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While the CCP’s move is in sync with China’s quest for Zhongguo, or a Middle Kingdom status as the centre of civilization, it raises further question mark over firms (REUTERS)
While the CCP’s move is in sync with China’s quest for Zhongguo, or a Middle Kingdom status as the centre of civilization, it raises further question mark over firms (REUTERS)

How Chinese Communist Party’s overt control on private cos play out for India

  • India on its part has been keeping a close watch on its eastern neighbour and the unfolding Himalayan adventure, that is also playing out in New Delhi’s economic policy decision making

New Delhi: The timing couldn’t have been more potent or worse, depending upon who views it and from where. The trigger has been the Chinese Communist Party (CCP), under its most powerful president Xi Jinping recently unveiling a plan of exercising better control over private businesses.

While the CCP’s move is in sync with China’s quest for Zhongguo, or a Middle Kingdom status as the centre of civilization, it raises further question mark over firms such as tech giants Alibaba Group and Tencent who have made deep inroads into India’s start up space. A quick look at unicorns such as Paytm, Paytm Mall, fantasy gaming company Dream11, Byju’s, Zomato, Swiggy and BigBasket portrays the true extent of the Chinese influence over the space.

Experts say in China, the party and the state permeate each other and CCP is the state.

Alka Acharya, professor in Chinese studies at Jawaharlal Nehru University said, “Clearly we are looking at a Party state. While they have been exploring market reforms, these firms are still tied to the state. Even the so called private players owe their rise to the Party. For instance Jack Ma is a member of the CCP. There is only one Party and it is always necessary that you uphold the Party’s principle. Also some Party officials have ties to these private firms." Jack Ma is Alibaba’ founder.

While there have always been concerns about the likes of Huawei Technologies Co. and ZTE Corp.’ close links with the Chinese government, with Beijing' new overt control projection exercise; the global security establishment’s worst fears seem to be coming true. The plan reportedly calls for private firms hiring a minimum number of CCP members across both large and small firms to strengthen ‘ideological guidance.’

In his order Xi stated, “Unify members of the private sector around the party, and do better in promoting the healthy development of the private economy."

The message from Great Hall of the People also perhaps marks a pivot in its stated ‘mixed socialist market economy’ and comes in the backdrop of a trade war with the US government censuring WeChat and TikTok apps. Donald Trump administration is also trying to rally Association of Southeast Asian Nations (Asean) against China’ state owned firms.

India on its part has been keeping a close watch on its eastern neighbour and the unfolding Himalayan adventure, that is also playing out in New Delhi’s economic policy decision making. With the US, UK and Australia banning Chinese telecom equipment, India is expected to follow suit in the backdrop of its plan to roll out 5G networks.

“We can’t do more than what we are doing. We are now trying to limit the damage. However, the question will still be there that if you are trying to keep the Chinese out, who fills that space? Also, given the value chains are so inter-linked, how will you differentiate. It is very difficult to completely sanitise your economic operations from Chinese influence," Acharya said.

From restricting bidders from China in participating for government procurement tenders including smart meters, to barring hundreds of Chinese apps, including Bluehole’s PUBG, Bytedance’s TikTok, and Alibaba’s UC Browser, China watching has assumed a completely new meaning altogether.

The check on Chinese economic armada was succinctly pointed out by India’s external affairs minister S. Jaishankar in his book 'The India Way' where he wrote, “The era of benign globalization that facilitated the dramatic rise of China has come to an end."

Some believe that the gravest threat is on the active pharmaceutical ingredients (APIs) front, with China accounting for around two-thirds of India pharmaceutical companies’ API needs.

“The most critical thing is API in my opinion. We need to build indigenous capacity and this shall be treated as a strategic sector otherwise you will have a problem in supplying medicine to your population," said Saurabh Chandra, former secretary in India' department of industrial policy and promotion.

India on its part plans to become an integral part of global supply chains as firms look to move production lines out of China, following the coronavirus pandemic that originated in Wuhan. Added to the mix is Japan’ push for its manufacturers to move production lines of out of China to India, even as it has been working with India to aggressively develop strategic infrastructure projects in India’s northeastern states.

India’ concerns have perhaps been best articulated by Portugal’ former Europe minister Bruno Maçães who in his book Belt and Road: A Chinese World Order wrote, “In a world where China and the United States will compete for control over key technologies, India risks becoming the market where the outcome of that battle will be in large measure decided, but no more than that."

Gone are the halcyon days popular narrative of two Asian giants rising together and reaching a middle ground on China’s Belt and Road Initiative (BRI). India has also been critical of China-Pakistan Economic Corridor (CPEC), which cuts through Gilgit and Baltistan areas of Pakistan-occupied Kashmir (PoK).

Also, it doesn’t require an expert reading of tea-leaves to surmise that any proposed energy cooperation between India and China, the world’s third and second-largest oil importers respectively is a thing of the imagined past. In this backdrop, Indian strategic experts believe India and China will turn the screws on each other in a geopolitical race to sew up as much of the world’s next generation natural resources such as lithium.

“One also has to concentrate on more domestic crude oil production as it is a strategic sector," said Chandra, who was also former secretary in the petroleum and natural gas ministry.

For now, the Indian economic response in term of decoupling of trade and investment relationship with China has been limited to cancelling railway and road tenders, removing Chinese language from Indian school’ curriculum and ceasing imports of Chinese silk yarn, tyres and other auto components.

However, given the loud message of brinkmanship from the Chinese dragon, and troops on both sides of the Line of Actual Control (LAC) stationed in an eyeball-to-eyeball confrontation; Indian policy planners must be tweaking their playbook to keep a check on China’ private sector juggernaut.

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