As China meets India, hints of a global shift

By Howard W. French Copyright The New York Times
Saturday, April 9, 2005
NEW DELHI When China’s prime minister, Wen Jiabao, arrives here on Saturday, his four-day visit will be filled with the usual handshakes and protocols that would ordinarily go little noticed beyond this region. This diplomatic mission, though, will have an altogether different feeling.
Perhaps for the first time, there is an expectation that both India and China, together representing a third of humanity, are coming into their own at the same moment, with the potential for a dynamic shift in the world’s politics and economy.
The impact on the global balance of power, the competition for resources and the health of the planet is causing many analysts and political leaders to sit up and take notice.
For the rest of the world, this shift could be profound. For industrialized nations in the years ahead, it may well mean more downward pressure on wages, the outsourcing of still more jobs and greater competition for investment. In most countries it will likely lead to higher prices for scarce resources.
The rise of China has already been felt far and wide, from the export of often unbeatably cheap manufactures to the thick plumes of its industrial pollution that spread eastward across the Pacific and the effect of its fast-growing economy on rising oil prices.
The addition of India, already a major force in services, could pull the globe’s economic and political center of gravity decidedly toward Asia, and away from an aging Europe and a United States already stretched by security threats and swelling deficits.
Indeed, Beijing’s overtures toward India are being contemplated with a keen awareness of China’s rivalry with the United States, which has also jealously courted New Delhi, lately promising to help make it a “major world power in the 21st century.
For that reason, Wen will come with a package of initiatives.
They are aimed at drawing India and China, the world’s two most populous nations, closer than they have been at any time since the 1950s.
Both sides say they will push hard to resolve a decades-old border dispute. There is talk of a free-trade agreement as well as joint oil exploration and purchases of commercial airliners.
China may even endorse India’s bid to become a permanent member of the United Nations Security Council, or at least strongly hint at its support.
“If the measure is whether you consult them or take them into account, both countries will be major powers,” said Stephen Cohen, a senior fellow at the Brookings Institution, a research institute in Washington.
Still, he noted, relations are not completely carefree. “As long as their relationship remains trade, economic ties, cultural, even kibitzing with the U.S., that is fine,” Cohen said, “but as soon as you get some confrontation, on the border, Chinese goods flooding into India, or an incident at sea, or in Tibet or Nepal, then things quickly become much more nationalistic and complicated.”
Indeed, competition is a byword as much as cooperation. The day after Wen arrives, work is set to begin on India’s first indigenous aircraft carrier. The construction is clearly being undertaken with China’s rising power in mind.
“Nonetheless,” Cohen added, “I see them collaborating in a lot of areas: high technology, the auto industry and others.”
China, already an economic powerhouse, is increasingly on people’s minds in India, both as a model to be learned from and a cautionary tale. From boardrooms to research institutions and opinion pages, Indians speak often nowadays of matching their neighbor’s success and power or, as some now dare suggest, surpassing it.
As long ago as 1959, John F. Kennedy spoke of the importance of what he saw as a contest between these two giants, casting their rivalry as one “for the leadership of the East, for the respect of all Asia, for the opportunity to demonstrate whose way of life is better.”
Not least, the two nations pursued divergent paths: India, democracy and belated economic reforms since the 1990s; China, a Communist system that began reforms in 1979, unleashing rapid economic growth.
But for much of the last half-century that contest was a dud. China nearly self-destructed during the Cultural Revolution of the 1960s, and India wasted decades on policies that left its economy closed and stagnant while hundreds of millions of its people were mired in poverty.
Today, their simultaneous emergence has few comparisons in modern history, economists say.
According to the World Bank, their combined growth can be credited with cutting the share of the world’s population living in extreme poverty to 20 percent in 2001 from 40 percent two decades earlier.
By the reckoning of most experts, China’s development enjoys a good 15-year head start on India. Today India has more illiterates – 480 million, by some estimates – than the country’s entire population at independence in 1949, dire poverty on a much larger scale than in China and even persistent hunger.
“India still faces problems that China addressed 50 years ago, rural reforms that would allow us to create a minimally capitalist environment,” said Jayati Ghosh, an economist at Delhi University. “It is obscene that we haven’t provided education, but we also have 250 million educated people we can’t employ.”
Despite India’s rapid growth, that gap shows no signs of narrowing, and Indians worry openly whether a consensus for growth can be sustained with the kind of single-mindedness that has helped propel China.
There is constant talk these days of turning Mumbai, the coastal commercial metropolis formerly known as Bombay, into a new Shanghai, mainland China’s most glittering modern city. For now, that is little more than a pipe dream.
More to the point may be Bangalore, India’s booming capital of telephone call centers and high-tech software. Even there, growth has been menaced by political delays that have stalled construction of a new airport for seven years. Shanghai, on the other hand, built one of the world’s most spectacular airports in just three years.
Such contrasts have left some Indians to remark, sometimes despairingly, about a “democracy price” that slows their development. At the same time, almost invariably Indians say they would have it no other way.
“I’m often approached by friends returning impressed from China, saying how our airports in Bombay and Delhi can’t compare,” said G.P. Deshpande, a longtime China scholar at Jawaharlal Nehru University in Delhi. “When I tell them that these things come in a package, that you don’t just get the new airports, and I describe the package, though, they say ‘no, thank you.”‘
The package Deshpande alludes to is strict authoritarianism, which allows the local and central governments in China to rezone entire districts without so much as a hearing, to pollute city and countryside without having to face public objections and to conduct large-scale social engineering, often disastrously, but with similarly little question.
Indians who follow events in China say proudly that no government of theirs could survive the kind of major mining disasters that are a regular occurrence in China.
“Both countries have waited 3,000 years for this moment of economic liberation, of solving age-old problems of want, and being 15 years behind doesn’t matter to us,” said Gurcharan Das, a former corporate executive and author of “India Unbound,” a best-selling account of his country’s recent revival. “Indians will wait if that is the price of being able to talk, which Indians hold dear.”
Despite the sharp limits on free speech in their country, Chinese intellectuals talk, too, often enviously, of India’s advantages in democratic governance. For all of China’s apparent strengths today, they say, future success may depend on democratic reform.
“If China learns its lessons from India, it can succeed in democratizing in the future,” said Pang Zhongying, a professor of international relations at Nankai University in Tianjin.
“India is a far more diverse country,” he said, “a place with the second largest Muslim population in the world, and lots of ethnic minorities, and yet it organizes regular elections without conflict. China is 90 percent Han, so if India can conduct elections, so can China.”
The Chinese have also begun openly to question the kind of growth their authoritarianism has spawned.
“We are using too many raw materials to sustain this growth,” said Pan Yue, China’s environment minister, in a recent interview with the German magazine, Der Spiegel. “To produce goods worth $10,000, for example, we need seven times more resources than Japan, nearly six times more than the United States and, perhaps most embarrassing, nearly three times more than India. Things can’t, nor should they, be allowed to go on like that.”
Pan predicted bluntly that China’s miracle “will end soon because the environment can no longer keep pace.” Others worry about China’s seeming addiction to massive investment, which leads to huge waste and steep cyclical downturns, a shaky financial system imperiled by a massive burden of non-performing loans, and rampant official corruption.

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