Saturday, August 28, 2010

Hindi-Chini-Bhai-Bhai is the phrase used to describe India and China as brothers. That was in the 1950s. By 1962, however, India and China went to war over land in Arunachal Pradesh. China wanted the mineral reserves in "Chinese South Tibet" and India vehemently claimed that the land was theirs as drawn by the McMahon Line. The line itself was terribly drawn and claimed a 10 km margin of error. Since then, India and China have had a rather turbulent relationship since.
Yet, there have been signs that perhaps the Asian rivalry could end and become an Asian cooperation. Pundits, so cleverly described this symbiosis as "Chindia." Both nations are part of the BRIC economic alliance in which India, China, Brazil, and Russia would come to dominate the global economy in the upcoming decades. Both nations have signed a 60 billion dollar trade agreement which serves as mutually beneficial. This is notable because in 1990, trade between the two countries was $270 million. Recently China also supported India's bid to join the UN Security Council as the 6th permanent member. So optimists point to this as a sign that relations between the Asian giants will be constructive.
Although there is this mutual agreement between the Chinese government and the Indian government, there is still the element of mistrust that haunts both of them. Because of recent events, Indian think tanks are convinced that China is using Pakistan and other Indian neighbors to stir up discord and essentially tie up India in South Asian affairs while China throws its weight into global matters. China would vehemently deny this but at the same time, we could see the motivation behind it.
India and China are both the fastest growing large economies in the world but for largely different reasons. China is viewed as the new industrial hub of the world and its large manufacturing sector is booming. Now that China has fixed its infrastructure, for the most part, efficiency has become key. Meanwhile, India has become more of the technology center and the place to do business. Some people could argue that India has simply "skipped" over the industrial phase leaving it about the same as in the 1990s. Although both economies are taking different approaches to development, they are still being compared.
Everyone believes that China is a more advanced society because it has a higher growth rate, greater amounts of trade with Western nations, a trade surplus, a brutal but effective government, and a superior education system. Most people believe that India will come up as second best to China in every aspect because infrastructure is not nearly as developed, education is limited, the government is discordant, and India has a trade deficit. Indians themselves debate whether or not they can catch or exceed China and many westerners believe that India has fallen too far behind, a view that the Chinese also take; however, India is starting to bridge the gap. India has a much younger and much larger labor force to pool from and the government has agreed to plan two massive "industrial corridors". One between Delhi (the capital) and Mumbai (the financial capital) and the other between Chennai (a manufacturing hub) and Bangalore( the rapidly developing IT hub). These corridors are meant to provide 3 million jobs to traditionally rural communities and establish necessary infrastructure between major cities; something, so far, China has been able to boast about. India also has a stable markets while economists are concerned that China may have developed its own housing bubble. India also seems to be a bit more active on investments into green technology. Already a pioneer in wind power, India is working towards developing better grid systems that would solve the power crisis that prevails in Indian cities.
While these are all good steps that are being taken, China still holds an excessive advantage in mostly every area. China has started to build up its military and it seems to have solved mostly all of its border disputes albeit the one with India. China also seems to be making friends with nations that are traditionally hostile to India and India seems to be taking notice. India has made agreements with developed economies like Japan and the United States for military training and manufacturing investments. There have also been proposed linkages between India and Vietnam. It seems as though the two Asian giants are going to be circling each other and appear to be making what was supposed to be a walkover for China into something of a contest between the tiger of South Asia and the dragon of the Far East.
I personally hope to see that these two nations cooperate because it will form the most powerful economic alliance of all time. however, time will have to tell.