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April, 2015

  • chindia-stocksThe Chinese bear market is expected to have little impact on Indian stocks. While China lost more than US$3 trillion on the stock markets, India’s benchmark Sensex eked out a 0.6 percent increase over the past three months making India the only market to rise in this period.

    Although the Indian market has been bullish, while the Chinese indexes have crashed, the result is from a few foreign investors that have hedged their emerging markets money on India. Overall however, analysts expect that China’s crash will have little to do with Indian’s gain in the near term. The reason being that foreign investors hold less than one percent of Chinese stocks in China.

    The stocks that are held in Chinese companies are either that listed in Hong Kong or in the USA or in other countries. These stocks had not moved as much as those listed in China. Thus the fall in share prices in China will not result in fund managers withdrawing money from other markets, ruling out any near term impact on India. In the long run however, if Chinese stocks continue to drop, global markets including India will be affected.

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  • leijun India – China bilateral ties have taken a quantum leap from raw materials to mobiles and technology. Recently mobile phone maker Xiaomi, or little rice in Mandarin received a generous investment from Ratan Tata, former chairman of Tata Sons Ltd. The CEO of Xiaomi, Lei Jun, a 45-year-old billionaire and serial entrepreneur, who last visited India 15 years ago recently visited New Delhi and Mumbai to promote the company. Photo’s of China’s Steve Jobs as he’s often known, posing in front of South Mumbai iconic landmarks and in an autorickshaw went viral across English and Chinese social media last week.  Lei Jun came to India, along with co-founder and company president Bin Lin, they met top Indian business leaders, startups, customers and retail partners.

    The company has big plans for India, where they plan to set up a local manufacturing center, expand their R&D center and emerge as India’s premier handset manufacturer by 2020. All this while maintaining their core USP of selling their handsets online only, while offering consumers a touch and feel experience before buying at select stores.

    Just weeks ahead of Indian Prime Minister Narendra Modi’s visit to Beijing India has become a hot buzzword in Chinese VC and investment circles. Aided by the central government and coxed by a tightening market at home, Chinese companies are keen to invest in India’s 1.3+ billion market. Jack Ma, Founder and CEO of B2B, Alibaba recently invested in Indian payment gateway Paytm and has set up an incubation cell in Bangalore to explore investments in the IT and mobile space.

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  • In the second part of our India – China in Numbers series, we compare trade in products and services between the sweet and sour neighbours. We also look at the resultant impact both nations have on the world economy and the weight they can thereby leverage on international negotiations.

    Lastly, we look at the traffic of people – businesmen and tourists between China and India to determine whom is more interested in maintaining better bilateral relations. In the chart below, we analyse the reason behind why China is known as the factory of the world and India the global back office. China clearly outstrips India in trade of products, while India reigns over China in services. In 2013, India had a deficit of US$143 billion in goods trade whereas it had a surplus of US$73 billion in services trade. In contrast, China had a surplus of US$360 billion in goods trade but a deficit of US$125 billion in services trade.product-trade

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  • brahmaputraChina today operationalized and put into commercial run the US$1.52 billion (9.6 billion yuan) Zam Hydropower Station, the largest in Tibet. Built on the upper reaches of the 2,900-km Brahmaputra river also known as the Yarlung Zangbo River, which flows through Tibet into India and later into Bangladesh is a major source of livelihood for Indians and Bangladeshis.

    The damming of the river, has been a major bone of contention between India and China for a few years now. While the river originates in Tibet, and Beijing has assured India it will not dam the waters but build the dams to generate electricity, New Delhi has been weary the sweet and sour neighbour might usurp power to flood or create a drought situation in North Eastern India during times of unease. As a result, Indian officials monitor and measure the flow of water into India from China to ensure the country is ready for any eventuality, such as the possible holding back and sudden release of water by China.

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  • indian professionalsAs China’s economy slows, umpteen articles document the rise of Chinese companies globally. Few have looked at what inroads Indians have mapped into the dragons lair. As the world turns towards India for hope, Inchin Closer looks at a growing trend of Indians who have made China their home.

    Having settled in the Middle Kingdom, many Indians have either set up businesses or joined existing conglomerates to prosper within China. First Indians ventured into China just on official assignments, often spanning a year or two. Sent by their Indian company to spread wings in a booming Chinese economy. A majority of these professionals, stayed within themselves, ate Indian food and yearn for the time they would return.

    Few made local Chinese friends or even bothered to learn more than Ni hao. However with the recent flourish of Sino-Indian ties, many Indians are seeing more merit in China than returning back to India. Entrepreneurs, those who want to break away from the mundane in Mumbai or the drudgery of Delhi decide to move and either start a business of their own or join an existing multinational, finally settling in to China.

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  • oil-price-droppThe dramatic 60 percent fall in oil prices since July last year has created interesting effects on the economies of China and India. The Chinese economy seems to have been significantly buffered due to the stark drop in oil prices since June 2014. On the other hand, the Indian economy has been lifted, sheltering its 1.3 million consumers from higher inflation, enabling consumers to buy more and the IMF to predict that India’s economy can outpace China’s this year. Analysts predict that China’s economy could have suffered a much harder blow had oil prices for the world’s largest energy consumer not fallen.  A strong reminder of this came on Sunday, when Beijing introduced a 1 percentage-point reduction in the amount of cash that lenders must lock up as reserves. It is the largest cut in Chinese banks’ required reserve ratio (RRR) since late 2008, the nadir of the global financial crisis. Cutting RRR to 18.5 percent, frees up nearly 1.3 trillion yuan (US$210 billion) for new lending, money that should help shore up growth.

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