New York: China has seen a deluge of US investment and imports ever since it opened up its economy and has used this economic leverage to sideline political objections over lack of freedom or rampant piracy within the country.
But now, with questions emerging over China’s internal tensions, many US investors are eyeing its more stable, democratic neighbour – that’s India.
And with President Hu’s recent visit to the US failing to produce any breakthroughs, this could be an opportunity for Indian business to make itself heard.
Chinese President Hu Jintao’s eventful reception at the White House last week, disrupted by a Falun Gong activist, was an indication of the internal political and social challenges facing the country.
And the American approach to the ceremony was in stark contrast to the state visit protocol extended to Prime Minister Manmohan Singh last year. The Bush administration is believed to be cultivating India in order to contain the growing influence of China outside its borders.
According to experts like Ian Bremmer – President, Eurasia Group, the head of a leading risk advisory firm, American businesses are doing the same, because they are nervous about what’s happening inside China’s borders.
Bremmer says, “There is a big question about to what extent the Chinese political system as it presently exists is sustainable for 5, 10, 15 years. If you are a major automotive manufacturer, telecommunications manufacturer and you are not just talking about selling white goods in China or India, you are talking about setting up shop, putting hundreds of millions of dollars, billions of dollars in the country that you can’t get out tomorrow or in a month, then China represents a growing risk for you and there is no question that those companies are starting to take a more serious look at India and at countries throughout south and south-east Asia as their own hedging strategies. “
China still has tremendous economic leverage with the US. China enjoyed a trade surplus of over $200 billion over the US last year. China is also America’s fastest growing export market, and is the second largest buyer of US treasury bonds.
But as observers point out, crucial disputes remain over issues like the lack of Intellectual Property Rights and the undervalued Chinese Yuan, as well as China’s relationship with countries like Iran, Sudan and Venezuela.
The recent summit between President Bush and President Hu failed to make progress on political or economic differences between the two countries. And American industry is also apprehensive about anticipated measures by the Chinese government to strengthen domestic businesses against foreign investors.
This could be a window of opportunity for Indian industry to highlight its advantages and attract more American investment.
· Trade surplus over US in 2005: $201.7 bn
· Fastest growing export market for the US
· Holds $265.2 bn in US Treasury securities (as of February 2006)