The intensity of COVID19 related major propensity in Italy , Iran ironically in the “I” countries and in the American world gives us the insight how much China has been thrusting in each of the country economy. Said Mr Vijay Kalantri, President All India Association of Industries (AIAI).
This bells a situation similar to making colonies by the British East India Company in the 1600 and slowly taking grip of the spine of these economies.
Already , most of the Central Asian economies were being wooed by the China trust factor due to the geopolitical access.
These economies opened up their borders to the mighty Chinese not only to the building up of the silk route through their lands . But also are now under the heavy pressure of Chinese investment on their soil.
Even more, the rising distrust in the Chinese financial system which has grown post the COVID19 pandemic may remain far from the fact for a smooth exit of any relationship with the Chinese by these economies.
Earlier, the British, followed by the Americans and now the Chinese interference in the country economies seems to have failed the existence of the governmental soul in many such economies.
However, the COVID19 Lockdown has pressurized and challenged many of the Chinese source of funds.
In such a situation the closing down of many Chinese businesses is inevitable. The increasing momentum for the boycott of Chinese goods in many countries is growing like a storm in close sight .
China has chosen to aggression in the Tibet and now proceeded over the Himalayas and the South China Sea. Chinese strategy of Aggressiveness to avoid the sight of its weakness will no doubt backfire in shape of heavy losses for Chinese companies which are dependent on exports for business.
The Chinese companies have lost the market worth trillions of dollars due to the lockdown. With businesses unable to pay back and now prone to default. This has already fueled distrust in banks leading to panic withdrawal of deposits.
Apart from local banks, shadow banks which are a 3 trillion dollar industry in China, have also started to collapse. Sichuan Trust, one of China’s largest shadow banks, has apologized to investors for missing the deadline for payments on financial products.
The recent gold scam worth billions of dollars has been reported in China. Kingold Jewelry Inc, China’s largest privately-owned gold processing and jewelry company loaned of more than 2.8 billion dollars with pure gold as collateral . However as per reports , shadow banks when claimed the gold after the company was unable to pay back, found that what the company claimed as pure gold was actually copper.
This news has sent shockwaves in the Chinese shadow banking industry and the shares of shadow banks, known as Trusts in China have collapsed detrimentally.
The non-performing assets (NPAs) of China’s local banks have grown exponentially in the last few years as the artificial real estate boom went bust and a number of companies defaulted on loans. This is a warning bell for India too, who’s real estate sector is presently experiencing this trauma.
And in this situation it becomes imperative for Government to match the demand and supply game of affordable homes and let loose the restrictions of reckoner rate in the Indian scenario. A market intensive policy needs to replace the control intensive policy. Reckoner rate should be suggestive and mandatory.
Local police in China have already started arresting people who talk about the collapse of the Chinese economy and the failure of the banks to pay back the deposits.
The 40 trillion dollars Chinese banking system undoubtedly the largest in the world is reeling under pressure due to growing defaults from companies and business, and this led to insecurity among the depositors.
Thus, the situation now going out of hand with the speed of cases of bank run going out of hand and talks of an upcoming financial crisis, the Chinese government has put restrictions on large cash withdrawals.
India’s has far too less exposure to Chinese influence and has a capacity to manufacture locally and can still bear the brunt of such a restrictive situation .
However, the Indian businesses who have set up shops overseas in China are susceptible to damaging their funds . This will no doubt put diplomatic pressure on Indo Chinese business and investment ties. Stressed Mr Kalantri.
Already , the Indo China political ties are at stake and whatever room was left to keep the trade and business ties to be in place, till all the operations concerned with Self Reliant India are established are now set to be pull their breaks.
Mr Kalantri suggests, India will thus need to fast track all its initiatives taken towards Atma Nirbhar Bharat.
First and foremost what needs to be tackled is the Indian Bureaucracy which needs to be trained for self discipline and the second and most important is India needs to iron out its regressive laws .
Thus India in order to progress as an Atma Nirbhar Bharat has technical problems imbibed deep in its ADMINISTRATION and not about the efficiency of its Businessmen or business climate.
All India Association of Industries(AIAI) is a premier Chamber of Commerce , an apex body representing the trade, industry and employment since 1956 . AIAI is a think tank established to suggest government about remedial measures in the changing economic scenario.