Not just Congress, even the Chinese are anxiously tracking Gujarat results

It's not just Indians who are eagerly awaiting the results of the Gujarat elections. Even the Chinese are anxious about the results. China is closely watching the developments in Gujarat as the outcome will impact its own interests in India.

The Chinese believe if the BJP wins with a handsome margin, it will be a popular endorsement of many radical economic reforms introduced by Prime Minister Narendra Modi. However, a defeat or a wafer-thin majority can cast doubts on the reforms and might make the government cautious.

Why are the Chinese so interested in economic reforms in India? The answer is growing investment by Chinese companies in India.


"Modi's reforms have drawn fierce opposition from other parties and some economists, but those most qualified to evaluate the "Gujarat model" are the people of Gujarat. Whatever the election result is, it will have a great impact on the public opinion environment for the implementation of the rest of Modi's reform agenda," says an article in state-run media outlet Global Times.

It says China's direct investment to India in 2016 has been many times higher than in the year before. "The outlook for India's economic reforms is deeply related to a good number of Chinese companies doing business in India such as Xiaomi and OPPO. If the BJP wins an overwhelming victory in Gujarat, the Modi administration may take more radical approaches to economic reform. China's companies will feel the changes no later than India's," it says.

If the BJP loses, the article says, it would seriously impact Modi's effort to reform the economy. "It's possible that voters in other Indian states might be influenced by a BJP loss in Gujarat and Modi's economic reforms might then be abandoned halfway due to a possible domino effect," it says.

The article points out what it sees as a flaw in India's economic reforms: "People doubt that the reforms can bring enough benefits to the country's small businesses and ordinary people. The government must find a way to make the reforms gain public support."

It asks Chinese companies doing business in India to prepare for possible changes in economic policy over the long run and possible volatility in India's financial markets next week after the results.