The hindi chini bhai bhai slogan is back, and hopes are high on its resurrection. Indian PM Dr.Manmohan Singh is on a visit China, a visit that many think will bring improved relations with the dragon. Getting better deals, opening up of markets fro better trade, and generally getting better bargains, etc seem to be the main agenda here for India.but amidst all the hope,the essential thing still remains that India cannot apply any sort of pressure on china for getting any of the above things done. For china has the controlling hand here,atleast for now.
- China’s GDP is more than double India’s GDP, and the same holds true for per capita GDP.
- In terms of trade,China’s exports are nearly 8 times more than India’s. the balance of trade for China is in positive(with a huge margin) while India is still struggling with negative balance of trade at around $60 billion. This sustained trade surplus has led China to accumulate an enormous foreign exchange reserve, almost 6 times that of India’s reserves.
- In agriculture, India produces 108million tonnes of foodgrains from 146 million Ha of cultivated land,whereas China produces 400 million tonnes of food grain from just 100 million hectares. Through more equitable and better-managed farming, yields in Chinese farms are far above the levels found in India. The difference lies not in hard work, but in the fact that inputs like water and fertilizers are available, machines are available and land holdings are remunerative. And, most crucially, public investment in agriculture is huge in comparison.
- Another aspect to see is the condition of people of the two countries. Around 10% of China’s population earns less than $1 per day, while over 34% of India’s population is below this benchmark. For further analysis,if we take $2 as the benchmark,the proportion of population earning below $2 per day is about 35% in China but over 80% in India. Same is the case with health and nutrition.
Its obvious that India has a long way still, to achieve a wholesome development, where China is already there. This is one very important factor which governs development, and although India is progressing at a very fast pace, China is still ahead. With most of its population educated and healthy, and earning a fair wage, China stands on a relatively solid base of prosperity and stability. But this in itself doesn’t mean that there are no problems. There is overcrowding of the cities with urbanization at over 40%, compared to about 29% in India. There is a huge rural urban disparity in China, presumably as a side effect of the policy of ‘scientific path of development’, as it is dubbed by the ruling Chinese Communist Party. Unemployment has risen to 4.2% of the labour force. But, on the balance, the base is undoubtedly stronger. So, when Dr.Manmohan Singh meets the Chinese counterpart, lets not hope for any miracles, though the scope is vast, but unless China is willing to open itself to more balanced trade, nothing can be forced. India might be in a better condition to achieve this in some years to come, but right now its still in its infantile stage.
Reasons? Where China works on the force of the communist cane, things get done in time. Whereas in India, we the people are hard to lead, and to get things done in time is a mammoth task,because democracy although is a very romantic principle in thought, but on application, its people controlled notion holds development back. How? Well, the representatives of the people want to stay in power, so to stay in power, they have to keep the people happy, even if it leads to indiscipline and decline in production. Because the party in power wants to stay in power for next term also,see they do plan for the future, so in order to stay in power for the next term also, they need to be in the good books of their people.now from ‘their people’ I mean the vote bank, that group of certain special kind of gentry that has the power to make or break the success of the parties. That may be because they have the largest population in a certain constituency or state or in general or they might be influential enough. People vote on different basis, this may range from caste, religion, region, sex, perks given to them by that party’s agenda, promises made by parties which are more often than not caste/religion specific or promises that stink with the smell of some kind of benefit, which might not be given at all. For example, some candidates distribute clothes to the poor,to get their vote,the poor poor guy ant think beyond the clothes,as that is his basic need at the moment,therefore his gratitude is certainly going to be towards the one who gave him clothes, therefore he must give something in return,ie, his vote. Or another example can be that of communal appeasement, in which a certain party decides to woo a certain community which is dominant in population in a given area,where they know for sure that if that community votes for them,then n number of seats will come into their possession.the higher the number of seats, the greater the chance of forming government. This whole thing works on the principle that was very popularly used in Rome for many years- the mob. The mob is fickle,it forgets past mistakes or crimes,it seeks gratification, and that too instant.the mob will be the force with the one who can woo the mob. And whoever the mob favours, is the one with the power.Hence the crux of the above written thing is that tough policies aren’t taken up because of the fear of the mob,the next elections are always looming in the minds of our very worthy representatives. This tendency is even more pronounced in case of a coalition govt, where you never know which supporting party might take away the support and you might be facing the next elections sooner than you thought. So strict policies are a no no. And lack the same results in behind the schedule progress, laxity and general under productivity.
