India upped the game with Beijing early this month by allowing the Dalai Lama to visit Arunachal Pradesh, something investors in Indian and Chinese equity markets should follow closely.
Growing territorial disputes between Beijing and New Delhi raises geopolitical risks in the region, threatening trade and capital flows to equity markets.
The controversial spiritual leader’s visit to the disputed region—the first since 2009–comes a few weeks after Beijing warned the Indian government not to proceed with the Dalai Lama’s planned visit to Arunachal Pradesh state.
China’s And India’s Equities
“India is fully aware of the seriousness of the Dalai Lama issue and the sensitivity of the China-India border question,” China’s Foreign Ministry spokesman Geng Shuang said. “….if India invites the Dalai Lama to visit the mentioned territory, it will cause serious damage to peace and stability of the border region and China-India relations.”
It should come to no one’s surprise that Dalai Lama’s visit has drawn the angry protests of China. “In the past due to some reason that we all know, the political foundation of China and India relations were undermined,” Foreign Ministry spokesman Lu Kang said referring to the Dalai Lama’s visit to Arunachal Pradesh which Beijing claims as part of “Southern Tibet”.
New Delhi had its own swift response to China. “Let me make it absolutely clear that there is no change whatsoever in the Government of India’s policy towards the Tibet Autonomous Region of the People’s Republic of China,” India’s External Affairs Ministry spokesperson Gopal Baglay said. “Similarly, our approach to seeking a fair, reasonable and mutually acceptable solution to the boundary question remains unchanged.”
Meanwhile, China has been trying to surround India through its enormous investment in CPEC – a collection of infrastructure projects with the country’s archrival, Pakistan—New Delhi’s resolve to be tough on Beijing.
While it is unclear what lies at the end of India’s Tibet game, one thing is clear: Beijing shouldn’t confuse India’s Modi with Philippines’ Duterte.
