Indian investments in China's IT sector poised to increase

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New Delhi, May 26 (UNI) With deepening engagement of China in the world economy, Indian investments in its IT sector are poised to increase substantially in the coming decade.

''There is an emerging new paradigm of South-South trade and investments that is one of the most exciting phenomenon of the 21st century globalising world economy,'' International Chamber of Commerce (ICC) Vice Chairman Victor Fung told reporters here.

''I would expect the current trend of rising Indian investments in IT in China will not only be sustained, but increase significantly. This may also apply to other services industries,'' added Dr Fung, who takes over as President of the ICC in mid-June.

''Although many Asian economies are confounded by the challenges and threats of the food crisis and environmental issues, the continent will continue to be a major force in the world economy and will generate a great growth and development momentum that should continue for at least the next two to three decades,'' he said.

The high savings rates and balance of trade surpluses to be found in many Asian countries will also provide for considerable accumulation of financial assets, he added.

Referring to China and the world economy, Dr Fung said, ''China, faces many challenges-- rising inflation, disparity in incomes, damage to the environment and a weak institutional framework.'' However, he said the Chinese Government is acutely aware of these problems. Contrary to what may be the impression abroad, there is an enormous amount of debate in China on how to address these challenges.

He said the key trend to watch for in the decade ahead will be the increased globalisation of the Chinese economy, which would be manifested as China offshore production to other Asian countries, Africa and Latin America.

''Chinese foreign investments in energy and mining will also continue and intensify. The current trend in respect to Africa, whereby China has become the biggest single investors, whose investments are greater than the combined investments of all OECD countries, will continue.'' Similar developments will occur in Latin America, Central Asia and West Asia, he added.

A new development, Dr Fung noted, will be the foreign acquisition of farm land. China has 22 per cent of the world's population living on eight per cent of the world's arable land.

''The current food crisis has accentuated the perception of China's vulnerability. The Chinese Government has announced that it will be encouraging Chinese investments in agricultural land as a means of securing a more reliable flow of food for the Chinese people,'' he said.

In respect of the OECD economies, he said, China will remain a major supplier of manufactured goods and a major importer of capital goods and high-end consumer goods.

Another trend, which will intensify assuming there is no major protectionist counter-move, will be the acquisition by Chinese, as well a Indians, of western companies, Dr Fung said.

This is the main means by which Chinese companies can rapidly acquire technology, management and especially brands, he added.

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