What does it mean when India overtakes China? There is more to becoming a world power than sheer numbers

First posted on Asia Times. As India is about to overtake China to become the most populous in the world, The New York Times promises a future series of articles speculating on how India might change the world as China has in the last 40-plus years. I am certain that India being the largest democracy in the world will be mentioned ad nauseam, but other considerations might be overlooked. I would like to provide a broader framework in the interest of a comprehensive discussion. As my teacher and good friend Martin Jacques has repeatedly argued, China is a civilization state unlike any nation as defined by the West. India can also be considered a civilization state, but with major differences. In the 3rd century BCE, China had a brutal and cruel leader with a vision that united all seven warring states. Qin Shi Huang became China’s first emperor. He standardized the spoken and written language, the currency, the weight and other measures and even the width of the wagon axles on the roads. He wanted to live forever, but at least his legacy survived. A national identity Most important, the first emperor established a national identity for all the ethnic peoples living in China. In time, these people responded to the Chinese culture and assimilated into the Chinese way of life, gradually discarding their own original heritage. Today, we say China is made up of nearly 92% ethnic Han, the remainder being 50-some other identifiable minorities. Actually, the Han Chinese are made up of a mixed gene pool of many other tribes that have faded into history. There is no “purebred Chinese” per se. Missing in India’s history is that one strong unifying figure to rally the disparate groups of people and establish a national identify. India still recognizes 16 official languages along with other unofficial ones, and people many cannot communicate with another. Contrary to popular impression, only 10% of the population can speak English. The closest to a national identity is the one imposed by the British rule on the Indian subcontinent for nearly 100 years between the 19th and 20th centuries. The Brits, of course, were not there to construct an Indian identity. They were there to exploit, colonize and enslave the indigenous people. Consequently, Indians today have a much weaker sense of who they are as compared with the Chinese. It’s harder for them to know their ethnicity, other than the idea of attaining the mythical stature of a white Aryan as nirvana. India continues to be hobbled by the caste system, a legacy of its culture. This means that by virtue of their parentage, more than 300 million Indians will be socially stigmatized and economically marginalized with no hope of realizing their potential. Their children and grandchildren suffer the same fate. Caste system is India’s worst obstacle Another reflection from the mindset of the caste system is that India’s elite schools are reserved for the privileged few. Quality of the non-elite universities is not high. Most, especially women, cannot get into India’s better schools for lack of seats. China has about four times as many universities as India, and some have been placed among the world’s top 100 institutions of higher learning. Functional literacy is over 90% in China and about 60% in India. In Chinese culture, education is life’s highest priority. The difference in the two countries’ systems of government is one the West loves to extol. India is the world’s largest democracy, while China is not a (Western style) democracy. What is that supposed to mean? From my perspective, India is constrained by all the limitations of a Western democracy. The government talks a lot but does not get much done. Corruption is rife at every level. The poor are condemned to stay poor. Come to think of it, it reminds me of another democracy, the United States. However, given its huge population, India can boast about its relatively small group of brilliant and talented people, those who are fortunate enough to have realized their full potential. One obvious example is the corps of business executives originally from India who are dominating corporate America. For India to realize its full potential as a nation, it needs to stop seeing itself as an Anglo-Saxon country, and join the Global South to contribute to the wealth and well-being of the coalition of people of color. India needs to raise the quality of higher education and open access to every citizen. Only by allowing every person the opportunity to realize his or her full potential can India become another emerging pillar of technology and industry. To create jobs for the growing body of educated youth, India needs to attract foreign investment. This means less red tape and a total absence of corruption, and, of course, prompt completion of infrastructure projects. Lessons from China Contrary to the Western idea that conflict is the way to peace, India should proactively approach China to resolve their border dispute. So silly to argue over a Line of Control drawn by a Brit more than a century ago (the McMahon Line). For India truly to overtake China and become a new emerging world leader, it would need to learn two essential lessons from China. One lesson, relatively easy to do, is to greatly improve the quality of education and boost the quantity of the workforce. The government then would have to eliminate corruption at every level and bureaucratic red tape to make foreign direct investment easy and attractive. FDI creates jobs and raises GDP. The second lesson, much more challenging, is to launch a cultural revolution on a scale that surpasses even the one in China, but with a constructive end-point rather than a destructive one. The objective of an Indian revolution is to truly eliminate caste, liberate women, and give all the opportunity to realize their potential.

