India, Japan and Australia look to each other and away from China in new supply chain initiative

Reliance on China has caused alarm, pushing major Asia-Pacific economies to re-evaluate supply chains

India, Japan and Australia are seeking to reduce dependence on China by launching a Supply Chain Resilience Initiative (SCRI) to build resilient supply chains in the Indo-Pacific region later this year.

The decision was made at a virtual meeting on 1 September. The initiative was first proposed by Japan.

The three countries have called upon other countries in the region to join the initiative in the light of the Covid-19 pandemic and changing geo-political factors in the area.

The aim of the SCRI is to provide a “free, fair, inclusive, non-discriminatory, transparent, predictable and stable trade and investment environment and in keeping its markets open”.

The result of this would likely mean more inward investment into India for manufacturing purposes by Japan and for Australia to try and reduce its reliance on China as a key buyer of natural resources exports.

Economic ministers have instructed officials to work out the details for a launch later in 2020.

The news will be concerning to Chinese government officials, coming on top of a wider discussion amongst global players about how to reduce reliance on China as a key manufacturing hub. China is likely to continue to put heavy emphasis on state-led efforts to move up the value chain and diversify away from cheap manufacturing.

The Indian government is reportedly putting extra effort into the proposal in light of China’s recent aggressive military presence in Ladakh, which has raised tensions between the two countries.

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