CHAPTER FOUR
China and India: Competition, Cooperation or Conflict?
The rise of China and India in the world has become a cliché of contemporary political analysis. It is widely accepted that these are the two countries whose development is having and will have a significant impact on the global system, and on the world’s sense of where international economic and political power will shift in the decades to come. The question we must consider is whether the two countries will compete, cooperate or even enter into conflict.
Of course, both China and India are extraordinary success stories of recent years. Both have multiplied their per capita income levels many times over since 1950, and have done so far faster in recent years than Britain or the United States did during and after the Industrial Revolution. The idea that both China and India could triple their current economies in the next fifteen years is not implausible to most economists, not even to the World Bank, if their annual assessment of Global Economic Prospects is any guide. I am not an economist, but I have always been profoundly sceptical of those who issue forecasts of any sort; to me, the future is never quite what it used to be. But few will disagree that China and India are going to be richer than they are now, both in absolute terms and in relative ones. That is why it is meaningful to speak of an increasing shift of economic and, as a result, political power—and to ask how the two countries, which fought a short but brutal war just fifty years ago, will deal with each other in the process.
China and India are the two most populous countries in the world, with India set to overtake China’s population around 2025. They account for nearly a tenth of global GDP, a fifth of world exports and a sixth of all international capital flows. China and India are the world’s second and eleventh largest economies in dollar terms, though both rank higher in PPP terms. China holds by far the largest foreign currency reserves in the world, at some $3 trillion; half of that is held in US paper, and if it pulled its money out of the US Treasury it could in one stroke destroy the US economy (at some considerable cost to itself, of course, which is why this won’t happen, but it reflects how much the United States is dependent on it).
We can say with some confidence that India and China will continue to prosper and pull more millions out of poverty than they have ever done, that they will compete effectively with Western corporations for business, purchase foreign companies and assets, expand their trade and overseas investments, invent and develop new technologies and displace more economic weight around the world. As a result, they will inevitably demand more authority in the international system, and I believe they will acquire it. China will, in my view, be the country that strips the United States of its current designation of being the world’s ‘sole superpower’—perhaps within one generation. India will not stride the global stage to that extent, but it will be a significant player in its own region, and through the attraction of its soft power, be hugely influential well beyond its borders. Neither will be—nor has been for some time—a bit player on the global stage.
Both are also currently expanding their hard power. China’s military budget has been increasing by a staggering 17 to 18 per cent a year since 2007, rising to $106 billion in 2012. It has launched an unmanned space orbiter, announced a major expansion of its naval and submarine fleet, and conducted a test flight of a new stealth fighter aircraft, the J-20, on the very day (11 January 2011) that the US secretary of defence was calling on President Hu Jintao in Beijing. India is behind but it is heading in the same direction, expanding its defence and space capabilities. (Still, both countries together would have a long way to go before they can compete with the United States, whose defence budget is currently equal to that of the rest of the world put together.)
According to the experts at Goldman Sachs, China is likely to overtake the United States as the world’s largest economy by the late 2020s, with India closing in behind them. But let us remember that this would merely be a partial reversion to a historical state of affairs. The economic historian Angus Maddison has told us that back in 1820 China and India together accounted for half of the world’s total economic output—India 23 per cent of global GDP, China nearly 27 per cent. Neither is close to those numbers today, but even the most optimistic projections for their rise do not see these two countries accounting for 50 per cent of global GDP in the twenty-first century. So there may be a genuine shift of economic power, but it would not bring these two back to the position they occupied just two centuries ago.
To look at the recent rise of these two countries is, however, remarkably instructive. Those who visited China during Mao’s time would not recognize it today. It is a country that remade itself to a point that its visible physical infrastructure is almost entirely new: the extraordinary cities with their dense forest of skyscrapers, their six-lane expressways, studded with flyovers or overpasses, their gleaming modern airports, their large and throbbing ports, and the growing network of high-speed railways. The last is indicative of how significantly China has invested in its infrastructure: the high-speed rail network has gone from zero just six years ago to 8358 kilometres at the end of 2010, and is projected to reach 13,000 kilometres by 2012 and 16,000 kilometres by 2020. It also features trains of a speed and sophistication not widely seen elsewhere in the world. Similar projections about the expressway network, which has gone from zero in 1995 to 66,000 kilometres today, see 100,000 kilometres of six-lane roads by 2015 and 150,000 kilometres by 2020. (The joke used to be that the national bird of China must be the crane, since there were so many of them around the country.)
