India and China Sail in Different Boats

By Shailendra Kakani
21 Aug 2006 at 11:17 AM EDT


BOMBAY (Commodity Research Group) -- After my last article "All rotten eggs for Bernanke?" I was inundated with emails. Some accused that I was some sort of Neo Macaulayite or a die-hard fascist who was intent on smearing the good image of India. Some sympathized with the plight of Indians and said they were sorry that such a great country was in the grip of such lousy politicians. Some India bashers said they understood the situation of Indians better and would be careful in their criticism of Indians. But most were surprised that India was so mismanaged and badly governed; they said they had been listening only the good things about this country.

This is not their fault. Of late India has been clubbed with China, particularly in the Western press. Whenever there has been a talk of resurging economies on this planet, the reference immediately doled out is that of China and India. Be it the question of commodity price rise or the global commodity demand and supply equations, the two countries are quoted in the same vein. But the fact remains that the two of them are as different as chalk and cheese. While China has truely achieved phenomenal level of material success, the same is not the case with India.




Measured in terms of purchasing power parity, China now ranks as the second largest economy in the world while India trails at number four. Compared directly, Chinese economy is already three times larger than the Indian one. China has seven times more Internet users and ten times more mobile phone users. While China has a trade surplus amounting to $200 billion with the USA alone, India's entire external trade amounts to the same figure. While China is registering trade surplus every year, India's trade deficits are growing to disastrous levels. And most importantly, Inflation in China is almost zero while in India even the government figures put it at 5+%, while the public estimates are anywhere above ten per cent.

Economic statistics apart, India is groaning under a level of poverty hitherto unseen in the world. More than 200 million Indians live in slums and shanties bereft of any sanitation facilities. Millions of school students don't see a teacher for weeks. More than 70 million children stay out of the school and work as child labour, often in very hazardous industries. By a former Prime Minister's own admission "269 million Indians are food insecure." In case the statement doesn't ring the bells, it is worth noticing that there are millions who don't get more than one meal, there are millions who share a meal in their family by turns(one meal for every member by turn), and there are millions who don't know what it is to have a meal, for they eat nothing more than boiled rice with nothing more than a pinch of salt.

Health of a new born is one indicator of human development, and India again under performs. While in China only 10% children under five are born underweight, in India 's score is 53% - far higher than Mexico's 8% and Pakistan's 26%. The UN MMR numbers for India (540) are several times higher than those for other developing countries like China (56), Brazil (260), Thailand (44), Mexico (83) or even Sri Lanka (92). India has far lower percentage of antenatal coverage (60%) compared to China. According to a study by Arati Rao "In India only 43% of deliveries involve a skilled birth attendant compared to between 86% and 99% in Mexico, China, Sri Lanka, Brazil and Thailand." Not surprising why China scores 0.718 on the human development index and why India clocks in a measly 0.571.

Fifty years back both countries were agriculture based economies. Today agriculture scene is different in both the nations. While Indian politicians ignored every sector of the economy, Deng Xiaoping focused on four vital areas to rejuvenate the Chinese state - industry, military, science & technology, and most importantly, the agriculture. He dissolved rural communes, infused new farming methods, allowed leasing of land by peasants, and permitted marketing of the produce. The results are for everybody to see: China now produces over 450 million tonnes of food grains, while India continues to struggle to maintain 200 million ton record achieved a couple of years back.

While Chinese farm production is rising, the agriculture output in India is stagnant since last three years. This can't be otherwise; a mere 21% of all farms in India have access to irrigation; remaining depend on rain gods to eke out one single crop. Farmers are crying because they are being supplied with rotten seeds, spurious insecticides, and last but not the least, no information. Though the country has hundreds of agriculture universities, there is a total disconnect between the agriculture scientists and the farming community; the farmers don't know what to do about a new pest attack, which crops to sow in case of monsoon failure, and where to go to seek information regarding proper application of fertilisers.

Reasons enough while the farmers in China are singing all the way to the bank, their Indian counterparts are committing suicide in despair. During last five years more than fifteen thousand farmers have either consumed insecticides or jumped in a well or tied a rope around their neck due to farming becoming unprofitable.

This is not a happy state of affairs; farmers are the backbone of any nation, they provide the food to the masses. How farmers are important can be seen from the huge subsidies the Western countries dole out to them. Happy farmers can do wonders for the economy of a nation; while China is set to become net wheat exporter this year, India is getting ready to import upto 3.5 million tonnes of the same stuff.

