FDI hike: how our comrades are a world away from China’s

Launching its service two years ago, Alcatel Shanghai Bell Co Ltd is a joint venture with the French major, Alcatel, holding ‘‘50 per cent plus 1’’ shares.

Besides, AT&T (China) Co Ltd is a 100 per cent foreign-owned enterprise based in Beijing for more than 20 years and serving mainly as a link between China and the US. This American venture was set up soon after China began its economic reforms in 1978.

As for the insurance sector, China opened it up immediately after it was admitted into the WTO in 2001. In fact, a time-bound liberalisation of the insurance field was one of the conditions on which China was permitted to join the WTO after 15 years of negotiations.

Talking to a group of Indian journalists in Beijing recently, Assistant Foreign Minister Shen Guofang likened China’s compliance with WTO obligations to basketball rules that are binding on all players.

‘‘Everybody has to play basketball according to the rules even if those are made or influenced by developed countries,’’ Shen said.

Accordingly, China permitted foreign non-life insurers to set up branches or joint ventures with foreign holding going up to 51 per cent. When it came to joint ventures in life insurance, China limited the foreign stake to begin with to 50 per cent on the express understanding that it too could be raised to 51 per cent after three years. Thus, more than half of the 61 insurers operating in China today are foreign controlled.

On the issue of effecting much needed reforms in civil aviation, there may be little to choose between India and China. But, ironically, the Left parties are objecting to the proposed increase of foreign investment limit from 40 to 49 per cent precisely when the Chinese government has announced that it was easing FDI restrictions to build new airports and revamp existing facilities.

China has so far limited foreign participation in civil aviation to traffic control systems.

But now it has embarked on an ambitious programme of augmenting the aviation infrastructure to meet, among other things, the traffic demand in 2008 for the Olympics in Beijing.

Indian journalists were taken to a remote town in the middle of the Gobi deserts, Dunhuang, where the existing domestic airport is planned to be upgraded to an international airport to encourage tourists from around the world to visit the nearby Buddhist Mogao Grottoes, which are a larger and even more awesome variant of the Ajanta-Ellora caves.

(This writer was in China as a guest of the Chinese Govt)