Indian Finance Minister Arun Jaitley is on a five day tour of China to pitch for Chinese investments from the slowing Chinese economy. India which is on a growth trajectory is aiming for 7.5 to 8 percent GDP growth at a time when China’s GDP has decelerated to 7 percent. While the Chinese are interested in investing in India – a neighbour and a large market most investors are yet skeptical on her policies. Mr. Jaitley’s aim is to convince Chinese bankers and wealth fund managers to invest in India.
The finance minister is not alone. His visit was proceeded by the Chief Minister of several Indian states, the last being Mr. Shivraj Singh Chouhan, the CM of India’s central and second largest state Madhya Pradesh who was in Beijing, Shanghai and Guangzhou last week with a 20+ member business delegation to pump investments into his state. Madhya Pradesh has already allotted land at Pithampur towards Chinese investments in automobiles, pharmaceuticals and technology and has promised massive discounts in land, taxes and electricity.
Soon after his arrival in Beijing, Jaitley met Bank of China chairman Mr. Tian Guoli and addressed a closed roundtable meeting of heads of sovereign wealth funds, institutional investors and banks. The finance minister will on Friday address Business Forum Invest in India in which several Chinese businessmen and heads of state-run firms are expected to take part. The objective of the forum is to attract investments in infrastructure, where China has excelled and India has till date been skeptical about allowing in.
On 25 June, Jaitley will attend the board governors meeting of the Asian Infrastructure Investment Bank (AIIB) in which India is the second largest investor after China. The Beijing-based AIIB was officially established late last year. The bank has an authorised capital of US$100 billion. China is the largest shareholder with 26.06 percent voting shares. India is the second largest shareholder with 7.5 percent followed by Russia 5.93 percent and Germany 4.5 percent. The bank is expected to approve development loans to several countries and create a collective plan to avoid a market meltdown due to Brexit.
On Sunday, Mr. Jaitley would take part in a seminar discussion Infrastructure and Global Economic Growth along with Chinese finance minister Lou Jiwei.
Mr. Jaitley is scheduled to visit China again, along with Economic Affairs Secretary Shaktikanta Das, from July 19 to 24 for a G20 meeting of Finance Ministers.
While Inchin Closer considers it a good sign that India is finally open to investments from China without any preconditions, strong hard and soft policies will need to be put in place if the two countries are to work together. While distrust still exists with China putting a spanner in India being a part of the NSG, the nations will need to knit together a firm plan if they are to effectively work together especially if millions of dollars are involved, else it could prove detrimental to both economies.