The same dismal performance marks Indian industries. Writing a couple of years back Jay Dubashi, one of India's leading economists, described the situation: "The industrial slump has affected everybody. If some companies have done well, it is because even in a slump, some companies manage to do well. But by and large, the industrial scenario is depressing."

According to him "In the Thane-Belapur industrial belt (a prominent industrial zone near Mumbai), every other factory is closed. Company after company, including such big names like Siemens, Philips, Guest Keen Williams and British Oxygen is laying off people." He further adds "Fifteen years ago, the textile mills of Bombay employed 250,000 millhands. Now they employ less than 30,000."

The industrial rot is not limited to one particular segment; sector after sector is experiencing the same thing. Take for example something as simple as locks. For decades a non-descript town called Aligarh in Northern India produced locks of all shapes and sizes. However the import of Chinese locks knocked the Aligarh locks which were too heavy, too ungainly. Today the town wears a ghostly look.

The same fate befell on Bhiwandi, a town just a couple of miles out of Mumbai. Till a decade and a half back this town produced suitings and shirtings by tonnes, however its weavers could not cope with the cheap imports, as a result looms after looms folded up. The change was so swift that workshops sold their perfectly working machinery at the rate of scrap.

I am mentioning of all these examples simply to highlight the fact that how the Chinese manufactury is outperforming the Indian one. I don't think there is any industry or any sector in China which has been devastated because of Indian imports or the superiority of Indian products. In fact there are many Indian businessmen who are going to China and opening their factories over there to take advantage of cheap Chinese labour and fantastic infrastructure. There are so many Indian books which are being published in China, there are so many Indian bulk drugs and chemicals which are produced by Indian businessmen in China and then shipped back to India. (Talk of the irony; these businessmen don't find labour in their own country where hundreds of thousands of people are dying out of hunger.)

The Western press is also highly impressed with Indian education, albeit wrongly. May be due to their exposure to Silicon Valley code writers, or to a couple of Indians professors working in American universities and corporations, Western journalists think too highly of India's forays in education field. Many have written glowing accounts of Indian Institutes of Technology or IITs. The fact is that the IITs produce barely 3,000 graduates a year, most of whom go abroad or join multinationals. However in their backdrop there are millions of children who don't see a blackboard in their life, there are millions who enroll in a school but drop out of it within five years, and there are millions who stay in the school but never see the face of the teacher.

Many journos eulogize India being the largest democracy in the world, however the fact is that the Indian legal system is far from perfect. Cases take decades to decide, allowing crooks to get away with their crime, and thus make a mockery of democracy. Hundreds of thousands of under-trails stay in jails simply because courts are too inefficient to bring their case to trial stage. Recently one man got out of jail after languishing in the jail for a solid 54 years - without a trial. The sad case was hilarious at the same time; neither the man nor the law-keepers knew what he was imprisoned for.

No wonder the common Indian dreads going to police, for he knows that the laws can be easily used as instruments of the powerful people to direct their actions. Police itself is notorious for torturing those who approach it for help. It has been often joked that if a woman went to the police station to complain of a rape, she stands the chance of being raped by the policemen.

On the other hand, in spite of there being authoritarian rule in China, the laws and the courts are able to protect individuals from exploitation of the powerful. There may be an unfortunate Tiananmen for two thousand Chinese once in two decades, but the humiliation and suffering millions of Indians go through daily is no better either.

China 's excessive authoritarianism and obsession with state power and control, along with its controlled media, may seem to be stifling settlement of contentious issues, but the fact remains that the system has been working wonders. It has brought prosperity to its citizen, it has kept them happy, and it has allowed them to have dignity of human beings - something often not available in India. No doubt there must be many problems in China as well - there is no Shangri-La in this world - but that doesn't mean the world must equate David with Goliath.

In the same breath I must clarify that it is true that there are some improvements in India during last decade and a half of India's tryst with globalization. It is true that financial liberalization has empowered consumers with access to housing loans, personal loans, credit cards and mutual funds, but for the majority there is nothing but rising prices, lowering standards and a miserable life. ATMs have revolutionized access to cash for a few rich, but for the majority cash has become a dream object. Computerization has improved the financial services for a few, but millions have simply lost their wealth altogether.

