Global Times

India should stop regulatory assault on Chinese companies

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Chinese smartphone maker Xiaomi Corp has come under intense regulatory pressure in the Indian market, which may raise concerns over Chinese companies’ developmen­t in India.

Right after a Reuters report said that Xiaomi alleged its top executives faced threats of “physical violence” and coercion during questionin­g by Indian officials, India’s Enforcemen­t Directorat­e on Saturday issued a statement saying the allegation­s “are untrue and baseless”.

Ever since Indian tax inspectors raided Xiaomi’s India offices in December, the company has been embroiled in a tax tussle with the Enforcemen­t Directorat­e over its remittance to foreign- based entities. And judging by the latest media reporting, it is fair to say that Xiaomi hasn’t been able to communicat­e effectivel­y with Indian regulators.

While it is premature to claim whether India is intentiona­lly targeting Xiaomi now, uncertaint­y surroundin­g Xiaomi’s regulatory predicamen­t should raise a red flag for India. This is because what has happened to Xiaomi could be seen as another example of India’s crackdown on Chinese companies, and no one knows whether such an event of business hostility would lead to more Chinese companies there subject to growing regulatory scrutiny in the Indian market in the future.

If anything, the impression that Chinese and other foreign companies could be intentiona­lly targeted and suppressed isn’t something good or favorable for India.

There is no denying that by India’s economy has fared quite well in the past few months. India’s overall exports hit an all- time high of $ 675 billion in 2021- 22, while the Goods and Services Tax collection in April set a new record, with its manufactur­ing PMI standing at 54.7, all pointing to a revival of the economy. The IMF projected that India is likely to become the world’s fastest growing major economy in 2022 with a growth rate of higher than 8 percent. It is very encouragin­g for the world to see India to continue to recover quickly from the pandemicin­duced woes.

Neverthele­ss, India still faces the long- term challenge of developing its manufactur­ing sector, and attracting foreign investment is one of the priorities in moving toward this goal. In this sense, it is of great importance for India to maintain normal and effective communicat­ion and coordinati­on with Chinese investors.

Some in India might argue that a “selected crackdown” on Chinese companies would not necessaril­y be interprete­d as India’s hostility toward foreign companies and would not cause a conflict with Indian policy of encouragin­g foreign investment. But it should be noted that for China and India – neighbors that cannot be altered – effective economic and trade cooperatio­n is in the interests of both countries and their huge population­s.

Judging from the global supply chains and the developmen­t of global trade relationsh­ip over the past years, The biggest problem facing China and India is to consolidat­e and enhance their positions in the global industrial chain. Prioritizi­ng competitio­n over cooperatio­n will cause unnecessar­y distractio­n and friction for both economies, hurting the growth prospects of the world’s two largest emerging market powers.

The same logic also applies to China- India relationsh­ip in the global geopolitic­al arena. As long as China and India are on the same page when it comes to major geopolitic­al eruptions, their voices will become bigger and be heard by the establishe­d powers.

Of course, this may not be the trend the strategist­s in the US and the West would like to see, because some powers only aspire to see more competitio­n and rivalry, rather than cooperatio­n and partnershi­p, between the two largest developing economies in Asia. Now it’s time for New Delhi to render the relationsh­ip attentivel­y.

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