India’s National Interest Lies in Collaboration with China, not Conflict

I wrote this article for Diplomatist, a publication based in India. It should have been published by now. Below is an electronic version.

The border scrum at Doklam, located between former kingdom Sikkim now under India’s control, Bhutan and China may have attracted front-page coverage in India and China, but not much attention elsewhere.

There were conflicting reports as to how the high altitude, shoving match started. Indian military force entered the Chinese side to stop road building undertaken by the PLA, alleging that the activity was a threat to India’s security.

The territorial dispute was supposed to be between China and Bhutan and India represented that they were intervening at the invitation of Bhutan.

Some observers noted that the Indian incursion begin shortly after Prime Minister Modi returned from his visit to the White House and hinted that perhaps President Trump encouraged Modi into acting as an anti-China proxy.

While there is no public evidence that Trump made such a suggestion, it would be well for Modi to keep in mind that while Trump believes in “America First,” it does not mean he supports “India Second.” Furthermore, he is well known for standing on one position today and an opposite position next.

More importantly, India should consider whether it is in their national interest to antagonize China and render them into an adversary.

Some hawks in India are spoiling for a fight reminding anyone that would listen that the India today is not the same as the India of 1962. In 1962, Prime Minister Nehru was under the impression that the legacy as a former British colony was enough to intimidate the PLA.

He was wrong and his poorly equipped and poorly prepared soldiers suffered a humiliating defeat. While India today is no longer the undernourished force of 1962, neither has China’s PLA been standing still.

Hosting the Commonwealth Games was nearly a disaster

A review of recent events should suffice to put matters in perspective. Beijing surprised the world with a spectacular staging of 2008 Olympics. Two years later, India was to host the Commonwealth Games, not exactly as grand as the Olympics but noteworthy enough as a sporting spectacle nonetheless.

India almost did not pull it off. As host, India didn’t have the resources to stage various venues in a style commensurate with the prestige of the international sporting event. The host had to explore whether Beijing would loan of some of the equipment such as scorekeeping displays to the Games.

Even though India has been a nation on the rise since 2010, there remains a significant gap between India and China. It’s rather comical that India would wish to turn China into a rival when India has so much more to gain with China as a friend.

The foundation of western civilization rests on competition and confrontation leading to conquests and colonization. The British Empire emerged following this fundamental tenet and the U.S. followed the English lead and became the hegemon in a unipolar world.

But the world is changing and shifting away from unipolar to multipolar, and the influence of the hegemon is eroding in face of cooperation and collaboration emanating from various corners of earth.

India does not need to westernize to greatness

As a once great eastern civilization, India hardly needs to follow the path of western imperialism to become great again. In fact, it’s in India’s national interest to seek collaboration and regain its pole of influence by leveraging friendly relations with its neighbors.

China has been offering its assistance building infrastructure projects around the world. Railroads, highways, ports and harbors are projects that qualify as part of China’s Belt and Road initiative.

Rather than participating in the recent Belt and Road Forum held in Beijing, India opted to snub the event. Since 160 countries were represented including the U.S., India’s absence was not conspicuous but India’s pout was nevertheless silly.

There is growing excitement in Pakistan over the China Pakistan Economic Corridor (CPEC), a multibillion-dollar bilateral development project that officials in Islamabad avowed would usher in an era of unprecedented progress and prosperity—from recent Asia Times.

What’s good for Pakistan should be good for India as well. All political leaders in India need to concede is that domestic priorities trump over national pride and a drive to supremacy over rivals.

The people of India are sure to appreciate a network of high-speed trains for regularly commute, and modern highways that are completed and continuous from north to south and east to west. The economic boom that would follow would surely exceed Pakistan by orders of magnitude.

China has demonstrated that such infrastructure projects belong in their sweet spot of competence. Under the auspices of the Belt and Road initiative (BRI), China has been building roads and railways not just in Pakistan but other parts of Asia and Africa.

