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Can the “Asian Giants” coexist and  cooperate for the common good?

The following article is a modified version of a power-point presentation by the author at the International Conference of the South and Southeast Asian Forum for Science and Technology Policy, New Delhi, Nov. 27-29, 2007.

2nd Jan 08 - Aqueil Ahmad ~ STWR

Background

India and China are two of the world’s most ancient surviving civilizations.  The Chinese built the 4000-mile Great Wall approximately 200 years before the birth of Jesus Christ.  They invented bureaucracy even earlier, thousands of years before Max Weber brought it to the attention of the western world.

The Indians gave the world the zero, which stands as one of the greatest contributions to the development of mathematics, and consequently, that of modern science.  Indian contributions to algebra, textile, chemistry, medicine, metallurgy, and astronomy in the Ancient and Medieval periods are legion. 

A Brief History of Indo-China Interactions

The wisdom of the Buddha flowed from India to China, while Confucius’ precepts of compassion, humility, and right conduct by merciful rulers influenced the behavior of emperor Ashoka in the 3rd century B.C.

The center of scientific and technological activity shifted to Europe, and later to North America during the 16th through 19th centuries for a variety of cultural, political, and economic reasons.  India and China, along with the rest of the non-western world, lost their cultural edge during this period.  Contacts between the two great civilizations almost ceased during the colonial period because the new rulers of the world did not encourage such contacts.  In the post-colonial era conflicts developed between a democratic India and a totalitarian China over rival territorial claims in the Himalayan region, the Chinese annexation of Tibet, and the Exile of Dalai Lama into (Dharamsala) India.

Post-Colonial Science and Technology for Developments in India and China

India and China embarked upon ambitious science, technology, and economic development programs through centralized planning in the1950s.  Both emphasized self-reliance through local initiatives, restricting the flow of foreign capital and technology for nearly three decades, China more so than India. These postures proved to be a mixed blessing in the two countries.  They missed out early transfers of advanced industrial and agricultural technologies in the incoming age of globalization but could develop indigenous infrastructures and capabilities that helped rapid advancements in the future.

The doors began to open in both countries during the later half of the 1980s.  By this time, technoeconomic globalization was already sweeping through North America, Western Europe, and the Pacific Rim.  Consequently, both India and China found themselves in the unenviable game of catching up with these regions. They began to look outside for capital and technology transfers, but not at each other as possible partners.

The situation changed rapidly in the next decade. Foreign capital and technology flowed into China in far greater degrees than in India. The Chinese economy has now been growing at about 9-10% per year, surpassing any other country for a sustained growth at such a high rate.  In terms of GDP per capita, China is the world’s 4th largest economy, and is likely to overtake Japan within the next 5-10 years.  It is one of the world’s largest exporters of consumer items through retailers like Wal-Mart, Carrefour, Target, and Tesco.

Since 2000, China’s contribution to global GDP growth (in purchasing-power-parity terms) has been bigger than America’s, and more than half as big again as the combined contribution of India, Brazil and Russia, the three next largest emerging economies. (“Survey of China,” The Economist, March 25, 2006, p.3.)  

India too has finally left behind its “Hindu growth rate” of 3% to hit an annual growth rate of 8+%.  It is now the most preferred destination of IT outsourcing, moving away from being the world’s call center to being a vital feeder to the global knowledge industry. 

India’s economic base is vast – 4th largest in the world in terms of purchasing power parity and 12th largest in terms of per capita GDP.  Along with China and Brazil, it is projected to become one of the five largest economies in the world by 2050.  The combined economies of India and China are already bigger than that of the EU countries put together.  At the present rate of growth, the combined consumer class in the two countries will reach about a billion people within the next five years.

