CLOSER ECONOMIC TIES BETWEEN INDIA AND CHINA MAKE SENSE

They are the world’s two most populous nations.

They are poised to be the world’s second and third largest economies.

They are the world’s biggest markets.

One has grown at around 10% for 30 years.

The other has grown around 6% for 20 years.

And as China, the one with an average growth rate of 10%, is slowing down, India is slated to become the fastest growing economy of the world.

And it is in process. India, that has grown at around 6% for past two decades, is expected to grow at 7.5% this year compared to China’s 6.8%, as the International Monetary Fund (IMF) reports.

According to a report by the Harvard University, the projections say India will grow annually at 7.9% for eight years till 2023 while the average annual growth rate for China for the same period is expected to be 4.6%.

India is poised to become the world’s youngest nation by 2020.

India has 65% of its population under 35 years of age – that corresponds to over 81 crores (810 million) of India’s population of 1.25 billion.

When its prime minister, Narendra Modi, who started his first official tour of China today, talks of a demographic dividend, he has reasons to say so.

India is poised to have the world’s largest middle class surpassing China by 2030. The criteria used by the BBC for this projection was an earning potential of US$ 10 to US$ 100 per day. The study projects India’s middle class to be 475 million strong by 2030.

According to a study by the World Bank, United States was at the top of the middle class consumption pecking order in 2009 with 21% global share (US$ 4377 billion). In 2020, China is projected to be at the top with 13% market share worth US$ 4468 billion. India will make a grand entry there with projected market share of 23% worth whopping US$ 12777 billion.

China’s is a manufacturing powerhouse and India is trying to be the one with the Bhartiya Janata Party (BJP) led government’s ‘Make In India’ campaign.

Global companies are vying for Chinese and Indian markets and India and China are eyeing for each other’s market as well.

And closer economic ties between the two giants, the projected second and the third largest economies of the world, the two largest middle classes, the two Asian superpowers and the two neighbours, make sense.

Right now, China is ahead of India in every comparable aspect – in social sphere, in military technology, in infrastructure and in economy – China’s economy is over four times the Indian economy.

But India is the world’s largest democracy and is slowly adopting the features of a free market economy while the Communist China with a one-party system did it very fast.

Now, China is stagnating and is coming around a sustainable growth rate.

And India is poised to take up – at least for a decade to come.

And the two counties together make the largest marketplace of the world – with 24% of the middle class consumption by 2020 that is slated to go up by 17% to become 41% by 2030.

India and China, the world’s two fastest growing economies, are home to over 2.6 billion people now – that is around 30% of the world.

And they are big markets for every country – including themselves.

Xi Jinping’s India visit last year and Narendra Modi’s China visit this year should be seen in this context only – two large economies that see gains in mutual cooperation – even if it means pushing back the contentious issues – including the border issue.

©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/

XI JINPING’S INDIA VISIT & CHUMAR STANDOFF: THANKFULLY, THE INDUCED BONHOMIE WORKED

India China bonhomie was in the air. It was in full throttle when the Chinese President was here earlier this month. And had a natural downslide after the visit. Even during the visit, yet another standoff on yet another Chinese incursion in Ladakh in Jammu & Kashmir, was in full swing.

So, if the Indian hospitality in making the Chinese President Xi Jinping feel at home will be remembered, it will also be remembered for the cultural elements that enveloped the bilateral tension under the wrap of a makeshift bonhomie.

So, if it was 10%, the wrap of the cultural bonhomie made it 50%. The personal touch of Narendra Modi and the Gujarat element took it to 75% (Xi landed in Gujarat to begin his India visit). And the rest was done by the media, making it complete, taking it to the absolute figure of 100%, so much so that long discussions were held out on the possible (say proposed) $100 Billion Chinese investment in India.

No one can say from where this $100 Billion investment figure cropped up which was nowhere near to the actual $30 Billion that Chinese President agreed on while leaving the country.

The two Asian nations and neighbours fought a war in 1962 and there have been very little in the name of diplomatic ties and high-level bilateral efforts. The general perception about political and public sentiments has been of hostility, bilaterally. India has had an all-weather ally in Japan, China’s historical adversary. And China has done all to prop Pakistan against India, India’s backstabbing neighbour.

But times are changing and economic compulsions are rewriting the global equations. And economic compulsions forced the two most populous nations, and thus the larger markets, to looks for options to explore the avenues of enhanced economic cooperation. A strong trade tie between the two nations has the potential to rewrite the world economic order and can offer a great leverage in bringing their populations to the level of a dignified quality of life.

Though China is much ahead, both India and China have been growing strongly and at higher pace than the world average. The markets in the both the nations need investors and buyers now and two big and mature markets sharing a long territorial border can throw a wonderful opportunity.

The border that has been the main bone of contention between the two nations inciting a war and numerous incidents of incursions and standoffs.

And one of such prolonged standoffs was in full flow while the Chinese President was on state visit to India from September 17-19.

But, thankfully, the induced bonhomie worked, at least during the visit, and the incident didn’t mar the prospects of the visit. Even MoUs for $30 Billion are practically a good deal to talk about given the patchy history between the two nations.

It will take much more than a bilateral Summit talk to bring India and China on cordial terms, and much is needed to be done. The ice will break slowly because the temperature has been frigid for decades.

For the moment, the border standoff in Ladakh, at Chumar, has been resolved and the troops will be withdrawn completely by September 30.

©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/

MEA’S UPDATED FILE SAYS JIANG ZEMIN DIDN’T VISIT INDIA

As of now, while writing this – on September 18, 2014

Owing to the checkered history of India-China bilateral ties, there have been very few state-level visits. Now with initiatives of Prime Minister Narendra Modi and President Xi Jinping, there is a sense of optimism that the process to set the relation back of track can begin now. While searching for information in the context of Xi’s visit to India from the concerned government platform, the Ministry of External Affairs, I came across this interesting anomaly.

The link http://www.mea.gov.in/foreign-relations.htm has sub-links to ‘the Briefs on India’s Bilateral Relations’. Clicking on each country’s name opens a PDF file with a primer on information pertaining to the bilateral relations between India and that particular country. The format usually categorizes information in sections like Political Relations, Visits of Heads of States/Heads of Governments, Other High Level Visits, Major Dialogue Mechanisms, Commercial and Economic Relations, Defence Relations, Cultural Relations and Education Relations.

The information packets hosted here, being on the official gateway of India’s foreign relations, are expected to reflect every major milestone in the bilateral relations, and need to be updated scrupulously.

With this thought in mind, I clicked the sub-link to the file on China. And the sub-link http://www.mea.gov.in/Portal/ForeignRelation/China_September_2014.pdf indeed had a good file with neatly packed information to serve as a useful primer. And the link told me it was updated this month only (China_September_2014). But while going through it, I came across a serious flaw.

I thought it would be rectified soon as the Chinese President was come calling on Wednesday and China-related information on official platforms would be looked into and updated. But it wasn’t. I visited the link and the file on September 15, on September 16, on September 17, and today, on September 18. But the missing information has not been updated in this basic file and Mr. Xi Jinping is leaving tomorrow.

Here are the screen shots of the file that I captured yesterday (and which don’t show the expected changes yet).

MEA-CHINA-1

MEA-CHINA-2

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