Even the most basic civic amenities are missing. A recent article in Economic Times quoted the latest Development Policy Review of the World Bank which says that the typical doctor at a primary health centre in Delhi is less competent than in Tanzania, and the chances of his recommending harmful treatment are 50:50. "One in five children drop out before class V. Teacher absenteeism is rampant, and half the Standard V children in five states cannot read Class II texts. Water supply is just four hours a day in Delhi, 2.5 in Bangalore and 1.5 in Chennai, against round-the-clock supply in Jakarta or Colombo. Electricity supply is terrible, and 30% of it is stolen with impunity."

You don't need World Bank reports to verify the situation. A casual drive through Mumbai (formerly known as Bombay) will describe the state of affairs. The so called financial capital of the country has thousands of people defecating along the roads while traffic creeps within three meters of them. Thousands of women get up before 4 AM to be able to relieve themselves without being noticed. Many women have testified that they often skip a meal simply because it would mean an extra trip to the toilet.

Though I have not been to China, I am sure even in their remotest village the scenes would be better than this. (In fact I have heard that when it comes to deal with human waste, the Chinese have been most enterprising; making farmyard manure out of the solid waste and enzymes out of the urine.)

What I wish to achieve by writing this article is simple: India and China cannot be - and should not be - clubbed together. They were in the same boat fifty years back; when India was just freed from the colonial rule and China was reconstructing after the Second World War. But as of today there is only one valid comparison among them: that the two have the largest populations to support. Apart from this there is nothing which forms a common denominator among the two nations. The way things are progressing in India, Bangalore will never become another Beijing and Bombay will never become another Shanghai. It is time the international media readjusts its perspective and present a more honest view to its readers.

This also means that during the coming decades while the Chinese commodity consumption may continue to rise, the Indian one may stagnate and may well fall. After all commodities are getting more expensive, and there will be a time only the highest bidders will be able to lay claim to them.

Copyright © 2006 Shailendra Kakani. All rights reserved.

http://www.resourceinvestor.com/pebble.asp?relid=23012

Those western press are not doing India a favor by overpraising India. Western press are not hestitate to report negative stuffs about China, but rarely report any negative news about India. Part of the reason is that they misjudge India as a modern and demoratic society. Part of the reason why those western press mainly see good things out of India and ignore the bad things is those Indian elites. Those Indian elites often write prapaganda-like articles on western newspapers and magazines that praise their country and in some cases demean China. In this way, they are just giving foreigners the wrong impresson that India is preogressing really fast. Such illution might backlashed in the future. In contrast, Chinese elites usually help their country by bringing foreign trained skills and investments to China.

While India news editors and some anti-China neoconservatives are loudly celebrating "Indian century". The Chinese elites are helping their country quietly.

You are absolutely right, the media here gave me some wrong impression about India when I visited it. I had the impression that it was much more developed than it really is.
Thats the power of the media for you.
I am ashamed that themedia is being arrogant. Although the truth hurts about all the things wrong in India, they will not go away if the media just keeps ignoring them. We Indians need to face up to the facts and only then can we help to improve our country much more and faster. I'm glad the Indian writer of this article has realized this.

Maybe we can learn somethings from you guys.

Does no one else wish to comment?

yes, but not about the article. arent you annoyed with frog lee? lol...

OMG....Froglee is actually on India Chat!!!!

The sky is falling!!! Ahhh!!!


LOL....j/k

this is just an opinion piece. there are also some who say that india's economic situation is in much better shape than china's.

No point as we'd just see the same arguments that we get in Chinese Serious Talk, only it'd be spreading throughout the forums.

I suppose you are right.

Everyone is talking about India vs China on the Chinese forum.

Um, not really, there's only a handful of topics about China vs India in the Chinese chat. You must be living in a dream world or something.

I actually agree with this. Do you guys know India's FDI in 2005 is about ~8 billion USD while Vietnam's FDI in 2005 is $5.8 billion USD? Don't even compare to it tot the size of FDI money in China...

I think one of the most needed thing for india right now is its infrastructure

Yes, I fully agree. I hear many companies such as from Japan don't wish to work in India because of its struggling infrastructure.

A Thaw Between India and China


The developing relationship between the wary Asian giants could shape the 21st century.

By Henry Chu and Mark Magnier
Times Staff Writers
Posted August 25 2006


NEW DELHI — High atop a snowy Himalayan pass, a lonely road linking Asia's two giants reopened last month after a 44-year diplomatic roadblock.

