China is developing a targeted layout around South Asia and the Indian Ocean region, and then forming a "counter-encirclement" against India. At a time when this situation is almost fixed, the Modi government has finally woken up, but the response it is ready to take is very intriguing, perhaps this is the biggest difference between India and the West?
Indian Prime Minister Narendra Modi has recently felt the "two heavens of ice and fire". On the one hand, at home, India has begun the 2024 general election, Modi and his Bharatiya Janata Party are determined to win, vowing to win two-thirds of the seats in the Indian Parliament, so that Modi can get a third term and continue to rule India for five years, while opinion polls show that the support of the BJP and Modi is as high as 70% nationwide, far exceeding the political opponent Rahul Gandhi and his Congress party, it can be said that Modi has won the game.
However, on the other hand, abroad, in view of India's active cooperation with the United States' anti-China strategy in recent years and acting as a "thug" of the United States, China's "string of pearls" layout around India has taken shape, and a "counter-encirclement" against India has been formed geographically:
(The "India Get Out" movement broke out in Bangladesh)
(The "India get out" movement broke out in the Maldives, and the new government and parliament have fully tilted towards China)
Needless to say, Pakistan is China's hardcore ally; Bangladesh's opposition parties have already begun to launch a nationwide large-scale "India get out" campaign, and India's influence is much less than before; Nepal's leftist political parties, the CPN-Maoists, and the Nepali Communist Party Marxist-Leninist coalition have formed a government, and the Nepalese government will be more inclined toward China in the future; China and Bhutan have made a breakthrough in the border talks last year, and it is very likely that Bhutan will establish diplomatic relations with China in the future.
China's successful "reversal" in Sri Lanka has caused the Sri Lankan government to cancel the policy announced at the beginning of the year prohibiting foreign research ships and warships from docking, and continue to promote the development of Chinese enterprises to develop the Hambantota port and Colombo airport expansion projects; the most stimulating part of India is the Maldives, under the leadership of the new President Moïse, the ruling party has just won a big victory in the parliamentary election, winning more than two-thirds of the seats, and there is no suspense that the Maldivian government will fully turn to China.
(In the 10 years that Modi has been in power, the ratio of India's manufacturing industry to GDP has fallen instead of rising)
At a time when this situation is almost fixed, the Modi government has finally woken up. If India still stubbornly adheres to its wishful thinking stance of hostility and rejection of China, it will be difficult for India to truly enter the fast lane of development, let alone become a world power in the future, as it claims to be. So Modi, after basically confirming the "third consecutive term", confirmed that it is time for India to open its doors to foreign investment, including China.
According to a recent report by India's Economic Times, the Modi government intends to relax restrictions on foreign direct investment (FDI) in the fields of banking, insurance, and defense, and may introduce specific reform measures after the election.
It can be said that the Modi government was forced to do so. This is because the foreign direct investment (FDI) attracted by India has plummeted in recent years. In the first three quarters of fiscal year 2023-24 (April-December 2023), FDI inflows from India fell 13% year-on-year to $32.03 billion.
According to Indian media, FDI absorbed by India's technology start-ups and real industries such as automobiles, pharmaceuticals and construction has fallen sharply, reflecting that foreign investors believe that India's investment in these areas is too risky. This is directly related to the Indian government's repeated tossing of foreign investors, including Chinese companies, over the years.
We are all familiar with the case of India imposing fines on several well-known Chinese mobile phone companies in various names, in fact, this practice of the Indian government has been used by almost all foreign companies that make money in India, including Wal-Mart in the United States, General Motors, Vodafone in the United Kingdom, Toyota in Japan and a large number of well-known foreign companies.
However, after the Galwan Valley incident in June 2020, the Indian government has introduced more frequent countermeasures against Chinese companies. But the direct consequence is that foreign capital "votes with its feet" and no longer plays with the Indian government.
On the other hand, almost all of India's neighbors have been developing close economic and trade ties under the Belt and Road Initiative in recent years, transferring some labor-intensive industrial chains to relevant countries. For example, Bangladesh has received many investments from Chinese companies, and its economy has grown rapidly, and as early as around 2018, Bangladesh's per capita GDP has surpassed India, and although it will be overtaken by India in 2023, it is expected to surpass India again in the next two years.
China-made industrial products almost completely crush Indian manufacturing in terms of quality, supply, after-sales, iteration, etc., so there is such a scene in more and more neighboring countries of India, that is, "China advances and India retreats". If India continues to adhere to its current policy of excluding and suppressing Chinese manufacturing and investment, it will be the only one that will be isolated. However, after the emergence of the trend of "India get out" in many neighboring countries, many of India's neighbors have begun to snatch India's share of economic and trade exchanges and markets with China, which is another heavy blow to India.
(India's import and export volume to China statistics, China's trade surplus with India reached a new high in 2022)
In fact, although the Modi government has stepped up its efforts to exclude Chinese products and Chinese companies in the past few years, China's trade surplus with India has actually increased, reaching new highs in 2022 and 2023, which fully demonstrates the strong competitiveness of Chinese manufacturing.
Looking at the global economic development, there is no problem that can be solved without China. Therefore, from the perspective of India's domestic demand, the surrounding economy and security situation, and the global economic demand, the Modi government's policy of excluding and suppressing Chinese manufacturing and Chinese investment is doomed to failure.
But even if India wants to reopen its doors to Chinese investment, we must get the pace right to ensure that India removes hostility towards China, improves the business environment, stops making things difficult for Chinese companies, and allows Chinese companies to legally transfer profits abroad. At the same time, China also needs to set up a review body for India's exports and investment, prohibit the export of key technologies and complete sets of equipment to India, prohibit the export and investment of complete industrial chains to India, and prevent India from cultivating an industrial chain that replaces China.
India has always dreamed of becoming the next China, and at the moment, this is not possible.