India Warms To China, Uncertainty Still Looms

At 7 feet 6 inches, Yao Ming is one of the tallest and most famous basketball players in the world. He played for the Houston Rockets from 2002 to 2011 and was an eight-time National Basketball Association (NBA) star.

And he is Chinese.

A well-known China affairs researcher remarked the other day that China is like Yao Ming—it looks like a giant and can be intimidating, but is actually gentle and soft-spoken, unlike many basketball players, particularly in the United States.

Of course, prod the giant too hard and the response might not be so gentle—that was the researcher’s point.

Not everyone would agree with this characterisation, of course, but it echoes sentiments I have heard before.

India’s Moves To Engage With China

Last week, India made several moves demonstrating a fresh desire to embrace the gentle giant.

The government approved a joint venture between Delhi-based Dixon Technologies and Chinese electronics company Shanghai Longcheer Technology.

The partnership will create a new entity in India, with Dixon holding a 74% stake and Longcheer owning 26% through its Singapore arm.

The new venture will manufacture a range of electronic devices, including smartphones, tablets, smartwatches and automotive electronics. It will be called Dixtel Infocomm once all formal agreements are signed.

Longcheer supplies brands like Samsung, Vivo, Xiaomi and Oppo, and the joint venture will evidently boost domestic electronics manufacturing.

Last week also saw the lifting of restrictions on Chinese nationals applying for tourist visas to India—another thaw in India–China relations, which had deteriorated sharply following the border clashes in 2020.

There have been other steps announced between India and China in recent weeks in terms of mutual exchanges, but we will, of course, have to see how and where that goes.

The Longcheer joint venture is an interesting development because it suggests that China is now comfortable with its electronics majors partnering with Indian companies to manufacture products, which may primarily serve the domestic market but could also be exported.

A Shift From Tension To Trade

This did not appear to be the case even a few weeks ago, after Foxconn pulled out engineers working at its iPhone factories in India, slowing down Apple’s efforts to build alternative manufacturing bases.

More than 300 Chinese workers had left, and mostly support staff from Taiwan remained in India. Bloomberg reported that this had affected training of local staff and the operation of some machinery.

The same report said that earlier this year, China had verbally encouraged regulatory agencies and local governments to curb technology transfers and equipment exports to India in an effort to prevent companies from shifting manufacturing elsewhere.

The joint venture between Dixon and Longcheer—which would arguably require blessings from both sides—and the lifting of tourist visa restrictions suggest that relations are better this week.

Which, of course, is the point.

The highly unpredictable nature of geopolitics over the past year has made doing business more challenging.

Indian businesses have been actively lobbying the government to ease off on China for several months now.

Some of that effort may have contributed to the thaw we are seeing.

Will it last? That might be the hope, but there is no guarantee, especially since there is no clear starting point to return to.

Its not just China. The United States (US) evidently wants India firmly in its corner against China, or else face the consequences. The US position on India’s recent border conflict with Pakistan is illustrative.

Geopolitics Keeps Business On Edge

Meanwhile, the August 1 deadline set unilaterally by the United States for signing tariff deals is fast approaching. Progress has been made, by all accounts, but it is not clear how close we are to a functioning agreement.

Which once again highlights the point that a business deal struck today in seemingly good times could unravel—or be forced to unravel— quite literally tomorrow.

It’s no surprise that businesses across the world want governments to be more accommodative.

Whether they will succeed, or to what extent, remains to be seen. It appears some individual businesses with stronger lobbying power are cutting side deals, even in America.

That is not a healthy sign.

Back to China—there is still some distance to cover. Direct flights between India and China are yet to resume, for instance.

And TikTok continues to be banned.

Not sure anyone is complaining about that, though.