CHINA and India have long been pitted against each other. As both countries have gone under a sharp rise in economic growth, that argument no longer stands today, said panelists at the Credit Suisse Global Megatrends Conference 2016 which was held last Thursday.
Mr Martin Jacques, the author of global bestseller, When China Rules The World: The End Of The Western World And The Birth Of A New Global Order, said in a separate interview that India and China are at very different stages of development. China’s economy, he said, is about five times larger than India’s. As a result, the priorities and imperatives of both countries vary.
Said Mr Jacques: “The biggest single issue confronting India is whether it can develop a large manufacturing sector, which so far, it has largely failed to do. Manufacturing is the key to the employment of the tens of millions who are leaving the countryside to work in the cities.
“The China versus India debate is largely a distraction and diversion from recognition of the very different stages the two countries have reached, and the very different tasks that confront them.”
Unlike China’s manufacturing-based economy, which it is slowly converting to a services-based one, the service sector is already India’s biggest growth driver, said Mr Shashi Tharoor, an Indian politician and former diplomat, to a 500-strong audience at the conference. Mr Tharoor previously served as minister of state for human resource development and minister of state for external affairs in the government of India.
“About 60 per cent of Indian gross domestic product (GDP) growth has come from providing goods and services to other Indians,” he said. The information technology sector, for instance, employs over 10 million people, according to industry figures. India is not an export-led economy like China’s and even then, there is a trade imbalance between India and China that favours the latter, added Mr Tharoor. Both countries’ trade deficit reportedly stands at US$45 billion ($61 billion). “Even our Hindu god statues are made in China,” he said. “If this was a tug of war, the rope is very much on the Chinese side.”
While India and China are trading partners, political tensions like the Sino-Indian border disputes remain. “These need to be overcome and superseded because closer cooperation between them would perhaps greatly benefit both — especially India — as well as the rest of the world,” said Mr Jacques.
Mr Tharoor insisted that India would rather be a success in its citizens’ eyes than to race ahead to become an economic giant. India’s 2016 GDP growth is projected to hit 7 per cent to 7.5 per cent, according to figures by India’s Ministry of Finance. “Why should we compete with China?” he said. “I think we would rather see both countries do well by their people, and then by the world.” While China may be way ahead economically, neither India nor China has reached superpower status.
Mr Jacques said that the United States is the only superpower at this time — in terms of economic performance, military strength, and political and cultural influence. “While China is in the process of becoming one, it is certainly not there yet. This is not to underestimate India’s influence in notably the cultural arena — while it remains poor and underdeveloped, it is not in a position to be a superpower,” he added. Although markets are wary of China’s potential debt crisis, Mr Jacques said it is unlikely that the debt problem will run out of control and result in a major banking crisis. China’s national debt is estimated at US$30 trillion.
He added: “Certainly, China’s debt problem is a matter of concern, but we should be clear about its nature. It is essentially a corporate and local government problem — the central government runs a surplus, as do individuals. “The central government still has plenty of weapons to deal with the debt.”