22 MARCH 1997, Page 29


India and China it's a two-horse race, but the betting is the wrong way round


Bombay hehe overfly is how an American friend of mine describes most of his country. He is based in New York, he does business on the West Coast, and the space between is there to keep the airlines going. To others who think on his lines, India is the overfly. It is the country they have to fly over or round on their way to do business in China. These are the world's two vast developing economies. One of them is the world's biggest democracy, maintains the rule of law — you can sue the government, which is more than you could sensibly do further east — keeps recognisable accounts and supports a thriving middle class with English as its business language. Much good these virtues seem to do India when the money goes down. Foreign direct investment in India is now running at $2 billion a year: in China, at $37 billion. Is China really 18 times as good a bet as India? These odds cannot be right. Indeed, there are times when I suspect that the bet- ting is the wrong way round, and this is one of them. No doubt I am influenced by the strong British presence which has suddenly asserted itself in Bombay, complete with the Lord Mayor of London and the royal Yacht. Bankers and money managers are here to push for business or, as they would say, to offer their expert services. Captains of industry practise their fixed smiles before they are photographed signing joint- venture agreements. They are betting my Way, and if they keep on like this may even shift the odds. As I do, they sense change in the humid air here.