Sikkim standoff: China's economic stakes in India is no worry for Beijing

India may hold the promise of a big market for China, but that promise is yet to be fulfilled

 

The sikkim standoff between India and China over a border dispute in the Sikkim region has given rise to speculation over how the latter would respond to the situation. The Chinese leadership has ruled out any talks with India until the Indian troops vacate what it considers to be its territory. In response, the Indian foreign secretary has noted that differences should not become disputes between neighbours.

But the stalemate continues, bringing into sharp focus its impact particularly on China’s economic ties with India. On social media including many WhatsApp groups, a campaign is already on to show how Indians can respond to China by rejecting goods that are produced in that country and sold in India.(economy policy)

It is a campaign charged with nationalistic emotion. But how seriously can such a campaign really impact Chinese exports or investments? To assess that, it is important to look at some numbers on India’s trade with China and the flow of Chinese investments into India.

There is no doubt that Chinese direct investments in India have been rising steadily. From being the 37th largest foreign investor in India in 2011, it has now scaled up to the rank of the 17th largest foreign investor in 2017.

 INDIA-CHINA foreign trade

That appears to be a fast rise in the pecking order, but actually the size of total Chinese investments in India and the annual flows are very little, almost insignificant either as a share of India’s total foreign investment or as a per cent of China’s total investments abroad.

Consider the following numbers. Between April 2000 and March 2017, India received cumulative foreign investments of over $332 billion. Of this, however, China’s share is only $1.63 billion. In 2010-11, China invested only about $2 million in India. That year, India had received total foreign direct investments (FDI) of over $14 billion..

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Serious action by US on H1-B visa would worry India quite a bit: CEA

Anything that is going to interfere with export growth creates anxiety (in India)

 

Any "serious actions" taken by the Trump Administration on the H-1B visa programme would be a cause of "worry" as a majority of Indian exports in the services sector go to the US, Chief Economic Advisor Arvind Subramanian has said.

"If there are serious actions taken it's something that's going to kind of worry us a lot because, remember that our exports of services are about 40 to 45 per cent of the total exports," Subramanian told an audience here last week.

"Something like 50 to 60 per cent of all our exports of services goes to the United States. So it would worry us quite a bit," he said while responding to a question on the H1-B visa during his visit at the Peterson Institute, a top American economic think-tank.

Subramanian said that India would be "okay" as long as the visa reforms are manageable and it's keeping a close watch on it.

"Anything that is going to interfere with export growth creates anxiety (in India). In the context of the United States, we're all watching very carefully the H1-B visa situation," the Chief Economic Advisor said.

"On the visa side, I don't know but as long as you know we can keep this thing manageable. You know it should be okay," he said.

During his US visit, Finance Minister Arun Jaitley had also taken up the the H-1B issue with the American side and highlighted the contribution Indian companies and professionals are making to the US economy.

President Donald Trump had earlier this month signed an executive order for tightening the rules of the H-1B visa programme to stop its "abuse" and ensure that the visas are given to the "most-skilled or highest paid" petitioners, a decision that would impact India's USD 150 billion IT industry.| READ MORE