China’s BRI is more a loose prescription for international cooperation and not a strict set of specifications to qualify projects for financial assistance and Chinese participation. The most important requirement is that the project upon completion would benefit the local economy and the financial return would justify the investment.

The stated purpose of BRI is to facilitate global commerce and trade. By definition such investments benefit all participants of world trade. There would be no losers, only winners. India occupies a strategic location on China’s maritime silk road and could only prosper by being part of it.

India’s paths to collaboration are many

India already has a number of venues to promote collaboration with China. Shanghai Cooperation Organization is one of these. India and Pakistan are recent members of SCO and Iran is expected to join next. Coupled with China, Russian and the Central Asia nations, SCO is a powerful organization not for military alliance but for economic and cultural exchanges.

Before SCO, India was part of the BRICS consortium, consisted of Brazil, Russia, India, China and South Africa, the five largest of the fastest growing economies. BRICS meet regularly to discuss and arrange for closer business cooperation.

Finally as a founding member of Asia Infrastructure Investment Bank, India already knows the benefits of obtaining financing from AIIB. Just last week, the Finance Ministry signed a USD 329 million loan agreement with AIIB for the Gujarat Rural Roads Project.

There is ample opportunity for India to collaborate with China. India should be pleased to find Great Britain leading the charge of developed nations into joining AIIB. If the former colonial master can see the wisdom of working with China, why not India?

India gets into the currency swap game

India and Bhutan recently announced a currency swap agreement amounting to $0.1 billion to "further economic cooperation." 

This swap agreement allows the Royal Monetary Authority of Bhutan to withdraw tranches in dollars and euros as well as rupees. 

The same piece goes on to say that in May 2012, the Royal Bank of India had announced intention to enter currency swap agreements to the aggregate total of $2 billion with SAARC member countries -- Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. 

The piece did not say whether Bhutan is the first or only member country to have accepted the invitation. The Bhutan central bank gave a clear and comprehensive explanation of the advantage of the swap agreement from Bhutan's point of view.

China has been entering into bilateral swap agreements with a large number of countries involving significantly larger amounts. These agreements involve their respective local currency and is a way of avoiding exposure to and cost of having to convert to dollars before settling their trade accounts.

Singapore just doubled their swap agreement with Bank of China to a total of 400 billion yuan or $48.2 billion. Singapore will be the third offshore centers (along with Hong Kong and Taiwan) to include the Renminbi in their foreign currency exchange market. London is expected soon to become the fourth offshore center to include the Chinese currency.

I have been tracking China's swap agreements as shown on my blog.

Looming tension between India and China

Recent developments on the borders between China and India hint at rising tension between the two giants. Most reports and commentaries portray China as the aggressor and India as the aggrieved state defending its national interest. These developments will bear close monitoring in the months to come.

Most frequently, the cause of the border disputes is traced back to the border conflict fought between China and India in 1962, invariably portraying China as the aggressor. Foster Stockwell has kindly reminded us that a contrary assessment was provided by John Fairbank in 1971. Fairbank was an OSS operative during WWII and a highly respected professor of East Asian studies at Harvard University after the war. Excerpt of Professor Fairbank's commentary as provided by Stockwell is quoted below for the record.

How Aggressive is China?/ by John K. Fairbank, /The New York Review/, April 22, 1971 (pg. 6)

The border war was triggered when the Indians sent 2,500 troops, in summer uniforms and with only the equipment they could carry, across high passes north of the McMahon Line, with orders to assault Chinese bunkers that were heavily reinforced on the mountain ridges farther north. This truly suicidal project was denounced by some of the professional officers, who resigned on the spot, but was ordered by the political generals now in command. Supplying a post at 15,500 feet, for example, required a five-day climb by porters from the air strip, and on a ten-day round trip the porters could carry almost no payloads beyond what they needed for their own survival. Among 2,500 troops beyond the McMahon Line only two or three hundred had winter clothing and tents, and none had axes or digging tools, to say nothing of heavy guns and adequate ammunition. As ordered, they mounted a small attack, and the Chinese reacted and drove it back on October 10.