Global Technoeconomic Power Shifts

The historically negative relationship between large populations, poverty, and disparity has a silver lining in the context of economic globalization: large populations mean larger consumer markets, and consequently, greater potential for economic growth.  But that should never be used as a rationale for not controlling population growth in already overpopulated areas like China and India; for in the long run large populations would remain relatively poor but as their purchasing power increases, they would also contribute more to environmental pollution due to over consumption of material and natural resource.

Population in the western countries, excluding the USA, is declining.  It is already below replacement levels in Russia and the Scandinavian countries.  The current demographic balance between the West and the rest favors the latter: West = 1 billion; rest = 5.5 billion.  It will continue to move in this direction.

The same is true for science and technology human resources balance of power. Per capita production of scientists and engineers in the West (particularly the US) is still well ahead of the world average.  But the total annual production in China and India surpass the US in about 4 to 1 ratio: US = 84,898; India = 103,000; China = 292,569 (India-China combined total = 395,569).  If tapped properly these large numbers can be a source of enormous mutual benefit to these countries but detrimental to the interests of industrialized West in the global science and technology landscape.

It is the global economy rather than global politics and military adventures that will drive international relations and balance of power in the 21st century, barring temporary setbacks.  For example, China’s military machine is one of the most formidable in the world.  But it is the Chinese economy that scares the Indians, the Americans, and the Europeans alike.

Americans see both India and China stealing American jobs – China stealing manufacturing jobs while India taking away IT jobs. “With the likes of China Mobile (with 300 million subscribers and a $177 billion market capitalization), telecom gear maker Huawei Technologies, and India’s Tata Steel on the prowl for acquisitions overseas, China and India are reshaping the global economy.  So, the competition between them is bound to increase.” (“The Dragon’s Way or the Tiger’s?” Business Week, Nov. 20, 2006, p. 55)   But along with competition, the possibilities for cooperation between the two Asian giants are also endless.

Problems and Prospects for Indo-China Collaboration

In 2002 then Chinese premier, Zhu Rongji, visited India and told his hosts: “You are the first in software, and we are the first in hardware.  When we put these two together, we can become the world’s number one.” (The World in 2005 – The Economist, p. 49)

But continuing political issues between the two nations come in the way of mutually beneficial technoeconomic cooperation.  These include the remaining boundary dispute, conflicting views on Tibet and the Dalai Lama, China-Pak nuclear collaboration, and the possible Indo-American nuclear deal.

China seems eager to increase its investment in India but claims resistance and double standards by the Indian government in the matter of Indo-China technoeconomic cooperation: e.g. four bureaucratic levels of approval for Chinese FDI but only the RBI (Reserve Bank of India) clearance for others?  It claims of similar hassles for prospective Chinese workers in Indian enterprises. (Business Week, Nov. 20, 2006)

Despite these difficulties, the following developments over the years are noteworthy:

Late Prime Minister Rajiv Gandhi of India signed an inter-governmental Science and Technology (S&T) Agreement between the two countries during his visit to Beijing in 1988.  A Joint S&T Committee is in place to initiate broad-based cooperative programs.  Specific joint projects are mooted at inter-agency levels in such diverse fields as Meteorology, Ocean Science and Technology, Space Science and Technology, and Biotechnology.  As recently as September 2006, India’s Minister for Science and Technology Kapil Sibal and his Chinese counterpart signed a Memorandum of Understanding (MoU) to further cement S&T cooperation between the two countries as part of the India-China Friendship Year 2006.

Economic cooperation in terms of trade is increasing between the two countries, currently running at $20 billion from only $1.8 billion in 1989-90.  A substantial share of India’s mobile-phone market is run by Hutchison Telecommunications of China.  Huawei Technologies has a software center in Bangalore that employs 1,150 Indian and 50 Chinese engineers. I understand that most of the Diwali lanterns for 2006 celebrations came from China.  An estimated 150 Indian companies are currently doing business in China, although some of these joint ventures are with other foreign firms operating in China, not with the Chinese companies.  (Business Week, Nov. 20, 2006)  The Chinese computer giant Lenovo has just established its global marketing center in Bangalore to be managed and run by Indians.

