India will lose geopolitical battles against China with a weak economy

China's GDP in 2003 was $1.4 trillion. Its about $9 trillion now. China's new leader Xi Jinping signed fresh deals to import modern jets, submarines and other deals flashing its $3 Trillion of forex reserves. The Chinese have been aggressive in their diplomatic efforts across the globe which is backed by the confidence they have in their economy. Compare this with that of Indian foreign policy which has faltered with tiny states in its neighborhood, be it Maldives, Nepal, Bangladesh ,Myanmar or Sri Lanka. In all these countries, India faces only one factor, China. The same holds good for the South East Asian Countries and Africa where the scramble to gather resources is well and truly on. India so far has only its "soft power" to show for but no concrete policy or the money spent to carry any influence with these countries.

Let us first consider the sub continent which is our backyard. China has made heavy inroads in all these countries developing roads, ports, railways and also providing weapons. China has made a new road named friendship road from Tibet to Nepal which undermines India's security. China has made roads, ports and railways in Bangladesh, Sri Lanka, Myanmar. It has invested in the Maldives. China has a head start in the oil and gas resources in Myanmar and set up a surveillance system on the Coco islands that can track India missile tests. No surprises then when China claimed that the Agni V missile had a much longer range than the 5500 kms claimed by India.



Let us consider trade relations with each of the SAARC countries with China and compare it with India.

1) Sri Lanka

The total bi-lateral trade value between Sri Lanka and China topped US $ 3.2 billion, which is the highest in the history. Sri Lanka’s exports to china have increased by 5.9% to $ 162 million in 2012 in comparison to 2011. China’s exports to Sri Lanka reached over US$ 3 billion in 2012.

Investments from China to Sri Lanka were likely to increase this year as against US $ 243 million recorded in 2012. The cooperation in the infrastructure sector also made great strides. Major projects, like Mattala Rajapaksa International Airport in Hambantota, Putlam Power Plant, Colombo-Katunayake Expressway, Colombo Lotus Tower, South Container Terminal of Colombo Port, Extension Lines of South Highway from Pinnaduwa to Godagama and the railway from Matara to Beliatta and some road construction projects like, A9 to Jaffna were all working well.

Compare this with India which has $4 Billion trade and does have other projects, but many of them have been half cocked and plagued with trouble due to the Tamil issue which has not allowed India to fully realize the potential with Sri Lanka. Sri Lanka has come up with many incentives for investment in their county so much so that an official in China said that Sri Lanka was the best investment destination in South Asia and even better than ASEAN!

2) Bangladesh

Bangladesh represents one country which has dramatically fallen out from India's grasp as far as trade goes. China's trade though heavily lopsided in its favor now stands at $7 billion a year while India stands at just $2.5 billion again with trade completely in Indias favor. Almost all of Chinas exports to Bangladesh have come at India's expense which traditionally exported all such items like textiles, machinery etc to Bangladesh. China has been aggressively wooing Bangladesh providing it space for exhibitions in trade fairs. Bangladesh has offered to China a duty free zone to relocate some of its industries that face competition issues due to rising labor prices in China.

3) Nepal

Chinas trade with Nepal stands at $2 billion which is again heavily in its favor. This represents a huge jump in trade between the two countries although India still remains the largest trading partner of Nepal at $4 billion. China has been wooing Nepal aggressively, It has made land ports to facilitate trade between the two countries and China is investing in infrastructure development in Nepal.

4) Maldives

Maldives has been firmly on the Chinese horizon in recent times. Although India has always been the largest trading partner, China has now the same trade figures as India at about $70 million. More importantly, Chinese tourists now constitute the largest group in Maldives. China has also extended big loans to Maldives. India has done the same but the recent change in the government and the coming in of the Islamist government there has seen India's influence wane in the country.


Looking at the African stage, China has aggressively expanded its influence in the dark continent. Today China has displaced the US and Europe in Africa to become the continents largest trading partner at near $200 billion. The balance of trade is equal as China has heavily invested in the natural resources in Africa and imports oil, copper and other raw materials to feed its huge manufacturing base. There is a Chinese diaspora in Africa which takes care of Chinese investments which includes roads, ports, dams, railways and more recently, manufacturing units which have Chinese managers with African labor. Compare this with Indo-African trade at about $75 billion though India has had historic and traditional ties with the continent and the presence of large Indian origin population in the continent.