Yet, I am not saying that China is squeaky clean. Their form of governance is effective, agreed. But does the common man have enough freedom of self like we in India have. Let me tell you, freedom is like air, its not that important,until you are not getting any. China governs with a cane. Though this cane’s lashes have become less painful in recent times, but nevertheless, it is there. The memories of Tiananmen square bring back this harsh reality. China has tried to open up its economy,and has been successful too, but there still some areas, where the secrecy is evident. How much pollution does this low cost manufacturing of goods in China cause? What is the real state of the labourers? What about the quality of the goods? All these questions are not quite answered fully.India may be behind China in terms of quantity of goods produced, but that’s only a part of the picture. Indian manufacturing is better than its Chinese counterpart, in terms of quality and manufacturing conditions. China may well be ignoring the toxin,pollution and safety norms (as there is no transparency here, and who know for all the reports given might be doctored?). it may not be imminent, but China faces the threat of being consumed by its own growth. I cant say how, but I believe this breakneck speed of development does give an impression of an undercurrent, something which is hidden from the general world.Afterall, there was the case of toxic goods which were being exported by China. Had it not been tested or found out, they would have happily continued with the manufacture and export. Well because it brought money into the economy. This very revelation gives you a sneak peak at the real intent of China, growth, at any cost.(?)This might just affirm my views about its future in years to come. How far will it be sustainable? There is a limit upto which you can hide the crap under the carpet and present a sparkling image outward.
Coming back to trade relations with China, India might not be in a position to bargain right now. China, though is keen on gobbling up any trade avenue in its favour, is not opening the door for India to itself. As India’s trading partner, China is in 2nd position after USA, whereas India occupies only a miniscule 1.3% of China’s global imports. What is deeply worrisome is the rising trade deficit in favour of China. Equally worrying is the near-monopoly of Chinese exports to India in certain critical sectors. India’s trade deficit with China climbed to $9.2 billion in 2006-07 while with US we had a surplus of $7.1 billion. Interestingly, the trade deficit with China during the first six months of this financial year has already mounted to $8.7 billion. And we may end up with a $12 to $14 billion deficit by the end of the financial year. We are developing a dependency syndrome on a single country in some critical areas. Indeed, if Chinese products are competitively replacing our imports from the developed world, there wont be any harm. But if this tidal wave of Chinese products is radically replacing Indian manufacture, there is cause for worry. With China’s pricing mechanism still remaining opaque and with massive subsidies to capital through huge non-performing assets in their banking system, India’s capacity to compete against a strategic and targeted inflow will become more and more difficult.
What should India’s strategic position be in the next phase of our economic engagement? India must focus on entering Chinese markets wherever we have core competencies and China must facilitate this process.
But is what China is not doing, precisely. Which is reason enough for the distrust.(at this point I almost feel like typing an expletive).India is world renowned for its pharmaceutical manufacturing- 40% of india’s pharma products are exported to the developed world, but its pharma export to China is miniscule.( The procedures for product and company registration and for procuring import drug licences in China are far too expensive and time-consuming. These ‘non-tariff barriers’ are acting as an impediment to the entry of Indian pharmaceutical companies into China.) Same is the scenario with IT, as Indian companies have failed to procure any Chinese orders so far, and for films, for India is the largest producer of films per annum, but the Chinese quota of 50 foreign films is mostly given to Hollywood. This is not to say that there is no demand for Indian cinema. Chinese people love Indian films and there is great demand for them, if only they had a say. Then there’s the need of coking coal, which an essential necessity of the steel industry in India, and yet there is no access to China’s reserve of coking coal as of now.
All these issues can be tackled and raised during Dr.Manmoahan Singh’s visit to china, through bilateral talks and negotiations. But the main problem right now is that China will have the upper hand in all this, as they are in a better position than India. A case of economic bullying. But how far the Chinese dicta will run is not clear. For India also has the strong base of a growing working population, and I believe that baby steps taken in a free, highly competitive environment is better than being like a donkey, working on the commands of the master. India has quality to offer, and I am sure, that this is far better than shoving the crap under the carpet and producing in bulk. I believe India has a better attitude here, we are working towards the goal, even though slowly. But like end of story of the tortoise and the hare goes, slow and steady wins the race.
In conclusion I would like to say that India and china have a better future together than in isolation, if only china can see it too.As stated by the Secy general of FICCI, “India and China are inseparable partners in progress in the 21st century. Our future is deeply tied together as the focus of the world shifts to Asia. However, the current engagement could easily turn into an unequal and unsustainable economic relationship. Now is the time to script a win-win model. Let the dragon and the elephant dance together and not be separated by a ‘Chinese wall’.”
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