Growing Pains Create Friction Between China and India 21 comments
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Interesting time for this very compelling story in the Wall Street Journal as we were just having this discussion in the past two weeks in one of our comment threads - the potential friction between India and China as they "grow up." As we Americans know, conflict is a great thing for us; one of the last great export markets we still dominate is weapons. About a month ago, I read a piece which said U.S. weapon sales were 60%+ of the entire market in 2008 - go Team USA! As long as world peace does not break out in the coming decades, we'll still have one niche thriving.
Since India and China are obviously going to be very important investment themes in the decades to come, here is a story worth your time:
- In the brewing discord between two giant, ambitious nations, even a remote meadow in the Himalayas is worth fighting over. Some two-dozen Chinese soldiers converged earlier this year on a family of nomads who wouldn't budge from a winter grazing ground that locals say Indian herders had used for generations. China claims the pasture is part of Tibet, not northern India. The soldiers tore up the family's tent and tried to push them back toward the Indian border town of Demchok, Indian authorities say.
- Chering Dorjay, the chairman of India's Ladakh Autonomous Hill Development Council, says he arrived on the scene with a new tent and Indian intelligence officers and urged the herders to stay put. "The Chinese, it seems, are gradually taking our territory," he says. "We will feel very insecure unless India strengthens its defenses."
- Dueling territorial claims along this heavily militarized mountain border, coupled with economic tensions between the two nations, are kindling a 21st-century rivalry. The budding distrust has created a dilemma for the U.S. about how to court one nation without angering the other.
- China and India cooperate occasionally. But in recent years, they have competed vigorously over trade, energy investments, even a race to land a man on the moon.
- Some Indians want their nation to move closer to the U.S. as a hedge against a rising China -- a strategic shift that's likely to complicate ties among all three. "China is trying to become No. 1," says Brajesh Mishra, a former national-security adviser for India. "This is the seed of conflict between China, India and the U.S."
- The prime ministers of India and China are expected to meet this weekend at a summit of Asian leaders in Bangkok, following several weeks in which their nations traded barbs over trade and disputed territory.
An interesting pickle for the US - India is the more Western style country, with democratic government - yet China owns us... (largest creditor) Certainly one could see similar strategies to what the US has done before i.e. arm India as a deterrent to Chinese Pacific strength. Chinese analysts agree with me based on this article.
- Next month, after a planned visit to China, President Barack Obama will host a U.S. visit by Indian Prime Minister Manmohan Singh, a meeting meant to highlight what the White House says is a "growing strategic partnership." Commercial and military ties between the two countries have been getting stronger. Last year, the U.S. loosened restrictions to allow India to buy sensitive technology and nuclear equipment for civilian use. Soldiers from both countries are participating this month in a joint defense exercise.
- Indian defense analysts say India needs closer U.S. ties to hedge against potential hostilities with China. "If China's rise is peaceful, and it integrates into the global economy, everything should be fine," says retired Indian Brig. Gen. Gurmeet Kanwal, director of the Center for Land Warfare Studies, an army think tank. "Should China implode, it's better to have a friend like the U.S."
- At the moment, the biggest threat to India-China relations may be their competing claims for big swaths of territory along their border. In recent years, China has settled border disputes with a host of nations, including Russia, as part of what it calls its "good neighbor policy." But China and India have made little progress, despite 13 rounds of meetings since 2003.
- The 1962 border war, which India lost, complicated the boundary between the two countries. These days, Chinese and Indian forces in some border areas have agreed to go out on different days to patrol contested territory. "We want to avoid an eyeball-to-eyeball conflict," says Gopal Pillai, India's secretary for the home ministry, which oversees the border police.
And it's not just military - economic strains also bubble...
- In addition to the defense concerns, trade friction is growing between India and China. India leads all members of the World Trade Organization in antidumping cases against China. India has banned imports of Chinese toys, milk and chocolate, citing safety concerns, and has launched investigations into export surges of Chinese truck tires and chemicals, among other products.
