Apple’s western promise
News that Apple is ramping up iPhone production in India comes at an interesting time. Starting in October, the iPhone 14 will roll off Indian production lines. This will be just two months after production began in China, a dramatic drop on the usual six months gap between Chinese and Indian production.
Of course, it would be a mistake to read too much into the move. For a start, iPhone production will continue in China with India providing additional capacity. In addition, India has been a technology power for some time, albeit better known in the West for software and services than manufacturing. For its part, meanwhile, Apple has been in India, both as a manufacturer and retailer, for some time, though plans to open Apple Stores have not quite borne fruit as yet.
What is interesting to consider, however, is that Apple appears to be making a strategic bet on widening its technology supply chain in the face of geopolitical risk.
Last year, Chinese property developer Evergrande defaulted on debt payments causing widespread fears of a global economic crash that never quite materialised. But that is not to say that all is well in China: today the property market is in freefall, and while a full-blown crisis is not anticipated this has hardly come at an auspicious time given the state of the world economy.
The Chinese tech sector is battered, too. Government policy has sought to rein in the likes of Alibaba and Didi, with the likes of e-commerce and Silicon Valley-style ride sharing falling out of favour with an administration that wants to see a greater emphasis on the native development of core ‘hard’ technologies.
Of course, this is not entirely surprising given China has always sought to move up the value chain in order to avoid the so-called ‘middle income trap’. In time, Western nations, having long seen China as little more than a giant factory that props up their economies by supplying cheap consumer goods, will have to adjust to the fact that China sees itself as a world power in the making.
In addition, relations between the US and China are at an all time low. Although a full-blown trade war is some way off, the sabre rattling is there for all to see, from threats to de-list Chinese businesses from American stock markets to calls to the effective banning of Huawei from supplying 5G network infrastructure in several countries. Frequently expressed fears over TikTok’s influence on young people can probably be filed under moral panic, but the fact that the fastest growing social media platform hails from China rather than California is certainly noteworthy.
What the future holds in store is far from clear. The recent visit of US speaker of the United States House of Representatives Nancy Pelosi to Taiwan certainly ratcheted up tensions, but for the moment the West and China are utterly interdependent, with Chinese manufacturing, particularly in technology, central to the economies of both. Given the economic and geopolitical shocks experienced in the last two years, indeed really since the 2008 Great Recession, it is more than a little interesting, however, to consider what the world would be like if China and the West were to drift farther apart.
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