Economy

The United States Is Withdrawing US Federal Pension Fund $3.6 billion From China To Invest In India

The Indian economy has been hailed by the IMF as a beacon of light in a dark sky. Among the world's top economies, the Indian economy is the fastest growing.

In the last quarter, the GDP growth has reached an astounding 7.8%, while other significant economies, such as China, slowed due to internal and external debt concerns, as well as the housing crisis.

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Witnessing this astounding growth and resilience in the economy, while the European powers are slowly moving towards technical recession, for example — Germany, the developing powers have now started investing billions in Indian economy in the desire for lucrative returns.

The main US Federal Government Pension Fund is preparing to change its benchmark index for international funds, thereby mobilizing $28 billion (Rs 2.3 lakh crore) in global stocks. Among the $28 billion, they intended to invest $3.595 billion in the Indian equity market.

According to economists, among emerging economies, India is projected to be one of the major beneficiaries of the Federal Retirement Thrift Investment Board (FRTIB) index move.

This is the first time India has received FRITB inflows because it was not included in the prior index and has now been included in the new index.

FRTIB has decided to change its benchmark for international stock investment funds from the EAFE index to the ACWI IMI ex-USA ex-China ex-Hong Kong index.

The EAFE index is made up of 21 developed markets (DMs) from Europe, Australia, Asia, and the Far East. The new MSCI ACWI IMI ex-USA ex-China ex-Hong Kong index will include both developed markets (DMs) and emerging markets (EMs).

Apart from India, the biggest gainers in the iShares Emerging Markets ETF will be Taiwan, Korea, Brazil, Saudi Arabia, South Africa, and Mexico.

The Federal Retirement Thrift Investment Board (FRTIB) has $600 billion in assets and has invested in many countries to diversify its portfolio.

During the second stage of the Cold War, the US established its relationship with China with the assistance of its other regional partner, Pakistan. Since then, the United States has invested billions of dollars in China.

The country also outsourced its production to China in order to protect the country's environmental record, but it never paid anything significant.

The United States similarly misconstrued China's ambitions, which were to gain world dominance and rule the world on its terms.

As a result, the US assisted China in monopolizing the global supply chain because the world is dominated by US corporations, and practically all US companies invested in China to receive tax breaks.

During the period of Covid, the US realized its error and is now attempting to repair it; also, the US consented to relocate its business due to China's hostility towards Taiwan.

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