Leaders in India and China hailed the event as a sign of the growing rapprochement between neighbors that have eyed each other with distrust since a 1962 border war. Officials say the artery along the fabled Silk Road will invigorate trade between their two booming countries.



LocalLinks

But the reopened Nathu La pass is an apt symbol of SinoIndian ties in more ways than one. The rough terrain, icy weather and extremely short list of goods approved for exchange are emblematic of the rocky path of limited engagement that Beijing and New Delhi have embarked on after decades of a political deep freeze.

Their evolving relationship may help define the 21st century as the world's two most populous nations — which account for one-third of humanity — try to pull themselves out of poverty and stagnation.

By 2050, some experts predict, the United States, China and India will have the planet's largest economies.

In a noticeable thawing of relations, New Delhi and Beijing have taken steps in recent years to reduce military tension, increase government contacts and expand trade. The two governments declared 2006 their "year of friendship," to be marked by cultural events and a summit of Chinese President Hu Jintao and Indian Prime Minister Manmohan Singh.

But establishing a truly strategic partnership will be no mean feat. Persistent suspicion among hawks on either side, unresolved border disputes, intensified competition for resources such as oil and gas, and influence from Washington could all act as a brake on Sino-Indian cooperation, analysts say.

That both nations stand to benefit from a peaceful, improved relationship is clear.

"In the next two decades, both sides want to be a rising power," said Hu Shiren, a South Asia expert at the China Institute of Contemporary International Relations in Beijing. "To facilitate this, you must have good, stable surroundings. Cooperation is most imperative."

China's communist government, in its rush to remake the country into a capitalist powerhouse, has put a premium on stabilizing relations with neighbors and settling contested borders.

India, too, after years of looking inward, is liberalizing its economy and paying more attention to the region. It's particularly keeping an eye on China, whose economy is nearly three times the size of its own, as it begins flexing its muscles politically, militarily and economically on the global stage.

"They've been a rising power for 20 years, and we didn't notice. We were so obsessed with our little world," said Mohan Guruswamy, head of the Center for Policy Alternatives in New Delhi. "The establishment in India has begun to take note, and it's slowly and lumberingly beginning to change its attitude."

Mention China here and hackles still rise. Official Indian rhetoric on the behemoth to the north remains heavily colored by the 1962 border war that led to the closing of the Nathu La pass, a conflict each side accuses the other of provoking.

In 1998, India's defense minister pointed to China as the country's No. 1 threat. That same year, the Indian prime minister infuriated Beijing by writing a letter to President Clinton citing China as one of two reasons India was conducting nuclear weapons tests.

The other reason was archrival Pakistan, a longtime ally of China whose own nuclear buildup Beijing is accused of aiding.

The Indian military's view of China is one of abiding mistrust.

"It's gospel among the armed forces. It's sacred to the hawks in this country," said Alka Acharya, an expert on international relations at Jawaharlal Nehru University. "They don't budge from that position."

Large swaths of mountainous territory technically remain in dispute between Beijing and New Delhi, despite a breakthrough agreement three years ago to push for a permanent settlement. Several rounds of talks have yielded little substantive progress.

The recent completion of China's Tibetan railway touched off warnings here of easier access to the area by People's Liberation Army troops. China contends that the rail line was built to help develop its impoverished western provinces.

"Some Indians see an ulterior motive, but this is ridiculous," said Hu, the South Asia expert. "If there were a war, of course the railway could serve military purposes; but its main purpose is for the economy."

In contrast to the enduring suspicion among the Indian military's top brass, the reality is far more relaxed. The India-China border, which stretches for more than 2,500 miles, has lain largely quiet for 25 years, to the point that soldiers on both sides of the Nathu La pass engage in friendly sporting matches, celebrate each other's festivals and exchange gifts.

Reopening the pass July 6 represented official recognition not just of greater mutual trust but of the increasing importance of economics in Sino-Indian ties.



LocalLinks

Last year, trade between the two nations was estimated at $18.7 billion, up by more than a third from 2004. This year, it is expected to hit $20 billion.

Pharmaceuticals, chemicals and steel flow from India to China; manufactured goods and commodities such as silk come back. Economists expect China soon to overtake the United States as India's biggest trading partner.

In the early 1900s, the Nathu La pass, more than 14,000 feet above sea level, was the most important commercial corridor bridging the two countries, accounting for 80% of bilateral trade, according to some estimates. The land link saves thousands of miles and weeks of travel compared with shipping goods by sea.