Competition and Cooperation for Global Energy Resources

India and China together are soon to surpass energy use in the United States.  With 17% of the world population, only 0.8% oil reserves, and an economy growing at breakneck speed, China is naturally frantic about meeting its energy needs through imports.  The Chinese oil conglomerate, CNOOC, is out to buy oil companies overseas, including a failed bid to buy American UNOCAL. It has invested billions of dollars in African development and oil exploration as well as in oil interests in Russia and the Middle East. India is faced with a similar dilemma with its own meager oil resources and pursuing oil interest overseas although not as aggressively as China.

But that is also an area where the two countries can effectively cooperate.  Discussions on these lines have taken place between CNOOC and India’s Oil and Natural Gas Commission.

Ex-Indian energy Minister Iyar suggested a Consortium of Oil Importing Countries to negotiate the supply and price of crude oil for the benefit of heavy developing country oil importers.  Like so many other great ideas, that too seems to have fallen by the wayside. 

Multinational R&D Projects

Ex-British Prime Minister Tony Blair (Nov. 3, 2006): “Chinese R&D has been rising by 20% a year over the past five years. Indian R&D is even more astonishing - it has tripled in a decade. Indian engineers are flooding into the world's markets - 350,000 a year, forecast to 1.4m a year by 2015.” (Speech at the Royal Society in Oxford, Nov. 3, 2006)

There is intense competition globally for R&D dollars. China and India are increasingly attractive places for companies to do their R&D. India has an edge over China in R&D capacity due to the availability of more well-trained, English speaking scientists and engineers than in China.  Joint R&D projects involving Indian, Chinese, and third country scientists should soon be emerging within India, China, and some third countries in such fields as biotechnology, alternative energy systems, drugs, and healthcare technologies, and perhaps even in space explorations.

Common Problems, Collaborative Solutions

Mahatma Gandhi said, “Poverty is the worst form of violence.”

India and China continue to inflict that violence upon millions of their countrymen. Despite their march to modernity, technoeconomic progress, enormous resources, and increasing pockets of affluence, millions in both countries live socially and economically degrading lives.

In the last Peoples Congress in Beijing in October 07, the Chinese leadership vowed to reinstate the system of universal healthcare and education and eradicate the poverty of the people.  In view of the Chinese history of single-minded approach to achieving national goals, this goal too is likely to be achieved sooner or later.

Indian leadership also needs to set such targets and commit national resources to achieve them within a dedicated timeframe.

Another equally important problem facing the two countries is environmental degradation as a consequence of their developmental strategies.  They can learn from each other how to make the vision of SUSTAINABLE DEVELOPMENT a reality.

The Future is Now

With vision, wisdom, and strategic partnerships, Premier Zhu Rongji’s 2000 wish to “become the world’s number one” may very well be within the reach of India and China to make this century the Asian Century.

Ahmad, Aqueil (1991). "China's Quest for Advanced Technologies: Nagging Questions," in D. Vajpayei and R. Natarajan, (Eds.), Technology and Development: Public Policy and Managerial Issues. Jaipur, India: Rawat Publications.

Ahmad, Aqueil (1998). "India's Quest for Technological Self Reliance," in Y. Malik and A. Kapur (Eds), India Fifty Years of Democracy and Development. New Delhi: APH Publications Corp.

Bhagwati, Jagdish (2004). In Defense of Globalization. New York: Oxford University Press.

Engardio, Pete, Ed. (2007). Chindia: How China and India are Revolutionizing Global Business. New York: McGraw-Hill.

Meredith, Robyn (2007). The Elephant and the Dragon: The Rise of India and China and What it Means for All of Us. New York: W. W. Norton & Company.

Dr Aqueil Ahmad is currently a full-time faculty in the School of Management at Walden University, Minneapolis, Minnesota. 

Click here to view the author's biography and a full list of articles

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