distress sale! All worried about the Chinese army being superior seem to forget that Ladakh is a good 1000 plus kms away from the Chinese mainland,the logistics are open to being sabotaged during all out war. Being connected by a single highway g 219 and a railway line. A few key bridges taken out or some mountain passes brought down by saturation fire will disrupt the whole Chinese war effort without much ado. Same applies to pla heavy lift airplanes,24/7 patrolling and interdiction by IAF interceptor jets should stop them in their tracks.

    So why are Indians pussyfooting around while the enemy is riding roughshod over them is something to be pondered? The defeatist mentality born out of the 1962 war debacle (if a few skirmishes along the border can be called all out war) has still not been shed. This is what makes the leadership bend over backwards to appease the Chinese bullies. If India Pakistan wars are described as ‘communal riots using tanks’ then don’t know what the so called 1962 war should be labelled. That it should cause such nightmarish pussilanimty is a wonder. High time someone mustered the courage to poke the bullies in the eye!

  12. Ayush says:

    Dr karnad,
    Your tirade starkly contrasts our military position on the ground.Also, you cannot see the obvious.The modi regime has acknowledged the vast military differential between India and china and are using these “talks” to bide time to increase our military strength.
    To be brutally honest,If I were the PLA western theatre commander or a CMC member for that matter, I would have immediately handed over the one line ultimatum to Delhi “evacuate leh and itanagar or get ready to be bombed back to the stone age.”China’s nuke forces are strong enough to deter any thought of N-first use from our side.Such is the massive military differential between the two powers.I have been personally shocked by the kind of restraint the Chinese have shown(no bullets).And for that, the Chinese actually deserve our gratitude.If I were the Xinjiang Military district commander I have blanketed those Tibetan exiles(SFF) sitting on top of the kailash heights with a hail of heavy arty.I would have done this without even consulting my superiors.And India lacks the military strength to raise the proverbial finger.
    Also , the fact that your senior military sources are acknowledging that the PLA is willing to accept a buffer zone in Depsang speaks a lot about our rapidly improving military strength.

  13. Ayush says:

    Dr karnad
    I cannot believe that you are actually watching recent LAC developments from a “diplomatic” point of view.I always look at everything from a military perspective as that’s the only thing that ACTUALLY MATTERS.The fact that the Chinese are even willing to mention about Depsang in these “talks” personally surprises me.This speaks volumes about our rapidly improving military position on the ground.Jaishankar & the modi regime in general are well aware that PLA understands nothing but force.They are using these nonsensical negotiations to bide time to improve our military situation.Also, as far as I am aware we have deployed “several nirbhay” missiles at LAC all aimed at PLAAF’s handful of critical airbases(Golmud,kashgar,Hotan).There is no air defense system in the world that can protect against a salvo low flying cruise missiles.
    I would say that 2020 was the bottom low point of the Indian armed forces,perhaps even worse than 1962.

    Lastly, it’s better to have a buffer zone-“a no man’s land” than PLA troops on the same

  14. Email from Lt Gen Kamal Davar (Retd)

    Sun, 18 Sept at 9:48 pm

    Hi Bharat—- many thanks for your candid, thought provoking piece—- we have to be more than careful with the treacherous Chinese—-they do not appreciate any diplomatic niceties and hell with those anyway. What do you feel after the SCO is over—why this great hullabaloo about a meeting or not—-anyway it did not take place. You must bring it to the notice of all concerned via the electronic media also including in the ‘Rashtrabhasha” ! Best wishes and my regards.

  15. Email from Lt Gen Balli Pawar (Retd)

    Sun, 18 Sept at 5:30 pm

    Dear Bharat very clear analysis of what actually is happening on the ground. Unfortunately this is what the Chinese have been following wrt India for decades now.
    My worry and concern is the projection of the same by the Govt and media as if China has buckled under pressure.
    On the other hand they are having the last laugh.

  16. Amit says:

    Professor,

    Another example of banning China from supply chains is semi conductors. The US has banned sale of advanced semiconductor equipment to China from Applied Materials. I think it would have put much pressure on ASML, a Dutch company, to ban sale of the latest photolithography machines to China, essential for advanced semiconductor mfg.

    Now TSMC and Samsung are the most advanced semiconductor fab companies in the world. TSMC already makes 4nm chips in high volume (iPhone 14), and according to experts I know, is doing research on sub nm tech already (no one else is so advanced). And the US is coordinating with Taiwan, Korea and Japan to exclude China from the semiconductor supply chains for the latest generations of chips.

    However, China is the biggest importer of chips – so it’s a huge economic loss to these chip companies to not make in China due to its low cost of mfg. and potential loss of sales. This will lead to inflation of chip prices and all consumer and military electronic equipment that use these chips. To not include China in the supply chain will also take significant time and loss of profitability, all serious factors in making economic decisions. Yet the US is leading the charge to make this happen. But it will take time and will have real economic costs.

    The same is true for India banning Chinese products. But India is a much poorer country compared to the US and has much lower capacity to take inflationary punishment.

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