Deploying tanks on Indo-China border hinders potential for Chinese investment

By Hu Weijia Source:Global Times Published: 2016/7/21 0:03:00

A media report stating that nearly 100 Indian tanks have been positioned near the Indo-China border to counter any possible threat grabbed people's attention on Wednesday as more Chinese firms are looking to increase their investment in India.

China's Ministry of Commerce said in Beijing on Tuesday that Chinese outbound investment increased by 58.7 percent in the first half of the year, as the country has sought to further integrate itself into the world economy. In this regard, a great number of Chinese firms, including smartphone manufacturer Xiaomi and PC computer maker Lenovo, have turned their eyes toward India.

This new wave of Chinese investment only just begins to meet India's rising import demands. The People's Daily said Wednesday that the Modi administration has recently promoted a second round of reforms to attract more overseas investment by allowing foreign firms to increase their shareholding in local enterprises.

However, it is puzzling that while deploying tanks near China's border, India still strives to woo Chinese investment.

China and India share a large potential for economic and trade cooperation, and while this may make Chinese enterprises enthusiastic about investment opportunities in the Indian market, those firms should remain calm in the face of investing risks.

In an index on the ease of doing business, from the World Bank, India currently ranks 130 out of 189. Despite India's stated goal to rise to within the top 100 this year, the nation has its work cut out for them.

Additionally, the illiteracy rate in India remains high and continues to hinder the country's efforts to improve its productivity, adding to evidence that India can not make itself a promised land for Chinese manufacturers overnight.

Furthermore, the deploying of tanks near the Indo-China border may hit a nerve within the Chinese business community, causing investors to weigh the threat of political instability when they make investment decisions.

The continuous efforts by India's government to improve its foreign investment environment deserve applause, but now it seems there needs to be more focus spent eliminating investor's misgivings over non-economic factors.

During its own initial stage of industrialization and urbanization, China put aside political disputes and concentrated on economic development. To an extent, this may serve as a road map for India's government.

In the long run, there is large potential for a successful relationship between China and India, especially in the manufacturing sector. In order for that possibility to become a reality, both China and India will need to work hard to clear up misunderstandings in a bid to lay a solid foundation for the sustainable development of economic and trade cooperation.

The author is a reporter with the Global Times.

Posted in: Eye on The Economy

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