Delinking business from politics

Subrata Majumder

The Chinese media rang the warning bell to the Chinese investors in India over the recent tension in Sino-India border in Sikkim, Bhutan –Tibet tri junction. Quoting the example in Vietnam in 2014, the Global Times – a Chinese daily – sent a precautionary alertness to the Chinese investors in India, augmenting the fear of ant-China protest in India. In 2014, several Chinese nationals were killed and more than 100 Chinese were injured in Vietnam in the protest when the media report revealed that China fired water cannon to a Vietnam vessel, which obstructed China’s extraction of oil in the South China sea.
Going further, the Chinese media sighted the example of Shiv Sena activists’ protest against China’s veto to India’s membership in NSG, burning the Chinese flag last year. Taking a leaf from these anti-China protests, the Chinese media expressed apprehension over the new investment by China in India.
But, can the Vietnamese protest against China be replicated in India or the Shiv Sena’s stir on China will mar Chinese investment, which is on the high growth trajectory? Border dispute has been a perennial issue since India- China war in 1962. With the rapid growth in the Chinese economy, reflecting Chinese financial power in the global market and India’s penchant for foreign investment to make India the global hub for manufacturing under the Make in India initiative, the threat of Chinese media is unlikely to mar the Chinese investment in India.
Saddled by glut in domestic investment, China is on the binge for overseas investment. From a paltry overseas investment of US $ 3 billion in 2005, Chinese overseas investment increased to US $ 90 billion in 2013 and China became the third biggest overseas investor in the world. Asia was the biggest receiver of Chinese investment. Chinese investment also made a surging growth in South East Asian countries including Myanmar, Indonesia, Malaysia and Thailand.
Leaving aside the political bitterness, Modi-Xi Jinping hobnob made a twist in the relation in favor of a better economic engagement.  For Prime Minster Narendra Modi, China was recognized as a friend and not a foe. For President Xi Jinping, India emerged as an opportunity to push forward his Go out policy. Both have mellowed down to reinvent the relation from the perspectives of economic cooperation, instead of hurling brickbats to each other on political ground.
The green shoot was visible. The visit of President Pranab Mukherjee to China in May 2016 reaffirmed each other’s eagerness for economic engagement. Indian President returned with big bang of Chinese investment proposals. Chinese biggest industrial park developer CFLD showed interest to set up 10 industrial parks in India. Shanghai Automobile Company, Chint Group for renewable energy, Sopo Group of chemical, Ding Shen and Shanghai Electric Company were keen for large investment in India.
During 2016, Chinese companies proposed US $ 2.3 billion worth of investment in the country. The proposals were acquisition of 86 percent stake, worth US $ 1.4 billion, by Shanghai Fosun Pharmaceutical Co in Hyderabad Grand Pharma Ltd, Beiiing Miteno Communication Technology ‘s investment of US $900 million in, Jiangsu Longzhe’s investment of US $125 million in Diamond Power Infrastructure and Tidfore Equipment investment of US $150 million in Uttam Galva Metal Works.
China made a dent in mobile phone manufacturing in India. More than half a dozen Chinese mobile manufacturing companies are in India. Just before Chinese telecom giant Huawei announced shifting of plant to India, Xiami had revealed plan to set up two manufacturing plants in the country. The upstart brands like Gionee, LeECo, Oppo, Vivo, Meizu, One Plus and Coolpad have their facilities in India.
Currently, China Railway Corporation (CRC) is carrying out feasibility studies of high speed trains between Chennai - New Delhi route. It will be no wonder if China can grab the construction deal of the longest route of high speed train and can pose a major challenge to Japan’s hegemony in high speed train. China has already proven its capability after winning Jakarta – Bandung 150 km high speed rail project, against stiff competition from Japan. 
Chinese investment has two benefits for India. First, Chinese investment will help in curbing the rising trade deficit with China. More than one-fourth of India’s total trade deficit was spear headed by cheap imports from China. Second, Chinese investment can be instrumental to normalize the political relation between the two countries. In September 2014 President Xi Jinping appointed Mr. Le Yucheng as the new Chinese Ambassador to India, who was at the rank of Vice Minister. China deputes ambassadors at Vice Minister rank only to those countries with which it has strategic importance. The countries like USA, Japan, Russia, North Korea and Great Britain have Chinese ambassadors at the rank of Vice-Minister.
Besides investment, China can act as a major fund provider to India’s infrastructure projects. With the setting of AIIB and BRICS’s National Development Bank, which provide more flexibilities in conditionality’s, such as environment, China can play useful role in providing infrastructure funds to India. For example, AIIB funds are more preferable to India for its power projects. This is because funding by World Bank, IMF and ADB were averse to the coal based power generation, given the policy stand to promote clean energy in the world.
Chinese politics is guided to a great extent by business interests. China will not like to slow down its investments to India just because of border tensions at the Sikkim side of India. Hot words may be exchanged at the political level but the business between China and India will flow as usual unless India wants to give any check which is unlikely at the present moment. (IPA)

Thursday, 13 July, 2017