But demonstrating the wariness with which the two sides still regard each other, Indian merchants are allowed to export only 29 items, such as rice and flour, across the pass, and their Chinese counterparts must stick to a list of 15 approved goods, including goatskins and yak tails, which are used as fly swatters.

Predictions that trade through Nathu La could reach nearly $3 billion in less than 10 years seem wildly optimistic unless the list of items is greatly expanded and better infrastructure is built.

"It will take time, but it's better than nothing," said Wang Jinzhen, secretary-general of the China Council for the Promotion of International Trade.

Restrictions on trade are not limited to the Nathu La pass. Chinese trade experts say China has lowered its tariffs faster than India and welcomed earlier and greater foreign participation in such important sectors as retailing and auto manufacturing.

Chinese telecommunications companies trying to invest in India complain of being made to jump through more regulatory hoops than American or European firms on the grounds of national security. For example, the Chinese telecom company ZTE's bid to enter the Indian market has been blocked by an Indian government investigation of "safety" issues.

Clashes also have cropped up in the two countries' scramble for sources of energy to fuel their burgeoning economies. Indian and Chinese oil companies have gone head to head several times for access to reserves around the world, including South America and Central Asia, with China almost always emerging the victor.

In January, Beijing and New Delhi agreed to work together in securing reserves abroad. Putting the deal into practice may be difficult, but analysts say both nations need to cooperate in the face of dwindling supplies.

"There isn't enough if you just go and fight for it. We need to pool our resources," said Acharya of Jawaharlal Nehru University.

"Competition is bound to emerge, particularly since we're looking at the same markets, the same sources of technology and energy," she said. "But this is precisely why [China] is the most important potential partner as well. You could clash on energy if you don't work with China. You could clash on U.S. markets if there's not some kind of understanding there. We are both too big to be competing for the same things, in the same neighborhoods, at the same time."

Although the United States' trade relationship with China, at $285 billion last year, dwarfs that with India, the Bush administration has made improving ties with New Delhi one of its top foreign policy priorities, as seen in its push for a civilian nuclear cooperation deal with India, a reversal of long-standing policy.

Senior U.S. officials have openly described improving relations with India as a way to offset China's growing clout in Asia, and building up India's nuclear arsenal as a way to keep Beijing worried more about New Delhi than about Washington.

That kind of talk has stoked Chinese fears of American attempts to "contain" China. At the same time, India has looked askance at Beijing's aid to Pakistan in building a submarine base at Gwadar, in southern Pakistan.

Guruswamy, of the Center for Policy Alternatives here, said diplomacy in the region needn't be played as a zero-sum game.

"It doesn't mean that if you have good relations with America, you have bad relations with China," he said. "That's not required in the modern world."

Establishing a deeper partnership between India and China, however, will require a concerted effort not just to overcome historical obstacles but to sell the idea to the people of both countries.

Chinese tour groups may be hitting popular destinations across the globe, but India isn't among them, and vice versa. There is no way to fly direct between Beijing and New Delhi on any Chinese or Indian carrier; the only way to do so is on Ethiopian Airlines.

But Wang of the China trade-promotion council is hopeful.

"Both are developing countries at a stage that requires cooperation," he said. "Closer ties are good for the region and the world."

*


--------------------------------------------------------------------------------
Chu reported from New Delhi and Magnier from Beijing. Gu Bo in The Times' Beijing Bureau contributed to this report.

http://www.sun-sentinel.com/news/nationwor...ewsnation-front

The Indian-Chinese rivalry is an American invention because they know that by driving a wedge between the two countries it suits their agenda in containing China and using India as a puppet.

At the end of the day it's not in Americas interest to see neither a powerful China or India challenge their power and influence.

I'm not sure if Americans are completely to blame though....what do you think? But of course they don't want to see those nations become too powerful.

Sinocentrique is correct.

Aside from the Kashmir issue where China invaded (We'll eventually get it back guaranteed) the two countries don't completely hate eachother.

Together India/China could take over the United States and split it up for our over-sized populations.

Congress and BJP both always get on their proverbial knees for America and NRI'S.


India and China two different countries with there own baggage and issues to face. If people don't like the editorials in American publications they should email a complaint or write letter to the editor. Nobody take Indian Nationalist musing very serious as a barometer for Indian public mindset. Nobody trolls Chinese serious talk when Thomas Friedman writes a positive article about China’s growth

Lol, it won't work and you know that.