- ....many Chinese resent any comparison with India, still a largely poor agrarian nation with only about one-third of China's per-capita income. And they're generally wary of India's warming ties with the U.S.
- The Indian government has closely scrutinized proposals by Chinese companies to invest in India. It recently demanded that thousands of Chinese citizens in India convert short-term business visas into employment visas -- a move that effectively boots unskilled Chinese workers from the country.
Yet they also cooperate on some subjects:
- India and China are intent on turning fast economic growth into national strength. When their interests have converged, they have proven a powerful combination. On Wednesday, they announced plans to cooperate at December's climate-change talks in Copenhagen, a pact likely to see both fighting carbon-emission caps proposed by industrialized nations. During global-trade talks, they both resisted Western pressure to open farm markets.
And you thought your marriage was complicated...
But always a silver lining... boo yah! Greed (or potential war) for the lack of a better word... is good:
- U.S. defense contractors could benefit from India's desire to modernize its military. While the U.S. has banned weapons sales to China, it has ramped up such sales to India. Lockheed Martin Corp (LMT). and Boeing Co. (BA) are among the defense contractors competing to supply India's air force a new fleet of jet fighters -- a deal that could be valued at $10.4 billion.
- Some Chinese analysts say friction between India and China are playing into what they say is a U.S. wish to contain China. "If border tensions between India and China continue to simmer, I can't say the U.S. will be displeased," says Shi Yinhong, a specialist in Sino-U.S. ties at People's University in Beijing.
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The average citizen in country A doesn't hate the average citizen in country B. The average citizen doesn't want kill and the average citizen doesn't want to be killed or have their family killed and home destroyed.
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It will be something to look out farther as the world population pops north of 8 billion and the major powers of the Earth begin to eye natural resources; in fact I am wondering if a return to "colonialism" might arise if the Malthusian world comes to us.
Carrots are all fine and dandy but if push comes to shove, I expect to see sticks.
Just remember, if all the world consumed like the US we'd need 4 Earth's. So if China and India only consume at the level of say Greece... one of the poorest W. European countries; we have some major issues. 2 billion people living in abject poverty is one thing... if 500M of those move into any sort of middle class over the next 20 years... well let's hope we have some serious efficiency innovations coming our way first.
On Oct 26 07:47 AM dollarandbullions wrote:
> Now the big question is: If an all out war erupts btwn India and
> China, does US stand to gain or lose??
How many Americans do we employ in the military? I don't know - has to be a few millions (1? 2?). If not for wars and "peace keeping" that would be a few million more unemployed back in the States.
War is one way to keep people employed I suppose...
On Oct 26 09:23 AM John Galt wrote:
> The biggest fear of mine is the "war stimulus" that we had following
> the Great Depression. Politicans in every country blaming their
> problem on foreigners in other countries, or ethnic or religious
> groups and poof, we have a global conflict.
>
> The average citizen in country A doesn't hate the average citizen
> in country B. The average citizen doesn't want kill and the average
> citizen doesn't want to be killed or have their family killed and
> home destroyed.
Malthus ( and his kind that came before him) have been wrong for centuries ( in fact thousands of years). There have always been "too many people", we have always been "destroying our earth", "wasting" natural resources etc. They thought we were running out of copper since the time of the Romans...
If China & India consumed at the same level as Greece, then we'd need 4 Earths assuming...
1. We had the same demand
2. No rise in prices
3. No innovation
It's just like the oil projections that continue to be wrong over and over and over again. They all say we'll run out of oil in X number of years and keep being wrong. The reason, they fail to account for 1) people consuming less when prices are high, and 2) innovation.
To them, everybody trading in their boats for smaller Japanese compact cars wouldn't happen... falling demand during our recession/depression wouldn't happen...
I believe there are better ways to keep people employed than "peace keepers" and trying to kill men under another flag. Don't trust any politican that tells you who to hate ( Hitler, Stalin, Chavez, Ajmenajod etc. etc. etc.).
