India Vs China

General

The Centre for Land Warfare Studies (CLAWS) organised a guest lecture on “India Vs China” by Dr. Amarjit Singh, University of Hawaii at Manoa, Honolulu, US, on July 14, 2009 at the CLAWS campus. The lecture was attended by a select gathering of officers and a sizeable section from the strategic community.

Opening Remarks

Brig Gurmeet Kanwal (Retd), Director CLAWS, stated in his opening remarks that there is a perceptible shift in China’s strategy from concealing capabilities and biding for time to displaying capabilities. The Chinese aim at developing comprehensive national power and not just military power. China envisages itself moving from strategic defensive to strategic preparations and realising strategic opportunities.

Dr. Amarjit Singh

Economic growth, GDP and military prowess are fully dependent on engineering. Each dollar put into infrastructure construction is estimated to have a 4.3 times multiplier effect on the economy. Reasonable economic growth is desirable to remain suitably competitive in the world. India seeks a place among the successful and powerful nations. Preparation for warfare is one of the most significant aspects of a nation’s development since security of a country is of prime importance. While comprehending the challenge emanating from China, India needs to take careful stock of numerous factors including GDP and economy, progress indicators, social indicators, industry output, literacy, corruption, competiveness, energy, electricity, transportation, fight for fuel, environment, Tibet, military production, change and innovation.

India and China reportedly accounted for more than 50 percent of the world’s GDP in the 18th century. By 1951, India and China’s per capita income was even at about $52-55 per year. Through the 1970s, China’s per capita income was less than India’s. It started rising in 1984 and convincingly surpassed India’s only in 1991. The World Bank figure of India’s GDP in 2004 is 0.7 trillion and China’s is 1.6 trillion. India is ten times superior to China in the field of IT. However, this does not give India the competitive edge in the realm of manufacturing.

There is wide acceptance of the fact that capital flows where it is welcomed and stays where it is well treated. China has five times more money to circulate as compared to India, thus accelerating its growth at a faster pace. In addition, India suffers from high inflation as well. The FDI, public sector debt, lending rates, trade balance and GDP demonstrate that China has the edge in the economic sphere as compared to India. In the field of external debt China can borrow twice as much for a lesser percentage of its GDP. India’s public sector debt is 60 percent of the GDP whereas that of China’s is 20 percent of its GDP. These figures impact upon the fiscal balance, which is the gap between government revenue and expenditure, thus amounting to the current account deficit (CAD).

While analysing the above factors, Dr. Singh is of the view that China is a ‘technocracy’ and India is a bureaucracy. According to a 2005 UNDP report, 34.7 percent of the population in India earns less than a dollar a day whereas in China the figures stand at 16.6 percent. There are nearly 200 million people living in slums at present in India. By 2050, India and Africa will have the largest slum populations in the world. If on the one hand literacy, competitiveness, GDP and environment are significantly positively correlated to each other, then on the other, corruption is significantly negatively correlated to literacy, competitiveness, GDP and environment. Lord Meghnad Desai stated in November 2003, “China will again become a viable Great Power; India may become just a Great Democracy.”

China’s industrial growth rate in 2004 was 30.4 percent while India’s was a mere 6.5 percent. According to Goldman Sach’s estimate, India will overtake the size of Italy’s economy in terms of GDP in 2015; France in 2020; Germany in 2025; and Japan in 2035. However, India would still lag far behind China in terms of per capita income. Dr. Singh also discussed other issues including that of Tibet. China has been accused of deforestation, nuclear dumping, human rights violations and defacement of Tibetan culture. As many as one million Han Chinese immigrants are brought in Tibet every year. In March 2005, a senior member of National People’s Congress announced that China executes 10,000 people per year. According to Amnesty International, at least 3,400 people had been executed in China. Mao Zedong had famously stated, “Power flows through the barrel of a gun.” China today considers launching warfare on all fronts including social, cultural, economic and diplomatic. Assuming a five percent growth in defence spending, China will surely outspend India by $ 3.5 trillion by 2035. In 2005, China’s defence spending was estimated to be $68 billion and India’s was $19 billion.

In conclusion, India needs to conduct an introspective review of its defence policy, economic policy, education policy, industrial policy, technology policy, taxation policy etc. This will be crucial towards ensuring India’s economic and military security. China cannot relax with the current state of affairs since “economic freedom cannot succeed without political freedom” (Friedrich Kayek and Milton Friedman). The Chinese economy could be unsustainable given their low interest rates coupled with massive growth. China’s economy is propped up by foreign entrepreneurs, thus, in case of a political upheaval in China, those entrepreneurs will not invest anymore. However, it is dangerous for India to depend on its main competitor catching a “disease” rather than on forging ahead on its own strength.

(Report prepared by Dr. Monika Chansoria, Research Fellow, CLAWS)