India taps Chinese provinces for bolstering foreign investment

November 15, 2014 07:16 pm | Updated 07:16 pm IST - BEIJING

A rare convergence of policies is deepening Sino-Indian economic engagement, which is now going beyond China’s coastal areas, following President Xi Jinping’s visit to India.

A 98-member business delegation from Zhejiang, a private sector stronghold, which will visit New Delhi and Ahmedabad later this month, is symbolic of a developing trend, where Chinese provinces, on the lookout for business expansion, are broadening their footprint in India.

In an address, last Sunday, to CEOs of the Asia-Pacific Economic Conference (APEC), Mr. Xi announced that Chinese overseas investment over the next decade is targeted at $ 1.25 trillion — a substantial jump from last year’s already impressive $660 billion.

The visiting delegation includes Alibaba — the e-commerce platform and the Wahaha group, an ambitious food and beverage giant, which hopes to aspire for a niche in India.

India is welcoming China’s investment outreach, as it could energise its own “Make in India” campaign. “There is a happy convergence of Chinese policy of escalating overseas investments and the ‘Make in

India’ campaign that is focused on attracting large-scale foreign investments,” says Ashok K. Kantha, India’s Ambassador to China.

But looking at the bigger picture, New Delhi is also, at the same time, telling Beijing that a sustainable economic engagement would also depend on improvement of market access of competitive Indian products into China, to counter the acutely adverse trade balance between the two countries.

Diplomatic sources said that India was looking for investment-led trade expansion, based on exports resulting from Chinese investments in India, as part of the solution to this problem.

Indian missions in China are doing some serious legwork to encourage Chinese companies in the hinterland, beyond the well-established coastal clusters such as Shanghai and Guangzhou, to invest in India, including the two industrial parks that were cleared during the Chinese President’s visit.

“We are now moving into areas in China, preferably with a vibrant historical connection with India, and, which, at the same time, have substantial untapped business potential,” says Namgya Khampa, Trade and Commerce counsellor at the Indian Embassy in Beijing.

Hard economic diplomacy is being nuanced with cultural and academic engagements in this exercise to build bridges with the Chinese provinces. The Indian ambassador, during his visit to Gansu province earlier this month, visited Dunhuang, home to the famous Dunhuang Grottoes — a testimony to the flourishing exchanges between India and China along the ancient Silk Route.

Soft power and economic diplomacy is also being combined in efforts to bond a relationship with the coastal Shandong province, which has a GDP of 892 billion dollar, making it the third wealthiest province in China. The Indian side wants a dedicated linkup between one of the states and Shandong, which is also one of the foremost sites of Buddhism, Taoism and Confucianism. There is considerable expectation in Indian circles that Shandong will become a major investor in the two investment parks India — a result of pioneering collaboration between the two countries, which focus on the automobile industry, and the manufacture of power equipment.

Border trade between India and China is still modest but cross-border commerce through Nathu La pass that links Sikkim with Tibet holds considerable promise. So far Indian and Chinese truckers ferry locally produced goods between the two market hubs - Sherathang on the Indian side and Rinqingang on the Chinese. But the infrastructure beyond Rinqingang is of the highest quality, opening up possibility of much larger trade volumes in the future.

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