Politics is hampering the growth and development of bilateral ties between India and China.
Distrust over labour and technology from China recently meant that as many as 10 Chinese power equipment companies have had to suspend work on power projects already sanctioned in India. The Indian government caught in a catch 22 situation, claims its protecting national security by protecting jobs for locals and import of technology from China, a close aide of Pakistan. However at the same time, demand for power generation in India is at an all time high, necessitating the need to import low-cost power equipment from China that can be set up quickly and on their terms. According to a McKinsey study, China builds a power station in half the time that it takes India.
Besides labour and technology, India is also skeptical as to the quality of the Chinese power equipment. A long-term game, Indian companies are buying cheap power equipment from China, but neither knows when quality will suffer.
India has said it will add 10,000 megawatts of power generation capacity to its grid in the current fiscal year which ends this month. Chinese equipment accounts for as much as a quarter of new capacity.
Nonetheless, China and India’s economic problems run a lot deeper. Although India isn’t against the devaluation of the yuan, it is dissatisfied with the huge trade imbalance between the two nations. At various points in the past, India has asked China to make the balance of trade more even. It has also claimed objections against dumping of Chinese goods especially toys into India. The south Asian nation whose majority export to China is iron ore has also had several skirmishes over price of the natural resource in the recent past. Analysts feel that besides age-old territorial disputes, until India’s exports to China do not even out, the smaller nation will continue to defend itself against China through small manuevers aimed to display its regional strength.