Ambassador (retd.) Kishan S Rana, Honorary Fellow, Institute of Chinese Studies.

Today’s newspapers carry a remarkable news item. In 2015, China’s total overseas direct investment (ODI) was $106.8 billion. In less than six months of 2016, this was overtaken with a total of $110.8 billion, making the country the world’s biggest ODI investor, ahead of the US.

One argument for this, advanced in press reports, is a relative shortage of worthwhile investment avenues within the country. This is surely a factor. But a key element is also a deliberate policy to employ a part of the country’s vast $3.2 trillion foreign exchange reserve towards profitable avenue, in lieu of locking up most of the funds in US Treasuries where they earn no interest, and in effect provide Washington DC with a free lunch, financing that country’s insatiable financial deficit. China simply cannot pull out of those funds in a hurry, as it would trigger a global economic collapse that would first of all hurt itself. But a gradual employment of its reserve in other, more profitable directions is both do-able and highly desirable for both economic and political reasons.

Underlying all of China’s One-Belt-One-Road (OBOR) policy, much in the news, is the same long-term calculation. The creation of a vast new continental economic, logistic and energy pathway is another major deployment of its reserve currency, in a way that serves a series of interlocking Chinese objectives, and also serves to strengthen its foreign relations with neighbouring countries and regions.

Will these investments bring all the anticipated returns, economic and political? We may count on responses from the US and other Western countries. But facts of economic power are not easy to refute or overturn. And should not India revise its calculus on where it sources its investment funds? Can we afford to spurn Chinese funds?