India reportedly moves to restrict Chinese direct investment

It looks like India is the latest country to move to restrict the amount of its stuff China can buy.

The news comes courtesy of Light Reading, which reports the Indian government has tweaked its rules on foreign direct investment to require specific clearance for an investment coming from and countries India shares a border with. Without in any way seeking to downplay the economic might of Nepal and Bhutan, it seems pretty clear this move is directed at China.

China’s ‘belt and road initiative’ has characterised its foreign policy for years. On the surface it’s all about expanding China’s trading relationships as per the Silk Road of antiquity.  In practice it looks more like a move to gain strategic advantage from buying, and in some cases controlling, companies and assets in countries around the world.

The coronavirus pandemic, and the resulting economic collapse that has resulted from the need to shut down many national economies, has put many counties under severe financial stress and depressed the prices of many assets. That would appear to create the perfect environment for China’s aggressively acquisitive foreign policy.

According to the LR report, the People’s Bank of China has recently bought a 1% stake India’s largest private bank, so it looks like the Indian authorities are getting nervous. It still seems unclear, however, whether this move also has a bearing on the involvement of Chinese companies in the Indian economy. There don’t seem to be specific restrictions on companies like Huawei and ZTE, but regulatory momentum seems to be against them.