Technology destroys some jobs, but creates others as an increase in technology is an increase in possibilities. Instead of working in the horse and buggy industry, you might work in the automobile industry. Whale oil to black gold. Your job in the 80's might not be there anymore, but now we have math guru's working for Goggle in jobs that are pretty new...
I believe citizens of the world value peace and "war stimulus" is a horribe horrible thing. Millions of Chinese killing millions of Indians wouldn't benefit anybody. We all lose.
But the sale of munitions and weaponry occurs MUCH more often as a response to fear and paranoia than as a precursor to genuine war. In this case, it is indeed very likely that the U.S. could make some serious dollars selling to both sides, but given the fact that neither side has a history of alliance with or purchasing from the U.S. when it comes to major arms, we probably will just see the Russians (the usual #2 to our #1 ranking in armament sales) get most of the business from both sides.
Anyway, I think it far more likely that China and India will fight it out in the world's marketplace.
Potentially you could have the Russia-China on 1 side, and US-India on the other.
On Oct 26 12:37 PM tripleblack wrote:
> India and China have traded shots before, and might again...
>
> But the sale of munitions and weaponry occurs MUCH more often as
> a response to fear and paranoia than as a precursor to genuine war.
> In this case, it is indeed very likely that the U.S. could make some
> serious dollars selling to both sides, but given the fact that neither
> side has a history of alliance with or purchasing from the U.S. when
> it comes to major arms, we probably will just see the Russians (the
> usual #2 to our #1 ranking in armament sales) get most of the business
> from both sides.
>
> Anyway, I think it far more likely that China and India will fight
> it out in the world's marketplace.
And under the circumstances, the U.S. is India's potential ally, with Japan holding the balance of power.
On Oct 26 01:06 PM TraderMark wrote:
> India has started to purchase quite a bit of military hardware from
> the US the past 2-3 years.
>
> Potentially you could have the Russia-China on 1 side, and US-India
> on the other.
—Orwell, 1984
On Oct 26 01:06 PM TraderMark wrote:
> Potentially you could have the Russia-China on 1 side, and US-India
> on the other.
2. India and China, however, differ in profound and profoundly consequential ways. India believes in a national model of success based on unity in diversity: hence a belief in personal and property rights: hence the affinity for a vibrant democracy( Indian elections are far more competitive than those in the West; more Indians vote in elections than in all of Europe) and emergent capitalism( or selective capitalism) as a way to organize and cohere an otherwise very fragmented population. China believes in suppressing diversity and enforcing unity via coercion from which follows its social and economic model of central political control and central resource allocation and unrepentant one party tyranny.
India has a growing population and a still improving worker to dependent population. India's total worker base will exceed that of China by 2025 and based on current fertility and mortality rates India's population is projected to equal that of China and the US combined by 2050. China's population is going into deep demographic decline, aging rapidly, has a rapidly deteriorating worker to dependent ration. China will see its working population peak in about a decade and then decline.
India seems to be more committed to growth via sustainable internal demand while China is determining mercantilist and export focused. Over the course of 20 to 30 years this may result in an Indian Middle Class that is much larger than in China with very important implications for stability, rule of law, desire for global integration and ,of course, democracy , free enterprise and innovation.
Educated Indians are decidedly more integrated into and comfortable with Western mores and the Western cultural canon than educated Chinese. There are, supposedly, more English speaking( although it is a form of English rather strange but still comprehensible to Americans) people in India than in the US.
The system of contracts and property rights in India is obviously Anglo-Saxon quite unlike China. India's judiciary is perhaps just as corrupt as China's but manifestly more independent of the legislative and executive branches than in China.
In India there is, apparently, freedom of worship and religious convictions are very strong and personally important. In China there is very little freedom of worship(hence the growth in underground Christian movements) and religion in terms of a relationship with a Creator (as opposed to ethics or morality which is relationship with other human beings) is of minor personal consequence for over two-thirds of Chinese(according to Chinese scholars, anyway).
