Sri Lanka is willing to be the buffer between China and India

Sri Lanka is willing to be the buffer between China and India
Tea plantation in Sri Lanka

On August 3, 2016, the ambassador of Sri Lanka to China Dr. Karunasena Kodituwakku, Sri Lankan minister of planting industry Navin Dissanayake and the delegation he led, attended the press conference. The purpose of the visit is to promote the Sri Lanka’s black tea exports to China and to attract more Chinese investors. The minister also made a statement of Sino-Indian and Sino-Japanese relations and claimed that Sri Lanka is willing to be the buffer between China and India for the peace of the region.

Sri Lanka is willing to be the buffer between China and India
Train runing along the Indian Ocean in Sri Lanka

Sri Lanka’s planting industry minister Navin Dissanayake said in his speech that China and Sri Lanka are like brothers helping each other and Sri Lanka will always affirm the One China principle. Historically, Sri Lanka is China’s trading partner since the ancient times, as well as an important hub of the ancient Silk Road in the sea. Nowadays, China’s “One Belt One Road” strategy will rebuild Sri Lanka as the global shipping and trade center. Politically, Sri Lanka is the first non-communist country to admit People’s Republic of China. Economically, in recent years, Sri Lanka’s tea export to China has been growing steadily. The amount of exports reached 7.2 million kilograms, which proves China’s position as the main sales market of Sri Lanka’s black tea.

Sri Lanka is willing to be the buffer between China and India
Sigiriya Lion Rock in Sri Lanka

The minister also mentioned about Sino-Indian and Sino-Japanese relations at the conference. He said, India is Sri Lanka’s largest neighbor. In spite of certain disputes between China and India, Sri Lanka is maintaining good relations with both countries. Sri Lanka will not take side on political issues, but expect to act as the buffer and medium to ease the tension between China and India. In terms of Sino-Japanese relation, the minister hopes that two sides can settle the argument peacefully and commit to the regional development together.

Gold demand is falling sharply in China and India

China and India have the largest demand for gold in the world, however, two countries are getting a sharp downturn in demand for gold this year. Contrary to the situation in Asia, gold becomes popular in Europe. With many uncertain factors such as UK’s exit from EU, FED’s expectation of increasing interest rate cooling down, Italian bank industry’s predicament and US presidential election, the demand for gold in the west soars.

Gold demand is falling sharply in China and India

Consumption decline in the two biggest gold importing countries

China’s domestic demand in physical gold slumped. Gold and silver jewelry sales in the 50 national key large-scale retailers fell by 20.9% in the first half of 2016, 22% below that of the corresponding period last year.

In the aspect of the consumption, the national gold consumption has diverged in the first half of 2016. The national total gold consumption was 528.52 tons, down 7.68% year on year, in which gold jewelry consumption 340.64 tons, down 17.38% YoY and gold bars 128.19 tons, up 25.33% YoY.

Gold demand is falling sharply in China and India

India also showed a sharp drop in demand for gold, with the lowest imports for decades.

Due to the minimal domestic gold production, India is highly dependent on imports. In recent years, the country’s import mainly falls from 700 to 900 tons, reaching 947 tons in 2015.

Gold demand is falling sharply in China and India

Since Indian government continuously imposed on import restrictions and taxes, India’s gold import totaled a mere 130 tons in the first half of this year, touching the lowest level in the at least last 20 years. India’s jewelry demand in the second quarter fell to 69 tons, down 56% YoY and net investment down 40% YoY.

Prithviraj Kothari, president of India’s largest gold dealer RSBL, said, “Nearly all the dealers and banks didn’t get little business in the past five months. It is difficult to adapt to Indian government’s changeable policy. At the same time, it is hard to bear a discount of 30-100 dollars per ounce.”

Gold demand is falling sharply in China and India

Gold investment in the west rises up

Report from GFMS on July 26 showed a major increase in gold investment in the west, which helped offset the impact of falling demand in Asia in the second quarter. GFMS raised its estimate of this year’s gold price, in response to doubts on the economic prospects.

The report claimed that raising the estimate reflects the strong increase of gold price since the beginning of the year, as well as the market shift caused by the heightened uncertainty of economic and political future, including UK’s exit from EU, FED’s expectation of increasing interest rate cooling down, Italian bank industry’s predicament and US presidential election.

