India stands to lose if it tightens security clearances for Chinese firms in retaliation against Beijing blocking New Delhi’s move to ban Pakistan-based terrorist Masood Azhar, the state media warned on Wednesday.
Quoting India-focussed Chinese experts, the influential Global Times newspaper said Chinese firms will stop looking at the Indian market as a potential investment destination if clearances are tightened or existing ones revoked.
Chinese firms will stop expanding and India will lose out on the billions President Xi Jinping had promised to invest during his visit in 2014. Without China’s help, India’s need for finance in infrastructure will remain unfulfilled, the report contended.
Senior officials told Hindustan Times in New Delhi that a review of clearances for Chinese firms will be carried out after China “blocked” a move to put Azhar, the chief of the Jaish-e-Mohammed, on a UN sanctions list.
That will not be a wise move, Chinese experts told the newspaper.
“India stands to lose more than gain if it tightens its security checks on Chinese firms after Indian media claimed the country is considering scrapping security clearance to Chinese companies,” the analysts were quoted as saying.
“Chinese companies may think twice about their expansion plans in India over the possible security clearance review. Thus, India’s development, which relies on China to improve its poor infrastructure, will be hindered,” said Hu Zhiyong from the Institute of International Relations at the Shanghai Academy of Social Sciences.
None of the experts mentioned that Chinese companies are looking at India as a major market to expand as growth in the rest of the world, including in China, gradually slows.
This includes Chinese computer and smartphone companies such as Lenovo, Xiaomi and Vivo.
An anonymous Chinese diplomat told the newspaper that overall, the ease of doing business in India has improved for Chinese companies in the last couple of years.
“Although India conducted a security review of Chinese firms, Chinese companies in India say the general business environment is improving, and the Chinese companies’ feedback is positive,” the official was quoted as saying.
Hindustan Times reported that around 25 Chinese companies have been given security clearance in the past two years for projects, mostly in power, telecom, railways and infrastructure.
Sun Shihai from the Institute of Asia-Pacific Studies at the prestigious Chinese Academy of Social Sciences said the “…Indian government is unlikely to tighten its policies toward all Chinese investments, but it may pick on some Chinese companies”.