In April 2021, Australia, India and Japan launched the Supply Chain Resilience Initiative (SCRI) in Indo-Pacific. First conceived last year, the SCRI is the product of the supply-chain disruption caused by Covid-19, which served as a wake-up call exposing states’ excessive dependence on China for critical products such as food and pharmaceuticals. Furthermore, growing tensions between the Chinese and “like-minded” Indo-Pacific partners such as the United States, exacerbated by Beijing’s aggressive military and diplomatic tactics, only made risk diversification by moving value chains away from China a more urgent goal.
In this context, the Indo-Pacific centered SCRI has been conceived as a mechanism aimed at enhancing economic and political security by challenging China’s dominance in trade and Beijing’s growing clout from its more robust foreign policy particularly its ambitious Belt and Road Initiative (BRI). How does the SCRI stand in the post-pandemic economic order, especially vis-à-vis the BRI? Is SCRI focused solely on decoupling from China? And is a complete decoupling from the world’s second-largest economy by fostering alternate global supply chains a feasible goal?
The SCRI vs the BRI
Covid-19 has proved to be a black-swan event in global economics and geopolitics, over and above its grotesque impact on human life. It revealed the vulnerabilities of being too dependent on complex supply-chain networks that are China-centric. Beijing’s “wolf warrior” diplomatic tactics – such as banning imports or imposing massive tariffs to assert pressure or exact retribution for perceived slights – have only accentuated the risks.
In effect, Chinese aggressiveness has marked a shift away from garnering political influence through economic prowess and by promoting trade and investments. The BRI was conceived on the basis of such a strategy, aimed at providing infrastructure financing to countries along its land-based corridors and maritime passages to forge a massive economic network with China at its core. Although not a supply chain-focused initiative, the BRI seeks to reconfigure supply chains so as to reinforce China’s global economic dominance.
The SCRI, while not a counter to the BRI per se, does hold immense potential to help reshape and restructure Indo-Pacific supply-chain networks. It is, therefore, of major concern to China. In response to the creation of SCRI, China stated that it “hopes” countries will respect “market rules” while dismissing the initiative as “unrealistic”.
That three major Indo-Pacific democracies – each of which has a close partnership (if not an alliance) with the US – launched the SCRI gives the framework far greater acceptance and flexibility compared to China’s BRI, which has become the target of skepticism and allegations of debt-trap diplomacy. Notably, the three launch partners are, along with the US, the members of the Quadrilateral Security Dialogue, known as the Quad – an informal strategic grouping that began as a cooperative grouping for coordinating humanitarian response. There is potential for “expansion based on consensus”, with the US and “like-minded” countries joining. It could also fuse with other frameworks such as the proposed Quad Plus, which could include New Zealand, South Korea and Vietnam in the region, and the Blue Dot Network (BDN), a public-private initiative led by Australia, Japan and the US to provide assessment and certification of quality infrastructure development projects worldwide.