Gold demand is falling sharply in China and India

The above concern has led to the warming curve on gold investment in the second quarter. The funding flocking to gold ETF offset the impact of decreasing demand of Chinese and Indian buyers, which eased the oversupply situation in the gold market. Total gold ETF inflow in the first half of this year has reached 568 tons, as the highest semi-annual inflow scale.

The situation in the second quarter of 2016 is similar to the first quarter in which gold demand in China and India is very weak, but very strong in western market, especially triggered by the consecutive demand of ETF in the second quarter, at the same time, the asset allocation got re-assessed and gold has been listed in a more positive place.

Gold demand is falling sharply in China and India

China and India will highlight Asian investment

On January 8th , the latest strategy report  from Julius Baer pointed out that Asia will continue to benefit from the favorable investment situation in 2015. The reason lies in the following three points: the long-term high correlation between Asian and European markets and the good prospects for the latter next year; the relatively loose monetary policy to be maintained by the world’s major central banks; the reasonable valuation in Asian stock market.

China and India will highlight Asian investment

The analyst in Julius Baer anticipated that China and India will become Asia’s best performing economies thanks to the diverse reform initiatives. Meanwhile, Japan’s performance can be expected as well, thanks to the local QE policies and the re-adjustment of pension allocation. In addition, the recent fall in oil price will benefit the economy in almost all Asian countries, enabling the government to apply the existing fuel subsidies to the fields that can enhance more the productivity, such as education and infrastructure, in order to further promote the long-term economic development.

Julius Baer emphasized that in addition to China’s A-shares, the other major Asian markets are highly correlated with the US and European market trends. Julius Baer Strategy Head Christoph Riniker predicted that next year the total return of the S & P index is about 4%, the return of the German Frankfurt DAX index is about 7%, which indicated that the overall market environment is quite favorable to the Asian markets. In view of the United States and Europe are the world’s two most important economies, the US Federal Reserve and the European Central Bank’s policies are very significant for the Asian economies and markets and currencies. The US FED led by economic liberals, the positive but not high economic growth and the low inflation have prompted the United States to launch the “normalization” process of interest rate in a slow and gentle pace. At the same time, the economic growth of the euro zone in 2015 forecasted at only 0.8%, the ECB’s loose monetary policy is bound to last longer.

India and China will sign high-speed rail construction agreement this week

On November 25th, the spokesman of the Indian Ministry of Railways said that India will sign an agreement with China this week and provide a report on the feasibility of constructing a 1754 km high-speed rail line between Delhi and Chennai. It is reported that the rail will be the world’s second longest high-speed one and the two countries are expected to build the rail together.

It is reported that the planned “Delhi – Chennai Route” has a total length of 1754 km, connecting Indian cities Delhi and Chennai. The construction cost is estimated to be 2 trillion rupees (about RMB 200 billion). This is part of “Diamond Quadrilateral” project proposed by India’s new Prime Minister Modi and it is expected that the rail will be the second longest high-speed rail corridor in the world and the longest in India after the construction, with the running speed of 300 km per hour. India’s newly appointed Minister of Railways Mr. Suresh Prabhu will be in charge of the project and will send a rail team to China for training. The research work is scheduled to begin early next year.

In September this year, in the Joint Statement of Chinese President Xi Jinping’s visit to India, India expressed its willingness to actively consider to build a high-speed railway with China. Therefore, the above high-speed railway construction agreement can be seen as a follow-up of the Joint Statement.

There is no highway in India and the transportation mainly relies on the railways. Data shows that India has railway lines of 64,000 km, the length of which ranks No.4 in the world, transporting over 23 million passengers every day. Indian Railway Department is the largest employer in the world, with more than 1.3 million employees. The speed of Indian trains is generally low. The current fastest train is the Express from New Delhi to Calcutta, with the speed of 87.17 km per hour.

India and China will sign high-speed rail construction agreement this weekChinese export of high-speed rail is very active this month

On November 3rd, Mexico Department of Transportation announced that the union of China Railway Construction, China South Locomotive and Rolling Stock Corporation Limited and four local companies won the high-speed Mexico City to Queretaro rail project and the contract were valued at about RMB 27.016 billion. Though the tender got withdrawn after three days by Mexican government, experts predict that the Union has great possibility of winning the bidding again.

On November 18th, Thailand adopted a Sino-Thai Railway cooperation project. China will participate in the investment and the construction of a double track standard rail with a total length of 867 km.

On November 20th, China Railway Construction and Nigerian authorities signed the commercial contract of coastal rail project in Nigeria. The total contract amounts USD 11.97 billion, indicating the highest single contract amount in Chinese foreign project contracting history.