South East Asia too shows that China leads India by a long way. China is ASEANs largest trading partner. Trade between the two stands at over $400 billion. Compare this with India' trade of $80 billion. Both India and China now have a free trade agreement with ASEAN but while China's trade has been growing dramatically, India has been quite slow.

From all this, the most common factor is that China runs large trade surplus with each of these countries being largely an export driven economy. The other fact is that the rate of increase of trade is also very high at over 20% generally to over 35% with countries like those of ASEAN. This has allowed it to run up large forex reserves which it is using all over the world in key strategic areas to expand its influence for both trade as well as military and strategic objectives. China has used its large surplus to develop infrastructure in Africa, South Asia and the poorer countries of ASEAN. Contrast this with India which is a net importer and India's $300 billion reserve is not good enough for it to buy influence all over. Add to this India has some issue or the other with its neighbors. These neighbors have now realized that they can play the China card in its relations with India and China has obliged these countries readily and expanded its influence in the region which is of great importance to it for both its energy security as well as trade it ships its goods to Middle East, Europe and Africa.

India has been trying to increase its influence in the South East Asia where many of the countries in the region have territorial disputes with China. But even then, China's trade and investment in these countries far out strips India. With Vietnam, China has a trade of $7 billion while India has $4 billion. China is heavily investing in Cambodia and Laos.

Even after India started economic reforms, it has progressed slowly. Lots of hurdles to trade and investments and regulations has meant that its not easy to do business in India. This has held back faster economic growth in India. China has relentlessly marched on it its economic progress to become the second largest economy in the world and on course to be the largest by the end of the decade. Chinese leaders have shown single minded focus of fast economic growth while Indian leaders lack any foresight or vision to develop the country and are often seen come out with populist, unsound and unwise policies to meet those populist schemes. India herself lacks world class infrastructure and the expertise for it to build infrastructure abroad. Even if India does undertake projects abroad, they are slow to complete. China on the other hand has built world class infrastructure in its own country and has the expertise to execute major projects world over and dwarfs the rest of the wold in infrastructure development. China's willingness to do business with rouge regimes, gives it a major advantage. Just like how the west found it easier to work with dictators while preaching democracy everywhere. Hard cash,weapons for rouge regimes or massive loans and infrastructure development for poor countries is too much for any of such nations to refuse practically.

For India to succeed diplomatically and in geopolitics it is imperative that it grows economically and very rapidly at that. Right now China outspends India in every sphere to "buy" influence which in many cases is detrimental to Indian national security but there is nothing that India can do about it unless it can match China dollar for dollar. India's "good image" will then be an advantage to compete with China.
 

Comments

In fact, I really look forward to the Philippines modernizing their forces and targeting the rogue fishing boats that are occupying your islands. Something tells me that drones armed with guided missiles would do a better job at scaring these warmongers away.
What make you think that Philipines air force or navy can't sink those Chinese fishing boats NOW?

They just simply can't deal with those Chinese warships and fighter jets behind. Modernizing their forces won't help at all.
 
There are two things India can do in supplement to attracting all types of manufacturing, especially the low-end that are in high demand across the world; reform your labor laws to curtail socialistic BS, and appreciate power and displaying it send a clear cut message, India, a nuke power is not playing games anymore.

If you look at the Chinese mindset, that is governed by history, that in-turn includes multiple variable and geography being one, the communist Chinese mind has a security dilemma. Chinese borders do not have natural barriers and it is this reality that has communist China play the covert games of disruption and ideological change in social structures of the enemy states. In the end, it means that communist China will back down when push comes to shove and play the moral victory card. They cannot stomach a large scale conflict.

My opinion is based on the Chinese history of invasions and the geopolitical policies and incidents, post communist takeover.
 
The other problem I see is the Amitab Bachan-Laawaris syndrome that is pushed by the communists in India. Socialism as it is today in India, simply communism, needs to end. This is the biggest hurdle in India's progress. I have faith in Indians that they will see this through.
The exact cause of the sluggish Indian economic activity. India should learn from Sri Lanka atleast how dangerous it is to continue with socialist policies.
 
