China rushes to defend firms post ED raids: 'Provide fair & just business environment'

Taking cognizance of the Enforcement Directorate's raids on a Chinese smartphone manufacturing company, the Chinese Embassy in India issued an official response on Wednesday. The embassy's spokesperson Counsel Wang Xiaojian asserted that the Chinese government always asks local enterprises to abide by laws and regulations overseas and firmly supports them in safeguarding their legitimate rights and interests. Objecting to the ED's frequent investigations, he contended that this impedes the improvement of the business environment in India and affects the willingness of market entities from other countries to invest and operate here. 

The Chinese embassy's spokesperson stated, "The essence of China-India economic and trade cooperation is for mutual benefit and win-win results. The bilateral trade volume between China and India strikes a historical record of over 100 billion USD in 2021, which reflects the huge potential and broad prospect of economic and trade cooperation between our two countries. China wishes the Indian side to investigate and enforce the law in compliance with laws and regulations, and effectively provide an fair, just and non-discriminatory business environment for Chinese enterprises to invest and operate in India."

Here is China's full statement on the ED raid: 

ED's crackdown

On July 5, the ED raided 44 places linked with certain Chinese firms in several states including Uttar Pradesh, Meghalaya and Maharashtra under sections of the Prevention of Money Laundering Act (PMLA). Reportedly, the central agency filed a money laundering case based on a Delhi Police FIR against a distributor of an agency based in Jammu and Kashmir. As per the ED, a few Chinese shareholders in that company forged their identity documents in order to launder illegally generated funds using shell companies.

Moreover, it alleged that some of these “proceeds of crime” were diverted abroad or put in some other businesses by skirting Indian enforcement agencies. Since the last few years, the investigative agencies have made a concerted attempt to crack down on Chinese entities allegedly indulging in serious crimes such as money laundering and tax evasion while operating in India. 

Earlier, the Enforcement Directorate on April 30 seized Rs 5551.27 crore of Chinese tech giant Xiaomi Technology India Private Limited. Top sources had informed that the seizure of the capital was made after being found unlawfully lying in the bank accounts. While the seizure is under FEMA and in connection with the illegal outward remittances made by the company, the economic intelligence agency initiated an investigation in connection with illegal remittances in the month of February.