The transformation has been so dramatic that a little fishing village called Shenzhen has become, in a decade, one of the world’s largest and most prosperous modern cities. The rows of massed bicycles across Beijing have given way to choking fleets of spanking new cars; the dull grey Mao tunics have been replaced by colourful clothes of the latest styles and cut, made (or at least copied) in China itself; the supermarkets overflow with consumer goods of every conceivable description, again mainly made in China and exported to the rest of the world, including to those countries that designed these products in the first place. When I first visited Beijing in 1997, I expected to see a version of New Delhi; I was quite unprepared for the difference of kind, not just of degree, that confronted me there, let alone in bustling, sleek Shanghai. China’s prosperous cities are First World conurbations, bearing little resemblance to those of the typical developing country (which is what China’s leaders still claim their country is). To an Indian visitor, this is startling, and not a little humbling.
Institutions are acquiring new habits and traditions undreamt of in the Maoist past. A few years ago, I was invited to speak at Beijing University, and was presented with a handsome red-and-white university tie. When I returned to the UN headquarters in New York I made it a point to wear my new tie at a meeting with a senior Chinese official who I knew had graduated from Peking University. He made no comment about the tie, so I was provoked to ask him, ‘Don’t you recognize what I’m wearing?’ No, he replied, and then it struck me: when he had attended Peking University, there had been no such thing as an official university tie, for the simple reason that no one wore one!
Even traditions are being manufactured in the country. Change has come to China, and it’s a stunning degree of change. Instead of being hemmed in behind tightly controlled borders, Chinese are now free to travel and study abroad, and almost a million have done so in the last three decades, including some 130,000 who are currently studying in foreign countries, acquiring skills that most will bring back to their native land. The private sector, unknown in Mao’s day, bids fair to rival the state-owned enterprises that were the initial engines of China’s growth and prosperity. It is not all good news. China is also more polluted than ever before, with air unfit to breathe, visibility in Beijing shockingly limited by smog, and rivers poisoned by toxic effluents. It is also a much more unequal society, an irony for a country that still calls itself a pe
ople’s republic and is ruled by a communist party.
This is admittedly a sketchy summary of a complex reality, but it serves as a platform for a reflection on two aspects of the rise of China and India: first, the question of commonalities, competition and complementarities between the two of them and, second, the risk of conflict.
First, commonalities, complementarities and competition. It has become rather fashionable these days, in bien-pensant circles in the West, to speak of India and China in the same breath. These are the two big countries said to be taking over the world, the new contenders for global eminence after centuries of Western domination, the Oriental answer to generations of Occidental economic success. Three recent books even explicitly twin the two countries: Forbes magazine correspondent Robyn Meredith’s The Elephant and the Dragon: The Rise of India and China and What It Means for All of Us, Harvard business professor Tarun Khanna’s Billions of Entrepreneurs: How China and India Are Reshaping Their Futures—and Yours and Raghav Bahl’s Superpower? The Amazing Race between China’s Hare and India’s Tortoise. All three books, though different in scope and tone, see the recent rise of India and China as literally shifting the world’s economic and political tectonic plates. Some even speak of ‘Chindia’, as if the two are joined at the hip in the international imagination.
Personally, count me among the sceptics. It’s not just that, aside from the fact that both countries occupy a rather vast landmass called ‘Asia’, they have very little in common. It’s also that the two countries are already at very different stages of development—China started its liberalization in 1978, a good thirteen years before India, shot up faster, hit double-digit growth when India was still hovering around 5 per cent and, with compound growth, has put itself in a totally different league from India, continuing to grow faster from a larger base. And it’s also that the two countries’ systems are totally dissimilar. If China wants to build a new six-lane expressway, it can bulldoze its way past any number of villages in its path; in India, if you want to widen a two-lane road, you could be tied up in court for a dozen years over compensation entitlements. When China built the Three Gorges Dam, it created a 660-kilometre-long reservoir that necessitated the displacement of a staggering 2 million people, all accomplished in fifteen years without a fuss in the interests of generating electricity; when India embarked on the Narmada Dam project, aiming to bring irrigation, drinking water and power to millions, it had to spend thirty-nine years (so far) fighting environmental groups, human rights activists and advocates for the displaced all the way to the Supreme Court, while still being thwarted in the streets by the protesters from non-governmental organizations like the Narmada Bachao Andolan (Save Narmada Movement). That is how it should be; India is a fractious democracy, China is not. But as an Indian, I do not wish to pretend we can compete in the global growth stakes with China.
In fact, if anyone wanted confirmation that twinning India with China is, to put it mildly, premature, one has only to look at the medals tally at the Beijing Olympics. China proudly ranked first, with 51 gold medals and a total of 100. You have to strain your eyes past such twinkling little stars of the global family as Jamaica, Belarus, war-torn Georgia, collapsing Zimbabwe and even what used to be called Outer Mongolia before stumbling across India in 50th place, with precisely three medals, one gold and two bronze.
