Posted by: qmaxim | September 9, 2010

10 reasons why India will always lose to China!

In the recent times there has been discussions and articles in the news paper, magazines and electronic media about raising economic , political and military power of China.  Also in the news is the book release by Raghav Behl of CNBC –TV 18  news channel. From the publicity of this book it appears that it is on blistering pace of China’s economic development which in comparison dwarfs India’s pace of development.  To go with publicity of the book there was a debate in the CNBC TV channel  involving economists, politicians and other assorted windbags. Raghav was saying that India should also aim to become USD 5 trillion  economy  in another 10 years & was even challenging viewers as to why India can’t overtake China in that period.

No doubt  India has made admirable economic progress over  the years. Though I would have very much liked to agree with him, still I think India can never match China now and in the future. In the  progress of any nation  economic , political and military power and more importantly national will always go hand in hand. Nation cannot make progress in one aspect while ignoring the others. Most commentators seem to be ignoring this fact.

These are my  10 reasons for making this prognosis.

  • No long term strategy & vision
    Chinese  have  50 even 100 year strategy and vision for the nation and their planning goes keeping this mind. Actions are taken keeping this vision in mind. For instance, Hongkong was  was leased  by the British for 100 years from Chinese emperor. China began negotiating with the British 10-15 years before year of handover. Transfer was completed well on time. Even some companies which have survived for long have long planning horizons. If the situation demands Chinese are not constrained by past history at all for making alliances. That applies to even former enemies. For instance, during Korean war with the Americans, Chinese lost thousands of people. During that period  Soviets were their allies. When  Soviet union collapsed  they began close relationship with  their former enemies the Americans. Only planning that goes on in India is by the planning  commission’s 5 year plan which is a relic of Soviet planning.
  • No holistic thinking and coordination

In India there seems to be no coordination between finance, home, foreign and defence policies. Each ministry works in isolation unless there is a crisis. Not in the case of China.
Here is an example. After the disastrous cultural revolution and death of thousands, Chinese leader  Deng decided  to  focus exclusively on development of export focussed economy for the next 20 years and military interventions and other (mis-)adventures were put on hold. As the GDP grew by 12-15%  for over 20 years  there were  enough resources to develop Red Army (PLA) to a modern fighting machine. Now that the  Chinese  economy has become  2nd largest after that of  U.S. , the military modernised they are becoming increasingly aggressive in their foreign policy and military tactics. They also realise that developed countries now have limited flexibility to pressurise China as most of their  goods of daily need are sourced from there.
(e.g. Flextronics which produces goods like iPad for Apple is  several times larger than Apple).
In other words diplomatic and military adventure is  back in fashion.

  • Still mired in old non- aligned preaching attitude
    Our  foreign policy is still grounded in non-aligned mindset. Attitude seems to be- we will act strictly according to these principles irrespectively of how others behave. (However, there were  few honourable exceptions in the past). All nations act strictly according to their perceived national interests with absolutely no principals and defend them accordingly. In most cases, laws applicable inside  countries’ borders are not applicable outside the borders at all.
  • Still  Gandhian – thou shall not do any harm –expect everyone to act similar way
    Most of the powerful  nations deal with their internal and external enemies and threats in a ruthless manner. For instance, China puts to death thousands of people considered to be internal threat every year. Oldest democracy U.S. does the same with hundreds of people every year. In India  hundreds of foreign terrorists having  committed number murders are still languishing in our jails for years.
  • Thinking is still mired in old economic theories & dogma
    After India gained  independence, most of the economic development was modelled on socialistic Soviet style development. This went on for several decades more even after it was obvious that it had  outlived its usefulness. This was dismantled gradually only after the economy  reached crisis point.Chinese also began the development of their economy on soviet model but  abandoned it 15-20 years before India. They are not constrained by prevailing economic theories such as markets are supreme and market / economic fundamentals  decide the value of a currency etc.  For instance they have kept the  value of their  currency absurdly low for decades to support the export based boom. Same goes for lack of workers’ rights  which is supposedly founding principal of communism.
  • No serious debate, review and course correction
    There is no transparent and rigorous review of  major economic / political / foreign policies and issues in India  at all. Whereas other  countries have systematic  mechanism for reviews. Take US for example. For example invasion of Iraq – they realised after rigorous debate / review etc that earlier  policy was not working and changed course midway  to make it work. Same thing is happening  about the current economic crisis. There is no serious debate about major issues in the parliament and  in the news media. Most of the legislation is passed with either opposition walking out or simply by voice vote  in minutes with  no debate at all. Most of parliamentary debates end in shouting matches, walkouts and parliamentarians rushing  towards  speaker’s chair for no apparent reason. Only debates which takes place in India is in the TV channels which are quite superficial.
  • Collector mentality
    Most  government functionaries think that their job is about   collecting  taxes, control/ manage the troublesome constituents and to give handouts  to favourites. This attitude is almost identical that of British when they were ruling India. They called  the district administrators as Collectors whose primary role was to collect taxes and to  keep  the natives under tight leash. Many countries see the role of govt. as that of a  facilitator  & enablers rather  than simply being mere collectors of tax.
  • Too scared to offend anyone – internal and external
    The Indian govt. foreign policies tend to be highly defensive so as not to offend any internal and external constituents.
  • No vision on long term needs technological and  resources needs
    Amount of Oil  imported  by India now is almost equal to that of Japan. Assuming the Indian economy grows at the same pace for the next few decades, there is a likelihood that  import bill will  equal or even exceed that of US. There is seems be no vision on securing  energy needs of the nation. Only limited measures have been taken to meet these needs. Countries like China, Malaysia have met with significant success due to focussed efforts during the past decades.Same goes for development  of technologies needed  for the development of economy. Though India is the 2nd largest telephony market in world after China, most of the technology / equipment needed is imported. China poured millions of Dollars in development of telephony and internet  technologies and consequently companies like  Huwei technology are leaders in technology and cost.
  • Public sector as cash cow
    Indian govt. sees most of the top rung Public sector companies as cash cows rather than national champions. Money earned from dividend & share sale etc   is seen as a means for plugging budget deficit. With some exceptions, most of the companies have not made any bold moves at all in for many years. Oil distribution companies are one such example.

Having said this, due to the  blistering pace of development, China has put unprecedented stress  on the resources human as well as physical.  India has no doubt a lot to learn from the Chinese but has  to carefully consider whether this type of developmental model is suitable for its needs  or not.

Advertisements

Responses

  1. This is a good little article that is thought provoking. Congratulations!

    Could you make some research on the internal contradictions in China as we have not known so much about them because of China’s highhandedness in putting down dissent and how these internal contradictions could affect Chinese economic ambitions and also their method of overcoming them and their negative impact if any.

    I agree with you on the your Gandhian plus socialist outlook that guide India to the gutter.

    But just as the hard core communists in China have died these Utopian Gandhian are also on the wane, don’t you think? Who succeeds depends on the following.

    India has unresolved contradiction is between the Hindus and the Muslims (add Christians too). This has a manifest external contradiction with Pakistan and Bangladesh. China does not have such major external contradiction unless there occurs a clash with the U.S. on access to world resources.

    • Pleased note that you have liked the post,Thanks.
      Focus of this blog is mainly economy, business, strategy, & Quality


I will be pleased to hear your views

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: