04 Apr 2017 20:18 IST

China could lead the world in heavy industry

Slowly and quietly, the country is coming to dominate various industries in the world

Throughout last year’s US presidential campaign, Donald Trump kept bashing China as a country that manipulates its currency, dumps its goods on overseas markets, and takes away American jobs by running a $500-billion-plus trade surplus.

But the president also expressed admiration at how the Asian country invested in itself by building world-class roads, bridges, trains and airports — a promise he extended to Americans during his own inauguration speech.

Taking notice

In recent years, China certainly put the world on notice and stories of its domination are legendary.

Consider nuclear power. The Wall Street Journal reported last December that a quarter century after the country fired up its first nuclear reactor, it is poised to become the world’s biggest producer of nuclear power. China already operates 36 next generation nuclear power plants, whereas the rest of the world is still toying with plants designed and built 40 years ago.

Even as the formidable nation strengthens, other parts of the industrialised world appear to weaken. This past week, in a major blow to the US nuclear industry, Westinghouse, the venerable company which literally launched the global nuclear power sector, declared bankruptcy. It could not complete the construction of a nuclear plant despite billions of dollars in loan guarantees from the US government and contracts with utilities to buy power.

Toshiba, the Japanese parent of the company, essentially threw up its hands amid mounting costs and delays. As The New York Times reported it, with General Electric already scaling back its nuclear ambitions and the French multinational Areva also facing financial troubles, it is conceivable that if the world needs nuclear expertise in the future, it will turn to China. This is a remarkable accomplishment.

Quiet domination

Or take steel. The Economist reported last year that China’s surplus capacity in steel making, for example, is bigger than the entire steel production of Japan, America and Germany combined! The kicker here are the words ‘surplus capacity’. For years now, China’s domestic steel industry has been the world’s biggest as the country vociferously gobbled up the alloy to build its vast nation and power its export-oriented manufacturing plants.

In other heavy industries too, it has been quietly dominating. Despite attempts at the 2015 Paris climate accord to limit coal’s appeal, it is a major energy resource around the world. Even the US continues to operate coal-fired power plants with nearly a third of all US electric power coming from the energy source. China itself relies on this non-renewable resource, while investing in wind, nuclear and solar.

Targeting poor nations

But as western countries slowly adopt more renewable forms of energy, poor countries across the world don’t have the same luxury. China is ready with its technology, engineers and skilled labour to help developing countries build electric plants centred on coal as a fuel, and therefore, cultivate steady customers for its own stock.

In mining, oil and natural gas, China has been aggressively courting poor nations — especially in Africa. Through the Asian Infrastructure Investment Bank which China largely controls, the country is able to provide low cost loans on easy terms. It has signed mining contracts for large swathes of land to develop and extract minerals.

The pitch, of course, is to improve economic conditions of the host nation (much like the US and the UK did with the oil sheikhs in the mid-20 th century) but the real reasons are to source raw materials for its own use and exert geopolitical influence that will ultimately benefit China.

Tech space: Even in manufacturing and technology, China is slowly beginning to make its presence felt. For over five years now, Huawei has been the largest telecommunications equipment manufacturer in the world. This means that mobile phone companies around the world rely on this firm for their switching and routing gear.

Airplanes: The COMAC ARJ21 regional jet is China’s first foray into the commercial airplane manufacturing sector. This plane began regular service between Shanghai and Chengdu two months ago, on flights operated by Chengdu airlines.

Shipbuilding: Although China’s massive shipbuilding industry is currently in a slowdown, once global demand recovers, China will be ready to pounce. This week, BusinessLine reported that China’s largest high-speed train maker CRRC Corporation has acquired an order to supply coaches to Nagpur Metro, after agreeing, in 2015, to provide 112 train coaches for Kolkata’s Metro.

Wait and watch

It will be interesting to see how Trump deals with a powerful and increasingly ambitious China this week. For the first time, he and President Xi Jinping will play several rounds of golf at his Mar-a-Lago Florida resort, when the Chinese leader visits Trump for two days of meetings and a dinner.

While the White House is keeping the details of the meeting under wraps, one thing is clear: High-stakes diplomacy will certainly be on the menu because no one wants a trade war between the world’s two strongest economic powers.