Opinion
Mint Quick Edit | China’s outflows and India’s chance
Summary
- Foreign investors pulled out a record amount of money from China in the last quarter as the global affair with the Chinese economy sours. Indian policymakers, though, must work harder at seizing the China-plus-one opportunity.
Foreign investors pulled out a record amount of money from China in the last quarter. Direct investment liabilities in its balance-of-payments dropped almost $15 billion in April-June, Bloomberg reported, citing data from the State Administration of Foreign Exchange.
This marks only the second time that the figure has turned negative, and should the full year end with a fall, it would be China’s first annual decline since at least 1990. The data offers evidence of the dimming appeal of the Chinese economy as its health takes a hit amid a structural slowdown, even as regulators clamp down on private firms.
Also read: Roll out a red carpet for Chinese investment—but cautiously
Foreign investors have been losing confidence and working on a China-plus-one strategy to diversify production and lower risk. This should benefit other economies, including India’s. That said, less-than-impressive foreign direct investment in India lately indicates that it isn’t an obvious choice for global investors pulling out of China.
Smaller economies in Southeast Asia offer stiff competition. While India’s economic prospects do stand out, New Delhi needs to adopt a more attractive policy framework. The China-plus opportunity is a rare one, and we mustn’t let it pass.