In my view, there is the real possibility of a genuine clash of civilizations and world views between China and India since what separates the two is very substantial and irreconcilable. This does not mean that the clash will be overtly military since neither side can expect
to win a decisive victory and a victory would be Pyrrhic ,anyway.
The clash, I think, will be economic, cultural and technological with the arena of conflict initially in Africa, Middle East, Pacific Asia. Later this clash will spread into Latin America and Europe.
China cannot take Iran for granted(there are ancient cultural, trade , linguistic and family ties between Iran,or rather Persia and India) or even Russia( the Russians both fear and have ethinic contempt for China while India and Russia have a cordial relationship).
I suggest that is in America's( same applies to the UK, Australia, Canada, Germany ) interest that India not be defeated in this clash. The global heir to American ideals of "life, liberty and the pursuit of happiness" is far more likely to be India( an institutionalizedEnglish speaking, capitalist democracy in about a generation) than China.
They are all going to value their alliances with the US. But we are heading into a period of self-doubt, of self-reassessment, of diminishing confidence...that will lead to a decidedly unstable geopolitical situation.
We've seen how ruthlessly China has dealt with Tibet. I'm afraid we might see more of that. How China handles the Taiwan situation will also be interesting to watch.
The polarization coming to Europe is going to be religious-related, as the European right begins to grapple with the internal problem they have of absorbing millions of Muslims who don't want to become European but who want Europe to become Islamic. The Europeans will either have to accept Islamization of Western culture or they will have to begin deporting Muslims in large numbers. That's quite a political and moral dilemma they are going to be facing.
On Oct 26 01:06 PM TraderMark wrote:
> India has started to purchase quite a bit of military hardware from
> the US the past 2-3 years.
>
> Potentially you could have the Russia-China on 1 side, and US-India
> on the other.
So watch out, Russians, especially since they're committing demographic suicide even faster than the Chinese.
Then turn on each other. Just like Russia and Germany in World War II.
On Oct 27 01:47 PM Michael Clark wrote:
> Russia and China on one side? They couldn't even be on the same
> side when they were both communists nations and both supporting Vietnam
> against America, the Great Satan. There are a LOT of reasons Russia
> is not going to be trusting China very soon.
>
> The polarization coming to Europe is going to be religious-related,
> as the European right begins to grapple with the internal problem
> they have of absorbing millions of Muslims who don't want to become
> European but who want Europe to become Islamic. The Europeans will
> either have to accept Islamization of Western culture or they will
> have to begin deporting Muslims in large numbers. That's quite a
> political and moral dilemma they are going to be facing.
On Oct 27 01:47 PM Michael Clark wrote:
> Russia and China on one side? They couldn't even be on the same
> side when they were both communists nations and both supporting Vietnam
> against America, the Great Satan. There are a LOT of reasons Russia
> is not going to be trusting China very soon.
>
> The polarization coming to Europe is going to be religious-related,
> as the European right begins to grapple with the internal problem
> they have of absorbing millions of Muslims who don't want to become
> European but who want Europe to become Islamic. The Europeans will
> either have to accept Islamization of Western culture or they will
> have to begin deporting Muslims in large numbers. That's quite a
> political and moral dilemma they are going to be facing.
Like all developing countries, they must pass on this economic torch to poorer nations. The territorial dispute is minor int the face of growing global competition. China, the US, and the rest of the world must face it or find themselves clinging to old business practices that lead them to increasing irrelevance in the modern age.
India has thawed remarkably toward the U.S., and giving credit where it is due, it was partly due to the initiatives during the Bush tenure acknowledging India and bringing them into the nuclear circle.
On Oct 26 01:06 PM TraderMark wrote:
> India has started to purchase quite a bit of military hardware from
> the US the past 2-3 years.
>
> Potentially you could have the Russia-China on 1 side, and US-India
> on the other.