DESPITE a recent study which was more upbeat about India than China, British merchant banking group Schroders has chosen to place its bet on the mainland. 'Our optimism [about China] is the people. The people have responded enormously well to what the government has embarked on,' said group chairman George Mallinckrodt. He said there were some people more optimistic about India because of its big pool of entrepreneurs, a relatively well-defined middle-class, a legal tradition based on British law and the popularity of the English language. 'But we've opted for China,' said Mr Mallinckrodt, who was in Shanghai to open the group's first representative office yesterday. 'Our optimism is also related to the co-ordination between the government realising what it wants to do and implementing it and the extraordinary response of the people,' he said. In a comparison between the two countries by the Economist Intelligence Unit, India was ranked as a better investment than China for the first time. 'A brighter macro-economic outlook and burgeoning foreign exchange reserves have triggered an improvement in India's credit-worthiness, making the country - for the first time - a less risky investment proposition than China,' the study said. It lifted India's overall risk-rating from C to B but kept China's rating at C, largely because of the latter's political uncertainty arising from paramount leader Deng Xiaoping's worsening health. 'We're here for the long haul,' said director Bruno Schroder, suggesting that such short-term political ups and downs did not bother him too much. He was confident about China in the longer term because of his faith in the entrepreneurial ability of the Chinese. 'Look at what's happened in Hong Kong, Taiwan and Singapore - and we're in all the three places - and what the Chinese have done to their economies,' said Mr Schroder, whose family holds 48 per cent of the group. Enquiries from Schroders' clients suggested that China remained the most popular investment spot, followed by Indonesia and Thailand, said Gerry Grimstone, Schroders Asia's deputy chairman. But Mr Mallinckrodt said China's biggest challenge was to ensure that its infrastructure such as roads and power supply could keep up with industrial development. Schroders is involved in eight infrastructure projects in China.