This is not, in fact, a surprise. Whereas China has set about systematically striving for Olympic success since it re-entered global competition after years of isolation, India has remained complacent about its lack of sporting prowess. Where China lobbied for and won the right to host the Olympics within two decades of its return to the Games, India rested on its laurels after hosting the Asian Games in Delhi in 1982, so that it is now considered further behind in the competition for Olympic hosthood than it was two decades ago. Where China embarked on ‘Project 119’, a programme devised specifically to boost the country’s Olympic medal standings (the number 119 refers to the golds awarded at the Sydney Games of 2000 in such medal-laden sports as track and field, swimming, rowing, sailing and canoeing), Indians wondered if they would be able to crack the magic ceiling of two, the highest number of medals the country has ever won at this quadrennial exercise in international sporting machismo. Where China, seeing the number of medals awarded in kayaking, decided to create a team to master a sport hitherto unknown in the Middle Kingdom, India has not even lobbied successfully for the inclusion in the Games of the few sports it does play well (kabaddi, for instance, or polo, or cricket, which was played in the Olympics of 1900 and has been omitted since). Where China has maintained its dominance in table tennis and badminton, and developed new strengths in non-traditional sports like rowing and shooting, India has seen its once-legendary invincibility in field hockey fade with the introduction of Astroturf, to the point where its team even failed to qualify for the Beijing Olympics.
Forget ‘Chindia’—the two countries barely belong in the same sporting sentence.
What’s happened at the Olympics speaks to a basic difference in the two countries’ systems. It’s the creative chaos of all-singing, all-dancing Bollywood versus the perfectly choreographed precision of the Beijing Opening Ceremony. The Chinese, as befits a communist autocracy, approached the task of dominating the Olympics with top-down military discipline. The objective was determined, a programme (Project 119) drawn up, the considerable resources of the state attached to it, state-of-the-art technology acquired and world-class foreign coaches imported. India, by contrast, approached these Olympics as it had every other, with its usual combination of amiable amateurism, bureaucratic ineptitude, half-hearted experiment and shambolic organization.
In China, national priorities are established by the government and then funded by the state; in India, priorities emerge from seemingly endless discussions and arguments among myriad interests, and funds have to be found where they might. China’s budget for preparing its sportspersons for these Games alone probably exceeded India’s expenditure on all Olympic training in the last sixty years.
But where China’s state-owned enterprises remain the most powerful motors of the country’s development, India’s private sector, ducking around governmental obstacles and bypassing the stifling patronage of the state, has transformed the fortunes of the Indian people. So it proved again in the Olympics: the wrestlers, boxers, runners, tennis players and weightlifters who made up the bulk of the Indian contingent, accompanied by the inevitable retinue of officials, returned with just two bronzes among them, while India’s only gold—in shooting—was won by a young entrepreneur with a rifle range in his own backyard and no help from the state whatsoever. Young Abhinav Bindra was, at twenty-five, the CEO of a high-tech firm, a self-motivated sharpshooter who financed his own equipment and training, and an avid blogger. He is, in short, a twenty-first-century Indian. At one level, it is not surprising that he should have won India’s first individual gold in any Olympics since a transplanted Englishman competed in Indian colours in the 1900 Games. India is the land of individual excellence despite the limitations of the system; in China, individual success is the product of the system.
Certainly, in absolute numbers, the Chinese are way ahead. Their export of electronic goods now tops $180 billion a year. One out of every three shoes exported in the world is made in China. They make 75 per cent of the world’s toys. Foreign direct investment is at the level of $70 billion a year (for comparison, India gets $19 billion). Shanghai alone has nearly 4000 skyscrapers (more than all of India, and exceeding Los Angeles and Chicago combined). China has built an estimated 60,000 kilometres of expressways in less than two decades and will soon outstrip the total length of the US highway network. Per capita income has risen nearly tenfold since 1978 to over $6000, and the number of people living in absolute poverty has dropped from 425 million two decades ago to 26 million today. The population is almost totally literate; life expectancy is reaching developed-country levels. In 2009, China overtook Germany to become the world??
?s third largest economy, behind the United States and Japan; in 2010, Japan was overtaken. It won’t stay number two for long.
Against this, though, are a number of factors suggesting that not everything is rosy in China. Economic growth has occurred at breakneck speed, but that means some necks have been broken: the human cost of development has not been negligible (population displacement, farmers thrown off their lands, villages flooded by dams, mounting pollution, low-wage labour in appalling conditions, widening disparities between the rich and the poor, an absence of human rights and few checks on governmental abuses). The Chinese have seen great and rapid improvements in their Internet access, but Beijing employs some 40,000 ‘cyber-police’ to monitor politically undesirable activity on the Web.
Equally important, China’s success has not just been China’s: a disproportionate share of the benefits goes abroad, to the foreign companies that have set up factories in China. It has been estimated that of the $700 American price of a Chinese-made laptop, only $15 remains in China. Only four of the country’s top twenty-five exporters are Chinese companies, according to Robyn Meredith, who adds that in practice ‘Made in China’ really means ‘Made by America [or Europe] in China’.