India Debates Inviting More Productive Investment from China

Aug. 2—The Indian Finance Ministry’s Economic Survey 2023-24, which came out in July, suggested an implied economic policy change toward China: “In sum, to boost Indian manufacturing and plug India into the global supply chain, it is inevitable that India plugs itself into China’s supply chain. Whether we do so by relying solely on imports or partially through Chinese investments is a choice that India has to make.”

Earlier India’s Finance Ministry Survey had pointed out: “As the U.S. and Europe shift their immediate sourcing away from China, it is more effective to have Chinese companies invest in India and then export the products to these markets rather than importing from China, adding minimal value, and then re-exporting them.”

This proposal, similar to what Southeast Asian nations like Indonesia are doing, comes through Indian access to Chinese productive capital as a possible improvement in China-India relations, their trade balance, and their economies. It received a kind of denial from India’s Commerce Minister Piyush Goyal. He told reporters in Delhi on July 31 that the Survey was not a binding government document and that, “There is no rethinking at present to support Chinese investments in the country.”

Whatever the balance of forces between the Finance Ministry’s Survey and the Commerce Minister’s comment, there has been a sequence of statements looking toward cooperation—much to the dismay of British geopolitical circles and their efforts to drive a wedge between the two BRICS member nations.

RT, in covering this difference between ministries, noted that Prime Minister Narendra Modi had said in an exclusive interview with Newsweek on April 10: “For India, the relationship with China is important and significant. It is my belief that we need to urgently address the prolonged situation on our borders so that the abnormality in our bilateral interactions can be put behind us.” On July 25, on the sidelines of the ASEAN-related Foreign Ministers’ Meetings in Vientiane, Laos, China’s Foreign Minister Wang Yi and India’s Foreign Minister Subrahmanyam Jaishankar held a meeting. The Chinese readout quoted Wang as saying: “Tackling global challenges should embody the solidarity and cooperation of countries of the ‘Global South.’ It is hoped that the two sides will work together to actively explore the right way for the two big neighbors to get along with each other, and guide all communities to develop positive perceptions of each other.” The Indian External Affairs Ministry quoted Jaishankar: “EAM stressed the importance of the three mutuals—mutual respect, mutual interest and mutual sensitivity—to our ties.” In Tokyo for the July 29 “Quad” meeting, in his press briefing at the Japan National Press Club, Jaishankar responded to reporters: “We have an issue between India and China…. But we are not looking to other countries to sort it out. It is for the two of us to sort it out…. And that is what we are doing.”

And on July 30 on his “India Punchline” website, retired diplomat M.K. Bhadrakumar begins: “There is an expectation that Prime Minister Narendra Modi would prioritize a historic turnaround in India’s relations with China as a legacy of his 15 years in power. Things are indeed moving in such a direction.”

China became India’s top trading partner over the past fiscal year, with bilateral trade expanding to $118.4 billion.