China’s state-run Global Times warned India on Tuesday that its hostile policies are frightening Chinese investors and their allegedly much-needed capital out of the Indian marketplace.
“Following a series of abrupt restrictions that hammered Chinese investors’ confidence, the Indian government is reported to be further tightening rules on all Chinese investments,” the Global Times asserted, referencing reports by Indian media that Prime Minister Narendra Modi’s administration is considering tighter rules and closer oversight for investors from China.
As in most Chinese editorial broadsides against India, the Global Times chided Modi for daring to cut off Chinese money while the “pandemic in India is still raging” and lectured the Indians for taking actions against China that could kneecap their own post-pandemic recovery:
If India wants to achieve a high growth rate like China, it must rely on investment to drive it, not just consumption. India’s savings rate is also much lower than China’s, so it must rely on foreign investment. Therefore, from all aspects, India should be open to foreign investment.
From investment in infrastructure construction under the Belt and Road Initiative to the current industrial upgrading, China has show[n] willingness to make connections between some of its manufacturing industries and high-tech sectors with India in recent years. Chinese science and technology companies were also very optimistic about the Indian market, so investors in corresponding areas were confident as well.
However, the series of abrupt restrictions imposed by India this year have severely affected the confidence of Chinese investors. India’s bans on Chinese apps and restrictions on Chinese investment prompted some Chinese investors to abandon the game in India, and now even those who were watching from the sidelines are leaving.
According to the Global Times, those alienated Chinese investors are taking their money to Southeast Asia and the Middle East, dooming India to further economic contractions in the year ahead.
“To stimulate economic growth, India needs foreign investment. China and India had promising cooperation prospects. If India stubbornly continues ruining the cooperation momentum that was built up over a long time, its economy will undoubtedly suffer incalculable losses,” the Chinese Communist paper lectured.
Whatever the future might hold, The Hindu reported on Tuesday that foreign direct investment in India hit a record high during the first five months of the current fiscal year, surging as a result of “policy reforms, investment facilitation and ease of doing business” according to India’s Commerce and Industry Ministry. The ministry expected the surge to continue over the next few months.
India’s telecom industry and real estate were especially hot tickets, the latter purportedly driven by foreign investors accepting the need to “ramp up local supply chains after the pandemic hit.” India has been making a strong effort to woo international supply chains away from China.
India’s Financial Express quoted analysts in September who said the loss of Chinese investment, due to the Wuhan coronavirus pandemic and tensions along the Indo-Chinese border, would not be a huge problem for Indian startup companies. These analysts saw India as well-positioned to scoop up capital fleeing from China after the pandemic.
“However, it is the deep entrenchment of China’s supply chain in India’s manufacturing and services industry which is a bigger matter of concern. For example, India’s pharmaceutical industry is hugely dependent on the supply of raw materials from China,” the report added.
“In the short to medium term, India should develop alternate supply sources to reduce its dependence on China whereas, in the medium to long term, India must capitalize on the opportunities that the current crisis has presented. The country should present itself as a viable alternative to capture a larger pie of global commerce,” the Financial Express advised.