China, India should pursue business cooperation instead of conflict: experts

By Yin Yeping and Zhang Hongpei Source:Global Times Published: 2020/6/17 20:33:40

An Indian health worker takes a swab sample of a policeman, as new cases of COVID-19 were reported from a police station in Bangalore, India, June 16, 2020. (Str/Xinhua)

Border clashes between China and India in the Galwan Valley on Monday cast a shadow of uncertainty over the two regional economic powers, with Chinese investors showing concerns about doing business in India. 

However, experts said that both sides have displayed restraint in order not to escalate their tensions, as the two economies have the need for cooperation while averting conflict.

The border brawl on Monday made global headlines, with some calling it a potential roadblock to bilateral economic relations -- which were already affected by India's amended rule on foreign direct investment discriminating China, and the continuous spread of the coronavirus pandemic.

The Global Times learned that some Chinese firms operating in India worry that the clashes, together with other issues, might trigger some anti-China sentiment in the South Asian country, negatively impacting Chinese brands or products in the local market.

Scott Wang, head of a China-invested fintech provider based in Delhi, told the Global Times Wednesday that Chinese companies probably will face heightened risks, amid rising nationalist fever there. "We also have concerns about capital safety ... we're worried if overseas capital would be frozen," Wang said.

There are also some Chinese investors who do not think the latest border clash will have much impact on their business.

Li, who has been engaged in the exhibition sector in India for four years, told the Global Times Wednesday that there isn't much anti-China sentiment in India -- at the moment.

"The impact on Chinese businesses from the border brawl could emerge in a week or two, and that depends how the two giant countries deal with it," said Li, while believing both China and India would not let the situation fall into a tit-for-tat war.

As one of the largest trading partners of India, China plays an important role in the former's economy. Bilateral trade reached $90 billion in 2019, of which nearly two-thirds represented Chinese exports to India.

Zhao Gancheng, a research fellow at the Shanghai Institute for International Studies, told the Global Times Wednesday that the Indian government should not move to disrupt bilateral cooperation on business and trade to display a tougher posturing with China, especially when India needs to recover from the pandemic's impact on its economy.

There have been rising barriers against Chinese investment in India, which has sent contradictory messages toward China and Chinese investors, experts say.

"On the one hand, India expects more Chinese capital to come in and help grow its economy, but on the other hand, it does not want to see more reliance on the Chinese economy," Zhao said, adding that Chinese investors may choose to withdraw their funds if bilateral relations worsen. 

China's biggest automaker SAIC Motor's assembly plants in India are currently doing well, and the company's investment would be at risk if the border brawls escalate, Zhao said.

Qian Feng, director of the research department at the National Strategy Institute at Tsinghua University, told the Global Times on Wednesday that bilateral trade has been significant, including exports of active pharmaceutical ingredients and electronic parts imported from China to India. Despite some disruption amid the virus outbreak, such trade has remained smooth with the efforts of both sides.

However, if the border brawls escalate to broader conflict, which will produce substantially negative impact on business cooperation in India, analysts said.

"Bilateral trade may drop 20 percent this year if the border situation won't calm down," Qian said.

Posted in: ECONOMY

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