How India, Japan and Australia have joined hands to punish China

The biggest takeaway from this pandemic has been a singlemost thing -- China cannot be trusted.

But punishing China hasn't been easy because it remains at the centre of global commerce.

So what is the world doing about it? It is creating alternatives.

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The next battleground, hence, is global supply chains. At the moment, China controls them.

But India is leading a new alliance to change that. Three countries have come together for this -- India, Japan and Australia.

They have struck, what you can call, a supply chain pact.

The mission is clear -- challenge China's dominance as an export hub.

Prime Minister Narendra Modi delivered a speech at an India-US summit on Thursday and used the occasion to pitch India as the next export hub. He said global supply chains must be built on trust, and not just cost.

His message was loud and clear -- the world has learned this lesson the hard way.

According to a UN estimate, the coronavirus outbreak could have led to a $-50 billion decrease in exports across global value chains.

This means a loss of $50 billion.

This is the price global businesses have paid for a slowdown in china. They need alternatives. And that's what India, Australia and Japan want to provide -- another global supply chain.

To understand how big the task is, one must know what China has.

In 2019, China shipped more than $ 2 trillion worth of goods around the globe.

Chinese goods go to practically every corner of the world. So this map should show all the countries.

But here, we've only put China's 10 biggest trading partners. The list includes the United States, the European Union, ASEAN nations, and even, India.

Earlier this week, trade ministers from all three countries took a decision. India, Australia and Japan have decided to build a "resilient supply chain".

PM Modi proposed reshaping global supply chains based on trust and stability. This is a declaration of a new alliance. And they're already hurting the dragon.

India is now in the race to replace China because of some recent decisions. Their impact is beginning to show.

In March, India announced incentives for niche firms. Under this, companies which are manufactured in India, will be eligible for a payment of 4-6 per cent of their incremental sales over the next five years.

It means savings for these companies. Most probably, this money will come back to the firms in the form of tax savings.

Global manufacters of electronics have also taken notice of India's decision.

About two dozen companies have now pledged 1.5 billion dollars worth of investments. This is to set up mobile phone factories in india.

On the other hand, Japan is taking some special steps to create this Indo-Pacific supply chain.

In short, Japan is encouraging companies to leave China by offering them a subsidy if they do so.

For this, Japan has set aside $221 million.

It is for companies that exit China and move back to Japan or Southeast Asia.

Japan has also added India and Bangladesh to that list.

To this end, 30 Japanese companies have already signed up to move from China to Southeast Asia.

Australia is also fighting a trade battle with china.

Australia demanded a global investigation into the origins of the coronavirus. And China wasn't happy. It slapped tarrifs on Australian imports and banned its groups.

So now, Australia has joined India and Japan to find new markets for its goods and companies.

This is just the beginning. And the endgame is economic distancing from China.