Russian Railways recently says that they are planning for the high-speed rail project between Moscow and Beijing, with a total mileage of 7000 – 8000 km and an investment of RUB 7 trillion (about RMB 935.2 billion).

Indian ambassador to China: Huge manufacturing potential cooperation between Chongqing and India

On November 14th, Mr. Ashok K. Kantha, Indian ambassador to China, visited Chongqing with an Indian business delegation, introducing India’s investment environment and policies to Chongqing enterprises. Mr. Kantha proposed that Chongqing would strengthen the manufacturing and infrastructure cooperation with India, to exploit the industrial advantage between two places and to promote the bilateral trade development.

China and India are both the world’s ancient civilizations and have a long history of connection, of which when Chongqing acted as the auxiliary capital of China during World War II, the famous “Hump Course” put up an important air passage and friendship bridge between Chongqing and India. At that time, India set up the Indian Embassy in Chongqing and the site of which is still standing in Chongqing Nanshan Botanical Garden.

Huge manufacturing potential cooperation between Chongqing and India“Chongqing is the most dynamic economic center in western China.” said Mr. Kantha. This was the first time he came to Chongqing, and he hopes to come frequently in the future with continuous cooperation opportunities. As a vital point between the Silk Road Economic Zone and Yangtze River Economic Zone, Chongqing is playing an important role in the development of western China. Chongqing and India should produce their respective industrial advantages and build the further cooperation in manufacturing, infrastructure, IT, chemical, automotive, textiles and other fields.

Mr. Chen Heping, vice mayor of Chongqing, said that the total import and export trade value between Chongqing and India in 2013 amounted to $ 1.95 billion. In the first three quarters of 2014, the total trade value has reached $ 1.28 billion. Till September 2014, Chongqing has set up four companies in India, covering environmental protection, manufacturing, silk sales and medical fields.


It is understood that Chongqing Yunhe Hydropower Inc., China Chongqing International Construction Corporation, Chongqing Yuneng Taishan Electric Wire & Cable Co. Ltd are proceeding one batch of new projects so far in India, including e-commerce, garment outsourcing, software training, energy and infrastructure construction.

Mr. Kantha said that the current political and economic situation between China and India is encouraging and the relations between two countries affected nearly one-third of the global population. In October 204, Chinese President Xi Jinping visited India, further improved the strategic partnership between China and India, and reached a series of consensus with Indian Prime Minister Modi on promoting the investment of Sino-Indian Industrial Park, infrastructure construction, financial cooperation and trade exchange.

“The core of the strategic partnership between two countries is the economic and commercial exchanges.” said Mr. Kantha. Currently India is paying more and more attention on the economy, hoping that China’s western development strategy and India’s Look East policy can enhance each other and create a good environment for the bilateral investment.


Article source: The China Voice

Time for Chinese to invest in India!

Textiles and clothing accounted for 4% of India’s GDP, providing the largest employment in addition to the agricultural sector. Currently, India’s textiles accounted for 6.56% of global trade while clothing 3.43%, and export of cotton products occupies dominant position. India is the second largest cotton producer and yarn exporter, of which the export of yarn accounted for 28% of global yarn export in 2013.

China is the second largest export destination of India’s textiles and clothing, but the export to China is mostly raw material, such as raw cotton and cotton yarn. China is the largest source of India’s textiles and clothing, which are mainly high value-added ones. In 2013, China’s import of textiles and clothing from India accounted for 11% – of which cotton yarn 30% – while India’s import from China 45%.

7.10_Yarn01Textile industry has been always shifted from high-cost area to low-cost one. With the increasing producing cost in China, more and more low-end products will be produced out of China. As European textiles developed from low-end to high-end and was gradually shifted to China, now it is the time for low-end textiles to leave China. India welcomes investment and purchase from Chinese yarn customers. The cost of Chinese textile manufacturers can be greatly reduced when Indian textile factories and Chinese textile supply chain are bound.

Indian government has taken many measures to encourage the development of textile and clothing industry, such as allowing 100% foreign direct investment; investing on infrastructure construction of textile industrial parks, 40 of which have been approved till now; formulating export promotion schemes, including the encouragement of production means export, tax allowance and export rebate, aiming to eliminate the tax influence on different stage of production. Chinese textile enterprises can enhance their competitiveness by making use of the friendly investment environment and low processing cost in India and building alliance with Indian textile companies. It’s time for Chinese textile enterprises to seize the investment opportunities in India!