China invariably leaves India … err … well … now, I am looking for a neutral word which would fly under the trolls’ radar, and here, I’ve got it! Nonplussed, yes, China simply leaves India nonplussed. We’re never quite sure how to treat our gargantuan neighbour. As a powerful enemy who needs to be poked gingerly, handled with kids’ gloves? Or an inscrutable giant we would like to befriend, but warily, with great trepidation? It’s this ambiguity in our collective national consciousness that leaves our foot hanging in mid-air. As soon as we move one step forward, we keep the second step dangling, unsure whether we should stride forward or roll it back.
‘Creeping Acquisition’ In Ladakh
Before I am booked under the sedition law, let me explain with two recent examples. Take what’s happening on the India-China border. Every piece of evidence points towards a deep Sino thrust into what we consider our territory, especially in Ladakh. Unlike previous years, this is not a local skirmish between excitable patrols whose paths just happened to cross. There appears to be a calm, sinister pre-meditation about China’s provocation. There is mounting chatter – much of it credible – that while the action is being ratcheted down, the withdrawal is strategically ‘short of complete’, ie it’s not ‘back to the earlier base’.
Ban Chinese Foreign Direct Investment!
Even more unedifying is the clumsy manner in which we’ve tried to clamp down on Chinese investments. When the valuation of India’s largest mortgage lender HDFC was plumbing an unrealistic, panicky Covid-bottom in March, the Chinese central bank raised its stake in the blue-chip on our stock exchanges, to over 1%. Read that again. It was just one percent. It was a portfolio purchase on a freely traded, open market. But we were, well, nonplussed.
In a terrified, knee-jerk response, we decreed that “every investment coming from any country that shares a border with us will be removed from the automatic route. It shall be screened on a case-by-case basis before it is permitted”.
So far so good. But then we were struck by our infamous ‘second step suspended in mid-air’ disease. We had ‘boldly’ (recklessly?) taken the first step without thinking through downstream implications. So now we needed to follow through with the critical second step by defining what exactly, ie which Chinese investments, would be put in fetters. But since the Chinese rolled their eyes in anger, we got, well, nonplussed. We froze.
So today we are trapped in no-man’s land. Every renminbi from China is stuck.
It doesn’t matter whether a Chinese investor owns two percent or 80 percent, or whether he is a direct owner or a beneficial one who is two layers above the investment vehicle – everything has slammed shut. Why? Because India has yet to define what constitutes a ‘Chinese investment’. Worse, while the original objective—and I daresay a fair one—was to control predatory acquisitions, which invariably should have meant a ‘change of control in favour of the Chinese buyer’, today even the tiniest, most innocent portfolio investment is jammed. And the parody does not end here.
Questions, questions, and more questions, but no answers, at least not yet, almost two months after the knee-jerk “ban”. And the consequences of this paralysis are lethal for companies that need, or had commitments or an active interest from Chinese investors.
All of this is … err … well, so utterly nonplussing!
India’s ‘Two Pulverisations’ Versus China
Finally, to distract from our own confusion, we’ve created an opium for our masses – just go swadeshi, buy local, boycott these bloody low-quality Chinese goods, hoping (naively) that an orchestrated consumer hysteria would replace a calibrated, thought-through response to a military or investment challenge.
Why have we reached such an unequal pass against China? The answer lies in ‘Two Pulverisations’. I am just borrowing the phraseology from two Chinese titans, ie Mao Zedong’s “The Great Leap Forward” and Deng Xiaoping’s “Four Modernisations”.
Arguably, these two comprehensive conquests have given China a palpable psychological dominance over India, whether we like to admit it or not.
But is everything lost forever? No, most certainly not.
If not equal, can we at least regain an honourable near-parity? Yes, we can (thank you, President Obama).
How? By giving up our economic defeatism and revving up to full potential.
How? By studying the big ideas which helped China pull off its economic miracle.
And then, by crafting and zealously implementing our own big ideas.
What are these?
The answer shall lie in Part Two of this article.
Raghav Bahl is the co-founder and chairman of Quintillion Media, including BloombergQuint. He is the author of three books, viz ‘Superpower?: The Amazing Race Between China’s Hare and India’s Tortoise’, ‘Super Economies: America, India, China & The Future Of The World’, and ‘Super Century: What India Must Do to Rise by 2050’.
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