India ramps up lending to counter China

This is an audio transcript of the FT News Briefing podcast episode: ‘India ramps up lending to counter China’

Jess Smith
Good morning for the Financial Times. Today is Monday, December 19th, and this is your FT News Briefing.

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The European Union just agreed on the world’s first major carbon border tax. India wants to counter China as a regional lender. And artificial intelligence keeps getting better. Our global tech correspondent Tim Bradshaw tells us about one of the hottest new apps.

Tim Bradshaw
Silicon Valley has got very, very, very excited about ChatGPT and they’ve really kind of called this the “iPhone moment” for AI.

Jess Smith
I’m Jess Smith, in for Marc Filippino, and here’s the news you need to start your day.

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EU member states yesterday reached a deal on the world’s first major carbon border tax. It will force foreign importers to cover the cost of their carbon emissions. EU trading partners aren’t happy. The US and South Africa say the new levy will create protectionist trade barriers. EU lawmakers still have to adopt the law, which would go into effect in 2026.

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New Delhi has been stepping up its overseas lending, not just to help out neighbouring governments but also to strengthen its diplomatic influence. Prime Minister Narendra Modi has been keen to counter the impact of China and its massive Belt and Road Initiative. The FT’s Ben Parkin has been reporting on this and he joins me now. Hi, Ben.

Ben Parkin
Hi, Jess.

Jess Smith
So, Ben, you wrote in your article that India’s lent money to other countries for a long time, but it’s been stepping it up. And I’m wondering, can you talk about the approach and the thinking behind its recent lending?

Ben Parkin
Yes. So India has been lending billions of dollars all over the world — in Latin America, Africa and other parts of Asia. You know, it portrays this as a kind of an effort to help the global south. But the biggest sums have gone to its neighbours and, you know, countries in the Indian Ocean, like the Maldives — places that India considers its backyard and where the strategic competition with China is most intense.

Jess Smith
Is India openly in competition with China? I mean, does it publicise itself as an alternative?

Ben Parkin
So the Indian government certainly downplays the competition with China. But Modi, in some of his speeches, has made clear the parallel, the contrast with China. You know, he’s talked about how India’s lending respects countries’ sovereignty, is based on their needs. He’s talked about how, you know, development finance can be a guise for kind of debt-trap-style ensnarement. The Indian government is implicitly, but in some ways explicitly, portraying itself as a kind of benevolent alternative, as it were. That’s the narrative they’re trying to push.

Jess Smith
But as you report, the amount that India has lent is still tiny compared to China’s. But is India having the impact that it wants?

Ben Parkin
So on the one hand, India’s clearly succeeding in some places in being a meaningful alternative to China. And the governments in those countries notice it. And, you know, for them, the more people trying to give them money, the better. Critics argue that what India’s doing is not that different always from what China does. So, you know, in the Maldives, for example, there’s been this big controversy led by opposition parties who are running this “India Out” campaign, where they argue that some of the Indian-backed infrastructure projects are really a front for New Delhi to cement its military interests in the island. And for people in these countries, it’s not always apparent who’s the better option. But it is true that Indian loans, for example, tend to be at lower interest rates than Chinese firms. You know, it’s true that India has more transparency around, say, the companies that are selected to, say, build the Indian-backed infrastructure projects. So they have to be, in large part, Indian. But, you know, there’s still a transparent bidding process in theory, whereas for a lot of the Chinese projects, that’s already determined when the loan is given.

Jess Smith
You wrote about another big difference between the two countries’ lending programmes, and that’s the role of private companies. Can you talk about that?

Ben Parkin
The Chinese Belt and Road is a very state-driven project. India doesn’t have that kind of level of financial muscle. So one crucial difference with what India is doing is a much more active role for the private sector. Under Modi, India’s government has worked to help promote Indian companies in these countries in ways that will ultimately benefit national interest, which is, you know, not that different from, say, what the US might do. So there are some crucial players in this, like the Adani Group, which is, you know, now one of India’s largest conglomerates owned by the world’s third-richest man, Gautam Adani. And he’s very open about the fact that what they’re doing, you know, helps them, but it also helps India, you know, at least in their view.

Jess Smith
Ben Parkin is the FT’s South Asia correspondent. Thanks, Ben.

Ben Parkin
Thank you.

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Jess Smith
In other news involving the world’s two most populous countries, investment banks will this year earn more dealmaking fees in India compared to China. It’s the first time this has ever happened. Financiers describe it as a historic reorientation as they diversify away from China. Chinese companies have also turned to domestic banks for advisory work, especially since the pandemic.

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Artificial intelligence keeps getting more and more sophisticated — as in it’s able to do more things that previously only humans could do.

Tim Bradshaw
Basically, what we’re talking about here are a new generation of AI apps that you write a short sentence into a box, and it produces the thing that you have described as if by magic.

Jess Smith
The FT’s global tech correspondent, Tim Bradshaw, has been writing about the latest AI advances. He says it’s not just call-and-response and simple requests anymore. AI can write essays and marketing plans and create videos. He says one app in particular is creating waves. It’s called ChatGPT.

Tim Bradshaw
Silicon Valley has got very, very, very excited about ChatGPT and have really kind of called this the “iPhone moment” for AI and conversational AI. It’s not 100 per cent reliable is the problem. Some of the answers that it gives sound great and seem very lucid, but are actually total nonsense. And that’s partly because it scoops up the material that informs the intelligence from the internet, which is full of nonsense. There are issues around that reliability. They’re called hallucinations, when the AI kind of just make something up. And it’s quite difficult to detect if you don’t know the source that it’s pulling from, whether or not this is real. So if I were to try and, you know, fool my editor into thinking that I’d written something just by punching a few instructions into ChatGPT, it might look kind of OK as a sort of regularly written, perhaps not particularly artistic, news story. But I wouldn’t be able to kind of answer any questions about whether the facts in that were right, because you just don’t really know where ChatGPT is pulling this in from.

Jess Smith
Now, one of the fears about AI is that it will replace more and more humans. But Tim came across a new job for human workers that’s created by apps like ChatGPT. It’s called a prompt engineer.

Tim Bradshaw
A prompt is the little sentence that you write into the AI tool to tell that AI what to create, whether that’s a picture or a body of text. And the quality of your prompts directly informs the quality of the output. So you could say “a picture of a bunny rabbit in the woods”, and it would create a picture of a bunny rabbit in the wood, that may or may not be very good. But if you said “a picture of a bunny rabbit in a wood, taken at ground level with a Leica camera set at twilight with the dew settling on the leaves” or something like that, you would get a much more specific picture.

And there are folks who’ve spent so long playing around with these AI tools and tweeting out the results and getting lots of likes and retweets as a result, that they’re trying to sort of say, “Well, hey, I can do this as a job.” And there are online marketplaces — one of them is called PromptBase — that are set up for you to go and get a kind of pre-canned prompt for the kinds of things that you want, in such a way that you don’t have to come up with the type of lens or camera that might make for a nicer picture to punch into the prompt box.

And I think, this is, you know, a nice bedtime story for people who are terrified that they’re gonna be put out of a job by AI. It’s kind of saying, “Oh it’s OK, I’m so smart, I can be an AI whisperer,” instead of, you know, data entry. I think it’s probably gonna have a fairly short shelf life as a career. And as the user interfaces get better and as more tools are built on top of these role models, the role of the prompt engineer, I think will effectively go away.

Jess Smith
Tim Bradshaw is the FT’s global tech correspondent.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.