The Chinese reaction against the announced Indian buildup for an attack north of the McMahon Line initially produced in New Delhi not only the excitement of warfare but even euphoria. Chou En-lai’s proposal that everybody stop where they were and negotiate was again denounced as aggressive. Nehru said that China’s proposal “would mean mere existence at the mercy of an aggressive, arrogant and expansionist neighbor.” He began to accept American and British military aid as well as Russian. As Maxwell remarks, “It was almost forgotten that the Indian army had been about to take offensive action; ignored, that the government had refused to meet the Chinese for talks.” Meanwhile, after their initial reaction, the Chinese paused and built roads to supply their advanced positions, while the Indian forces were kept widely distributed in defenseless, small contingents, still in the belief that the Chinese would never dare to attack.

All this was resolved on November 17 when the Chinese did attack again and in three days overran or routed all the ill-supplied Indian forces in the field, east and west. Many brave Indian troops died at their posts and were found frozen there months later. India’s political generals behaved like headless chickens. The Indian defeat was complete. On November 21, l962, China announced a unilateral cease-fire and a withdrawal in the west by stages to positions twenty kilometers behind their lines of control and in the east to the north of the McMahon Line, so that they would hold essentially what they had been proposing for three years past.

But the Indian government, while accepting the cease-fire in fact, objected to the proposal publicly. Its forward policy was finished and two or three thousand Indian troops had been lost; but “no negotiations” was still the Indian policy “The border war, almost universally reported as an unprovoked Chinese invasion of India, had only confirmed the general impression that Peking pursued a reckless, chauvinistic and belligerent foreign policy.” China had won the match but India the verdict.

Inevitably Tibet will figure prominently in any conflict between China and India. Go to here for a comprehensive review of the issues on Tibet.

Let's Talk About Tibet (II)

In recent issues of World Journal (世界日报), there was an interesting comparison of “two Lhasa’s,” written by three co-authors, Messrs Yin, Fei and Yu from the Bay Area. The two Lhasa’s in question were the Lhasa in Tibet and the “little Lhasa” established by the Dalai Lama in upper Dharamsala upon his exile from Tibet in 1959. In the interest of introducing the results of their research to a broader English reading public, I have loosely translated some of their major findings and observations in this blog.

When Dalai Lama fled Tibet in 1959, the Lhasa he left behind had a population of 29,000. Of this total, 14,000 were monks and nuns that did not contribute to the economy and 4,000 were homeless beggars, all were supported by a working population of 11,000. By way of comparison, in America for every 10,000 population, the average is 24 in the clergy and 2 homeless. Obviously the economic burden of the working class in the Lhasa Dalai Lama left behind was unimaginably onerous to say the least.

On the other hand, the little Lhasa in Dharmsala had all the advantages of a roaring new beginning. The followers of Dalai Lama were the elites of Tibet. They were educated, skilled and wealthy. They knew what it would take to set up an exile government. Furthermore, Dalai Lama and his cohort had the explicit support of the CIA and the State Department, to the tune of $2-3 million in annual subsidy. Lastly, Dalai Lama took his personal wealth with him to India. Just the antiquities he took with him were judged to be worth $200 million in today’s dollars. He also owned approximately 8 tons of gold and 4,750 tons of silver, worth $8.7 billion in today’s dollars. In other words, Dalai Lama had plenty of assets to establish a new Lhasa in style.

So, after 50 years, how do the old Lhasa in Tibet compare to the little Lhasa in India?

The population of Lhasa has increased from the original 29,000 to 300,000 Tibetans, while the population of little Lhasa remained static at 30,000 of which about 5000 are Tibetans.

In Tibet’s Lhasa, there used to be a total of 4 automobiles, bought by the 13th Dalai Lama, the predecessor to the current Dalai Lama. Today, there are 16,000 vehicles in Lhasa. In little Lhasa, only the Dalai Lama and senior government officials have cars, none of the regular Tibetans own cars.

In 2007, Lhasa replaced all plastics shopping bags with textile bags, and the practice has now spread to all of Tibet. Little Lhasa continues to be littered with plastics bags fluttering in the wind. There are 110 public toilets in Lhasa, none in little Lhasa.

