India and China Fight for Dominance

china wallIndia and China are once again engaged in a boundary dispute. After having bullied Japan and Vietnam, Beijing’s incursion into Indian territory is a test of whether its neighbour has got the balls and ability to act like a potential superpower. India remains, on paper at least, the only country in the world which can compete with China in the growth race. This has always irritated Beijing and now at a time when the Indian government seems weak it appears to be trying to rub New Delhi’s nose in dirt.

But isn’t China being penny wise and pound foolish? Today India is one of the growing markets for companies worldwide. China aspires to be the factory of the world, and with the West in recession India offers a new market which can only get bigger. India’s five percent growth may be slower compared with it’s earlier pace- but it is still growing, unlike the Western countries.

China may invest billions of dollars into Africa, but the markets there are not going to provide the demand that Chinese growth needs to keep ticking. India on the other hand is a readymade market for Chinese products, from manufactured goods to Chinese professional and labour. Indian companies, whether it be Tata’s JLR or the IT firms such as TCS and Infosys are setting shop in China. China has replaced Russia as the new Mecca for Indians wanting to be doctors but unable to get admission in India. In fact, China could get best returns for its foreign exchange reserves were it to invest them in India, which is wooing foreign investors. So, why is China risking losing access to Indian consumers over a region where as Pandit Nehru said not a blade of grass grows?

Unlike the thread of democracy, culture and religion which keeps India believes keeps itself united, China seems to me more like the erstwhile USSR where the union is forced and artificial, and most of the population suffers in poverty

I believe that it could be that internally, the only thing that holds China together as a nation is the military. Unlike the thread of democracy, culture and religion which keeps India which India believes keeps united, China seems to me more like the erstwhile USSR where the union is forced and artificial, and most of the population suffers in poverty. From uprisings by villagers against corrupt communist officials to the more dangerous simmering Muslim insurgency, it is a nation where the wide urban-rural divide and discontent spells trouble for the party in power. Hence the shows of strength are the only way to keep the military happy and the populace’s mind diverted from the government’s failure in its civic duties.

Beijing needs to remember that Indians stopped using British products as a form of protest during the freedom struggle. They can boycott goods of a hostile China too.

China must realise that India can be its ally in growth. Historically, Indians never had territorial ambitions. They have always believed in live and let live. Secular India has historically been more of a melting pot of cultures and religions than the WASP United States of America. Indians already buy many things from China, from machines for power plants to toys for kids. They employ Chinese for laying pipelines and metro rail lines. Beijing needs to remember that Indians stopped using British products as a form of protest during the freedom struggle. They can boycott goods of a hostile China too. The timidity of the Manmohan Singh government may lull it into believing that Indians can be bullied.

The Indian buying power needs to be exerted in this battle of wits. Trade embargo has been used to get rogue nations to fall in line. The Chinese military strategists need to incorporate possible commercial losses in their war room games. Similarly the Indian government must  send a signal to Chinese companies and government that it can play hard ball.

By Ashutosh Misra

Ashutosh is a senior business journalist who mastered the skills of the trade at the top India business daily, The Economic Times. He played a key role in the launch of Deccan Chronicle group’s business newspaper, ‘Financial Chronicle’.

 

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