Taming The Dragon: Economy To Geopolitics

Taming The Dragon: Economy To Geopolitics

The world is surviving the pandemic while China is in the league of an actual business. China stocks are on the rise.

Source: Economic Times

One thing is for sure, If China had been transparent about this pandemic, the world could have tackled this virus much more efficiently. Not only has China been not transparent, but it had also silenced the World Health Organization.

Due to this silence on coronavirus, COVID-19 has so far affected around 213 countries. The International Monetary Fund (IMF) is predicting a global recession. Except for this, Worldwide trade is also expected to fall between 13% and 32% in 2020.

In all of this, the threat of Chinese takeovers is in the minds of many countries including Japan, Europe, North America. India is no exception. The Indian government tightened its foreign direct investment (FDI) policy. This restriction was necessary to prevent opportunistic takeovers of Indian companies. But how this would affect India and China’s relationship?

Already China’s lack of transparency about the virus has generated so many negative sentiments in India against China. From economy to geopolitics, Let’s discuss some key factors that affect India-China relation:

1. Over Investment in Indian giants

The Chinese influence in India has grown exponentially. According to a study think tank Gateway House, 18 out of 30 Indian “unicorn” companies have significant Chinese investment. Chinese tech investors have invested an estimated $4 billion into Indian start-ups. Not to mention, Alibaba is the single largest shareholder in Paytm. This raises concerns over the security and privacy of our transaction. Let’s hope the recent FDI policy updation would do the job, even though it would be an impediment for other FDI and adversely affect the confidence of overseas investors. As the Indian Ministry said, tightened restrictions on FDI is necessary to protect domestic firms.

Taming The Dragon: Economy To Geopolitics
Source: Firstpost

What’s new in FDI?

Any fresh investment from China needs Indian government approval.
Exits from investments and deals which result in a change of beneficial ownership would also require government approval. Earlier this month, HDFC said that the People’s Bank of China raised its stake in India’s largest non-banking mortgage provider, HDFC Bank. Indian companies could be susceptible to Chinese takeovers. It’s clear that India’s decision to tighten policy for FDI came amid China eyeing to take over several Indian companies due to economic slowdown.


China-Pakistan Economic Corridor (CPEC), a flagship project of Belt and Road Initiative (BRI), directly impinges sovereignty and territorial integrity of India. The 1,300-km corridor passes through the Pakistan-occupied Kashmiri territory of Gilgit-Baltistan. It is an alternative economic road link for part of Kashmir lying on the Indian side of the border. The political game is already going on.

Taming The Dragon: Economy To Geopolitics
Source: The Guardian

While Belt and Road Initiative (BRI) or 21st-century silk road, is a world route through Pakistan. It has already started in African countries, but China’s opaque over the project has raised many doubts. BRI includes 71 countries that account for almost half the world’s population and also a quarter of global GDP. It will be the biggest threat to many countries.

CPEC will affect India in various ways. In a situation of war between India and China, it would be easier for China to move its forces to the border because of CPEC. China has already present in Chittagong port, Port Sudan (Sudan), Maldives, Hambantota port, Somalia and Seychelles. So, control of Gwadar port establishes full dominance of the Indian ocean in the hands of the Communist nation.

3. China intervention in Myanmar and funding of Arakan army

Arakan army, a terrorist group whose emergence is affecting the peace process and Myanmar’s efforts to combat decades of conflict. Myanmar is one of India’s strategic neighbors. While China is funding and providing arms and weapons to the Arakan Army, which ultimately helps northeastern insurgency groups to rebuild their presence.

Taming The Dragon: Economy To Geopolitics
Source: Licas.news

The AA is said to have links with China. Its spokesman Khaine Tukkha said, “China recognises us while India does not”. According to NorthEast Now, this statement explains why AA does not disturb the Chinese deep seaport at Kyaukphyu but kidnaps and badgers Indian construction workers involved in the Kaladan project.

4. Influence in the South China sea

The sea carries tremendous strategic importance because one-third of the world’s shipping passes through this sea. It carries an estimated $3 trillion in trade each year. Lucrative fisheries, Huge oil and gas reserves are believed to lie beneath its seabed. China increased the navy’s budget and dominating the south china sea dispute amid the corona pandemic. Apart from this, China is harassing Vietnam and Singapore. Chinese aggression in the South China Sea & East China Sea also faces strong pushback. In response to Beijing’s growing presence there, the US has also started its naval presence in the South China Sea.

South China Sea
Source: CNN

China’s growing military in the South China Sea is obligated to ease greater power in the eastern Indian Ocean too. In the middle of pandemic, China has increased its pressure in the South China Sea.

“A leopard never changes its spots”

This phrase fits for China. In many respects, nations’ true colors come forward in a crisis and China is showing it’s true colors in this pandemic. China has not slackened its hold and pressure on Southeast Asia. It has attempted to take advantage.

In the middle of this pandemic, China is trying his every trick to take over the world. At this time, India needs a hold on China. The new FDI policy might be an opportunity for India to direct investment to favored sectors and make the investment from China more controlled and transparent. Some negatives are still there. India has already rejected the participation in Belt and Roads Initiative. India must hold these foreign investments if our mission is long term. Indian policymakers need to be more careful about this troubled bilateral relationship because the above factors could affect our nation.

Our future rival is China for sure, Pakistan is not there anymore… The expansional way of China is always a red signal to India. China is always an enormous picture. This time, there is a need of long dialogue between China and India.

Also Read: The Deriding Dragon – Lack of Reprisal

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