China Should
Either Make Peace With India Or Forget About CPEC
China desperately needs the
China-Pakistan Economic Corridor (CPEC). It’s part of that nation’s
vision to write the rules of the next stage of globalization and help its
export and investment engines grow for years to come—a good prospect for investors
in Chinese equities, which have been lagging behind of those of neighboring
India.
|
Ranking
|
China
|
India
|
||
|
Population
(millions)
|
1374.62
|
1254.02
|
||
|
Per Capita GDP
($, Dec2015)
|
6416
|
1806
|
||
|
Human
Development Index (2015)
|
90
|
130
|
||
|
Entrepreneurship
Index (2016)
|
60
|
98
|
||
|
Economic
Freedom Index (2016)
|
144
|
123
|
||
|
Index/Fund
|
12-month Performance
|
5-year Performance
|
||
|
IShares
China (NYSE:FXI)
|
-5.16%
|
7.5.0%
|
||
|
iShares S&P India 50 (NASDAQ:INDY)
|
1.0%
|
32.18%
|
||
Source: Finance.yahoo.com 11/16/16
Specifically, CPEC is the express link between Western China, the Middle
East, and Africa–China’s second continent. Ideologically that is, which can
explain why Beijing has committed $46 billion to the project.
The trouble is that
CPEC passes through Pakistani regions claimed by India. That makes it a bumpy road, to say the
least — Pakistan and India continue to fight for control of these regions.
That’s why China needs to make peace with India.
So far, China has done very little to appease India. In fact, it has
done quite the opposite: repeatedly blocking India’s efforts to join the
Nuclear Supplier Group (NSG).
And it has sided openly with Pakistan in the India-Pakistan Kashmir
standoff, as evidenced by statements by China’s senior officials on the
sidelines of the ongoing 71st session of United Nations General Assembly in New
York.
That can explain why India’s has sided with the US in the South China
Sea disputes, as previously discussed here.
And things could turn worse, if pro-Indian forces in Pakistan sabotage
China’s CPEC route.
That raises the possibility of an open confrontation between China and
Pakistan on the one side, and India and its allies on the other.
Is China ready for this scenario? Probably not. That’s why Beijing
should either appease New Delhi or forget about CPEC altogether.
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