Why India’s Ladakh Region Is Crucial For China’s Rise As An Economic Super-Power?

China’s sudden and unceremonious incursions into India’s eastern Ladakh region since April 2020 have piqued the curiosity of many strategic experts, and various theories are thrown around to explain the Chinese aggression against India.

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While some experts blamed the Indian government’s actions such as the unilateral abrogation of Article 370 in Jammu and Kashmir, others said the jingoist speeches by politicians over reclaiming Aksai Chin had not gone down well with China.

Several other possible explanations were given to explain unprecedented actions by India’s giant neighbor.

However, according to a prominent Indian politician, China’s actions can be explained if we consider the resources that it will have access to in the region. He says access to freshwater resources could have been the driving factor behind China’s unmitigated advances in Ladakh since early 2020.

Freshwater and sand are the two basic raw materials for the manufacture of semiconductors that form the basis of all modern industry and economic progress.

Semiconductors are at the heart of microprocessor chips, which are a basic component of almost all modern equipment from computers, mobile phones to cars, helicopters and fighter jets.

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Although China is already a global manufacturing hub when it comes to electronics, it depends on its supply chain of chips from other countries, and its own semiconductor manufacturing industry is at a nascent stage.

As such, it aspires to build its own chip manufacturing capacity to cater to a burgeoning demand for this basic building block to support its vast industry base.

The chips are made of silicon which is extracted from sand. Cleaning the silicon wafers also requires immense quantities of freshwater. The wafers must be thoroughly cleaned before the integration of electric circuits takes place over them.

China is said to be hugely deficient in freshwater availability. Some prominent water systems in China such as the Yangtze, Huang Ho and Mekong rivers are all polluted and unfit for the semiconductor industry to operate.

Access to Aksai Chin, Ladakh and even Kashmir can fulfill that requirement since these regions are sources of major freshwater bodies.

Aksai Chin is also home to the Taklamakan desert that could provide an abundance of sand and access to Himalayan rivers and glaciers.

“The Shaksgam valley alone is home to 242 glaciers that can serve as the grand reservoir of fresh water for Chinese chip manufacturing. It, therefore, becomes imperative to view the Sino-Indian standoff through this technological lens also,” writes Manish Tewari, former Indian union minister.

Experts believe the 21st century will be all about the race for domination of chip-making, a strategic resource that will shape the geopolitical outcomes of our time.

China is giving a heavy push to the indigenization of chip-making having operationalized 5,000 semiconductor chip test production lines last year, which have an investment of 10 $1.42 billion in Horgos, Xinjiang Uygur Autonomous Region.

According to Global Times, these facilities are expected to achieve an annual output of 24 billion semiconductors and electronic components.

“China has advanced capabilities and experiences in the development and production of semiconductors, including chip testing, and it is not difficult for the country to build more production lines of this magnitude,” Global Times quoted industry analyst Xiang Ligang as saying.

The Chinese government has designated around 1.4 trillion dollars in the 2021 budget to boost the semiconductor industry in the country.

As the Biden administration continues to blacklist Chinese tech companies and supply chains, China will need to ramp up its domestic productions.

The communist nation imports around $300 billion worth of chips annually and with domestic production yet to achieve significant output, China will find itself in a difficult place.

The pandemic has worsened the shortfalls in semiconductor supply worldwide, affecting global tech giants in unprecedented ways. And with the world’s leading producer of chips, Taiwan, experiencing a severe drought and consequent shortfall in freshwater, it’s going to be tough times ahead for automobile, electronics, communications and defense companies, all of which employ microprocessors in large numbers.

The Indian government last year asked the Indian industry to establish semiconductor fabrication plants in India and the proposal reportedly received a lukewarm response from the industry heads. India has been attempting indigenous semiconductor manufacturing since at least 2006, although with little progress.

India has around two facilities that manufacture silicon chips for defense and space sector requirements, one of which is DRDO-run SITAR in Bengaluru and another a laboratory in Chandigarh. However, these fabs don’t manufacture chips for commercial use.

After the Ladakh stand-off with China, the government issued an Expression of Interest (EoI) for setting up such facilities across India. The National Policy on Electronics 2019 (NPE 2019) of the government of India envisages making India a global hub for Electronics System Design and Manufacturing (ESDM).

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With China using some 61 percent of the world’s chips to support its vast electronics corporations that support domestic as well as international markets, it will go to any lengths to acquire the capacity to set up its own chip manufacturing plants.

And with its relations deteriorating with the world’s leading chip producers such as Taiwan, South Korea and the US, China will have no option but to look inwards for the supplies. Experts say the country may have identified the control over the Ladakh region to be indispensable for its rise as the next superpower.