There are two things India can do in supplement to attracting all types of manufacturing, especially the low-end that are in high demand across the world; reform your labor laws to curtail socialistic BS, and appreciate power and displaying it send a clear cut message, India, a nuke power is not playing games anymore.

If you look at the Chinese mindset, that is governed by history, that in-turn includes multiple variable and geography being one, the communist Chinese mind has a security dilemma. Chinese borders do not have natural barriers and it is this reality that has communist China play the covert games of disruption and ideological change in social structures of the enemy states. In the end, it means that communist China will back down when push comes to shove and play the moral victory card. They cannot stomach a large scale conflict.

My opinion is based on the Chinese history of invasions and the geopolitical policies and incidents, post communist takeover.
If you can achieve 9% growth without being a Communist dictator then it is better to be democracy. The Chinese achieved nothing from 1948 till 1984; just marginal development. The real development began when American $2 trillion dollars arrived in China and for them the sight of money meant loosen up communist control on economy.

My point if $2 trillion dollars is promised to India and unrestricted American markets are opened to India, then all reforms will materialize in a year.
 
If you can achieve 9% growth without being a Communist dictator then it is better to be democracy. The Chinese achieved nothing from 1948 till 1984; just marginal development. The real development began when American $2 trillion dollars arrived in China and for them the sight of money meant loosen up communist control on economy.

My point if $2 trillion dollars is promised to India and unrestricted American markets are opened to India, then all reforms will materialize in a year.
Indians are too headstrong to work with the Americans. Whereas the Chinese just demeaned their past and looked forward. I don't think that India would go anywhere with the "the Glorious past" mentality.
 
If you can achieve 9% growth without being a Communist dictator then it is better to be democracy. The Chinese achieved nothing from 1948 till 1984; just marginal development. The real development began when American $2 trillion dollars arrived in China and for them the sight of money meant loosen up communist control on economy.

My point if $2 trillion dollars is promised to India and unrestricted American markets are opened to India, then all reforms will materialize in a year.
There are still a lot of markets where we can expand but are not expanding. With basic knowledge about economics and trade, I can pull out 10 active tenders for supply of heavy engineering assets that Indian PSUs can make for foreign countries to earn foreign revenue; and these are from developing countries that have secured international loans. Look at how many other countries get contracts to make assets like airports, dams and railways in smaller economies like Nepal, Laos, Cambodia, Thailand, Brunei, Djibouti, Burundi, Malawi, Mozambique, Peru, Ecuador, Panama, Nicaragua, Barbados, Jamaica, Honduras, Bolivia, Paraguay, Suriname, Namibia, Kenya, Ghana, Algeria, Morocco, Sudan, South Sudan, South Africa, Botswana, Chad, Zimbabwe, Egypt, Tunisia, Tanzania, Madagascar. Fiji, etc.

These countries don't ask for high-tech equipment like the Shinkansen or modern aircraft; they as for things like buses, railway coaches, rail infrastructure, cement plants, coal-fired power plants, brick-making factories, bridges, civilian ferries, etc., copper plants, etc. All these things are made by India and we can easily defeat much more expensive West and even Chinese in tendering. Yet, we don't even participate. Our focus is too internal when it comes to economic opportunities, which is why we are not able to earn foreign exchange from export of services, construction activities and fundamental infrastructure activities that we can easily make.

Are you telling me that these countries that I mentioned along with several others of their counterparts, cannot generate us at least $200-300 billion of more exports every year? Impossible!

People talk about Chinese growth but do not see what they did in developing countries before becoming the debt colonizer that it is today. Chinese construction exports and infrastructure activities are happening in LATAM, Africa and Southeast Asia since the late 80s. They started somewhere which is why Shanghai Electric today is known better than ECIL (India) Ltd. in these countries.

If Coal India, Integrated Coach Factory, HCL, ACC Cement, Birlas, L&T, NTPC, etc., push for more international contracts, we can make so much more money. Charging in $$ is any day better than earning in rupees. This is something Maharatna companies need to realize.



Basking in the glow of being near monopolies within Indian market is not going to get our country any serious growth. We have to look outwards if we have to expand. No country in the history of time has ever become a superpower by just looking within. And we are no exception.
 
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