TAMING ADANI: China's Masterplan to Contain India

India's economy is weathering the global headwinds and is expected to sustain its growth momentum. India is likely to be the fastest-growing Asian economy in 2022-23, according to analysts at?Morgan Stanley. They expect India’s gross domestic product growth to average 7 per cent during this period — the strongest among the largest economies — and contribute 28 per cent and 22 per cent to Asian and global growth, respectively.

India Inc's ambitions are imperative for India's growth. If an Adani didn’t exist, the Indian government would have had to invent him: The development model we have now chosen requires risk-taking “national champions” such as the Adani Group.

What else did you expect? After all, like so many others, India has turned away from traditional market-supporting structural reform in favour of the old-fashioned industrial policy.?Ten trillion-dollar economies need a lot of Adanis and Ambanis. Such daredevil entrepreneurs made America in the late 19th century, and Japan, Korea and China in the twentieth century. This is what will build India in the 21st century as well.

China's foreign policy is different from that of its predecessors. While Europe, the USA and Japan openly legitimise violence as a part of foreign policy, China is working on an alternate route. There are?roughly 750?US foreign military bases; they are spread across 80 nations! After the U.S. is the UK, but they only have 145 bases. Russia has about 3 dozen bases, and China just has five frank military outposts globally.

The Chinese belt and road initiative is amassing large real estate across the world. It is building ports and infrastructure. It is designed to ferry all the world's resources to China and send out manufactured goods. In times of trouble, this network will also double up as military infrastructure. The Chinese dole out opulent credit schemes to least-developed countries to get lucrative contracts. Chinese commercial firms currently operate terminals in?96 ports?spread across 53 countries. At 29 of these ports, China is the sole operator, giving it greater discretion over its usage. By comparison, the UAE operates terminals in 50 ports worldwide, and Singapore 40 ports. Ports are a big asset. China's strategy is to lock India's potential with this bottleneck. It gives China the power to choke global supply chains and clinch trade monopolies.

This is where China finds Adani its biggest threat. The Indian government is working on a massive plan to revitalize its infrastructure and reinvent its manufacturing capabilities. It is building a series of ports and transhipment terminals in the subcontinent and across Asia. This is where Adani matters. Adani Ports and Special Economic Zone Ltd (APSEZ) set up a wholly-owned holding company in Singapore to pursue potential port opportunities globally as India’s biggest private port operator seeks to become the world’s largest port company by 2030. The Adanis have already signed deals in Sri Lanka, Myanmar and Israel.

Both Sri Lanka and Myanmar are strategically important for China's military. APSEZ and its local Israeli partner, the Gadot Group placed the winning bid?for Israel's Haifa Port, where China unexpectedly lost out to the Adani group. This was too much for China to handle. The growing Covid bane, a stuttering economy, rising domestic political tensions... India's growing regional and global ambitions were simply too much for its neighbours.

The surgical strike on Adani's finances will help China recover some lost ground. But how do you stop the world from lending to a smart Indian business? Hindenburg was the answer. A classic case of hit and run by a self-proclaimed whistle-blower and short trader who make tonnes of money when global stock prices recede. In 2022, short traders made a killing when the stock markets lost over US$ 12 trillion to bad news. The ensuing chaos from the post-Adani stab will clip India's Inc's wings for some time - at least two quarters, by which time China's Covid pandemic will ebb, and the dragon can think of a new gameplan to flex its muscles.

Adani's companies have never defaulted on their debt obligations in India or abroad. At home, RBI's strict debt observation and tracking policies compel banks to notify debt that is overdue by even a day. But the perception war is a different ball game altogether. There are only two ways to fight it. One is to take the bull by its horn. Suing Hindenburg in the US will only keep the fight in the limelight. The enemy has nothing to lose and has access to deep Chinese pockets. The other way is to forget what has happened and move forward. Adani's strategists can take a call.

Gautam Adani is the new face of India. His ambitious enterprise is spreading its tentacles across the globe. In a sense, he reflects the new flamboyant spirit of India Inc. and that of India's government. Adani will not be the last to be stabbed by China. More blood will flow.

In 2021, the Indian association of Washington DC wanted the port of Seattle to start a service to an Indian port. However, the Chinese lobby opposed the move. American policymakers stood by and laughed. No ships connect Seattle to India. This is what Adani set out to change. This has to change; Adani or no Adani. India's Ministry of Foreign Affairs has to ensure that Indian ports are directly connected to at least 200 of the world's busiest ports. That is a huge part of making India the US$ 10 trillion economy it aspires to be.

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