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Crouching Dragon, Hidden Tiger
Taiwan is remote from Indian concerns. Yet one of the most salient issues in elections held a couple of weeks ago in this island nation of 23 million - one of the original Asian tigers whose per capita income, adjusted for purchasing power, now exceeds Japan's - has clear resonance for India. It's how to cope with a rising China.
A growing China clearly represents an opportunity for Taiwan's export-led economy at a time when western markets have stalled. Taiwanese businessmen encounter few linguistic or cultural differences when they venture to the mainland. Coming in the way of fraternal feeling, however, are an esti-mated 1,200-2,000 missiles positioned by China across the Taiwan strait, threatening the island.
President Ma Ying-jeou and his ruling Kuomintang Party see mostly the opportunity side of the equation. That led him to lift a half-century-old ban on contact with the mainland in his last term. From no direct flights till December 2008, there are now about 530 flights a week between the island and the mainland, while Chinese tourists throng Taipei 101. The two sides also signed a quasi-free trade deal in 2010 - causing trade between them to reach a whopping $150 billion.
The opposition Democratic Progressive Party, on the other hand, emphasises the threat side of the equation with China. Nevertheless, Ma may have placed his bets right, as galloping trade with China prevented Taiwan's globalised economy from suffering too much from the worldwide financial crisis. And voters just rewarded him for it by handing him a second term and his party a dominant legislative position.
The opportunity/threat matrix that China presents to Taiwan mirrors in many ways China's complex foreign policy challenge for India. China helped set up Pakistan's nuclear arsenal by transferring nuclear and missile technology and equipment. It isn't too keen to settle the border dispute with India - thus keeping open the prospect of a border war and forcing high military costs on India. It also needles India diplomatically through moves such as stapling visas or blocking India at global forums.
Yet China is one of India's biggest trading partners and the vastness of its markets spells opportunity. From the point of view of New Delhi's 'Look East' strategy, this is where Taiwan could come in. It's a friendly country that can not only help India fulfil some of its domestic economic objectives, but also strategic goals vis-a-vis China.
Taiwan is bulging with investible foreign exchange reserves - the fourth highest in the world. It has proven expertise in areas such as electronics hardware manufacturing, building infrastructure and enhancing agricultural productivity. New Delhi could sign a free trade deal with Taipei and invite it to help set up an industrial corridor between, say, Delhi and Kolkata (just as the Japanese are facilitating the Delhi-Mumbai industrial corridor). Such economic partnership would eminently suit the Taiwanese, as they would like to diversify and have a stake in all of Asia's growth poles instead of placing all their eggs in the Chinese basket. It would also enhance growth and jobs in India. If, for example, India used Taiwanese help to boost its electronics hardware capabilities, that could mate existing strengths in software to make India one of the most competitive players in consumer electronics and computing.
One of the reasons New Delhi may fight shy of an enhanced relationship with Taiwan is fear of provoking China. But that approach is outmoded - if it was ever valid - given that Beijing itself is dramatically upgrading its relationship with Taipei. The other problem, however, is a subtle one. It has to do with cultural difference, which deters Taiwanese firms from investing in India. It`s worth keeping in mind here that unlike the chaebol-type conglomerates of Japan and South Korea, small and medium-sized businesses predomi-nate in the Taiwanese economy.
But then, it is imperative from India's point of view to break into the Sinosphere, which could soon be (or has already become) the second most important cultural zone after the Anglosphere. And here too, the Taiwanese can help. Why not make it attractive for Taiwanese teachers to teach Mandarin in Indian schools, colleges and universities, while sending Indian students to Taiwan to soak up Chinese culture?
Once such cultural expertise comes India's way, it could begin to crack one of its biggest problems with China - the vastly asymmetrical trade relationship. Not only are Chinese exports to India roughly double of Indian exports to China, India mostly exports raw materials to China and takes back manufactured goods. Unlike India, however, Taiwan usually notches up trade surpluses with China. Working with Taiwan, therefore, would help Indian businesses crack cultural codes and business practices on the mainland, and make a dent in the Chinese market for goods other than raw materials.
Stepping up links with Taiwan could also address the political asymmetry with China. If Chinese diplomacy rides roughshod on Indian concerns, New Delhi could retaliate with calibrated moves on Taiwan. Let's say Beijing blocks Asian Development Bank funding for projects in India's northeast, Prime Minister Manmohan Singh could announce an official trip to Taiwan. As for ministerial visits, they ought to be routine.
If India is finally looking east after decades of neglect, Taiwan shouldn't be so remote from its concerns after all. It's time to move towards a more robust partnership.
Crouching dragon, hidden tiger - The Times of India