There are two public reading facilities (书楼) in Lhasa and 17 book stores, of which 16 sell books in Tibetan language and 4 sell sutras and Buddhist scriptures. In little Lhasa, there is not one bookstore that specialize in Tibetan books.

In Lhasa, by 2007 Tibetan language was taught for the first nine years of school but has now expanded to 12 years of school. In little Lhasa, Tibetan language is taught up through first 5 years of school and everything is then taught in English from the sixth grade on.

In the 50 years of existence, Dalai Lama received $150 million of financial support from the U.S. government—generous by American standards of foreign aid but pale by the amount Beijing has invested in Tibet, a total closer to $15.4 billion.

During the Cultural Revolution, many of the temples and historic structures were damaged or destroyed by the “Red Guards,” many of whom were ethnic Tibetans. Beijing has since allocated the necessary funds to restore and repair these structures and publicly apologized to the people of Tibet. The Dalai Lama has never apologized for the crimes against humanity committed by the religious government under his rule before his exile.

Democracy is not doing India any favors

I have just returned from a short business trip to India. The visit took me to New Delhi and Chennai and my overall impressions of India admittedly based on a short stay are summarized below.

My first conclusion is that India’s public sector is as dismal as ever. Multi-laned highways were littered with pinch points due to ongoing construction, incomplete exchanges necessitating u-turns instead of direct turns. Industrial parks consisted of buildings that sat in midst of dirt fields strewn with piles of rubble, networked by unpaved, pot-holed roads. While visiting factories in these zones, we experienced periodic brown outs at a frequency of several per hour. Whether in the city or outside, the roads in India were lined with tin shacks and mud brick hovels. There was no conceivable way the streets could be kept clean and dust under control.

Because of the ineffectual government, India is a land of bottlenecks. On the first morning in Delhi, our host picked us up to take to his plant located in the industrial park west of New Delhi. As we approach the toll station, his driver took the extreme inside lane because his car was equipped with “fast pass,” the electronic way of paying toll. We quickly came to a crawl in the “fast” lane for more than 30 minutes while the slow, cash only lanes, moved passed us in steady streams. We were stuck in the fast lane because we were trapped by three lanes next to us; all using the moving “slow” lanes to cut in front of us in order to get through the electronic gates.

It was hard to know the original cause of the jam at the toll gates but having fast lanes moving much slower than the slow lanes sort of epitomized the way things work in India. At airport security, for instance, there was either more carry-on inspection capacity than there were passenger inspection or vice versa so that the lines never moved smoothly the way it should.

In contrast, the private sector is impressive. We met two companies vastly different in size but share certain common traits. They were resourceful, competent from top to bottom and knew how to get things done promptly. They understood the importance of making a consistently high quality produce, necessary to be preferred supplier to Japanese and Korean car makers. They found ways to be successful despite the hindrance of a bumbling government system.

Both companies were founded by leaders that were visionary and knew how to treat their employees and thus earn their loyalty. They enjoyed low turnover and can boast of core group of executives that have been with them for decades or more. Their core teams consisted of home grown talent that were very content to grow with their owners. These folks were not going to be easily lured by MNCs and others that set up in their neighborhood.

Despite the imagery of the rule of a caste system in India, I was impressed with the people in India. While driving in Delhi, I saw someone trying to jump on to a moving bus, missed and fell to the payment. The inert form was immediately surrounded by passers-by trying to figure out how to help him. In the brief moment that our car was passing the scene, I could see a genuine and spontaneous reaction of care and concern from total strangers on the street.

While in India, the front page of the newspapers reported on the imminent demise of the current ruling coalition and speculated on the make-up of the next coalition. The news was rife with rumors of how each small party was maneuvering for concessions as price of their potential swing votes. There were so much of these articles about so many of these minority political parties, it was too dizzying for a foreign visitor to follow. A week later, I found out that the current ruling coalition squeaked by with a slender majority, but not before getting temporary releases for jailed parliament members so that they can cast their votes. These were members currently serving terms in prison for murder or extortion.

When and if India’s public sector can get their act together and become the other essential leg of India’s economic machine, India will then truly become a power to reckon with. Until then, all the effusive praise of India as a model of democracy is simply a reflection of ignorance, a projection of blissful optimism not supported by reality.