China’s current economic crisis has worried the world. Since 1990, China had climbed the economic ladder like a miracle. China is now the second biggest economy after the USA . The white men of the world always criticized the “ yellow race”. But the rise of China has frightened them .India is China’s closest neighbor and India has had a very bad relationship since 1958 with China. The rise of China has intimidated India. Every comparison of India with China has been un-flattering .
China has a civilization of 5000 years old like India. If India discovered the “Zero” in mathematics and was advanced in astronomy , China invented the wheel and many other things thousands of years ago .The wheel changed mankind. Imagine the 5000 mile Great Wall of China which was started 2000 years ago. It is an architectural marvel. In India, today, we are struggling to build a good fence around India’s borders . The Chinese built the Great wall in areas like our Himalayas . China calls itself the “ Middle Kingdom “, meaning that it is the center of the world.
Emperors of China were surrounded by the best advisers . So clever were the advisers that when an Emperor died, they never allowed news of the death to come out till a new Emperor had settled in. 2500 years ago, the heavens gave China the great gift of the most brilliant philosopher and sage “ Confucius “. Confucius even today determines how Chinese behave and how China’s government works.
When Confucius was the big brain of China, our Chanakya was living in India at nearly the same time. It was strange how the most brilliant Chinese Confucius and the brilliant Indian Chanakya were living just about the same time . There are so many common things and yet we have a Love-Hate relationship.
China’s economy :
China produces 850 million tons of steel and India produces only 80 million tons of steel per year. China has 5 times the power production capacity of India. In the years 2011 and 2012, China produced more cement than the United States did in the entire 20th century ( 1900 to 2000). That is how big China has become in the world.
China is India’s biggest trading partner. India imports per year 65 Billion US dollars and export about only 16 Billion dollars to China. But beyond economics , China has been damaging India for the last 60 years. The war of 1962 has done great damage to India.
India was humiliated before the entire world. Our small neighbors took great pleasure in India’s humiliation . China started supporting any enemy of India with Chanakya’s idea : “ An enemy’s enemy is a friend “. China supported Pakistan , Nepal, Sri Lanka and Bangladesh at various times to harass India. It was China which helped Pakistan develop nuclear weapons, whose only enemy is India. .
Our entire foreign policy was crafted keeping China in mind . If China did not support Pakistan , then India would have had an easy time. China helped Pakistan build airports , ports and gave immense support to Pakistan military and Pakistan has only one enemy and hence China knowingly uses Pakistan to harass India. China frequently declares that “ friendship with Pakistan is higher than the Himalayas and deeper than the Indian Ocean “.
China also announced major economic programs connecting Pakistan to China by roads and railways and building entire infra-structure in Pakistan. China also announced the Maritime Silk Route, whereby China would link countries like Sri Lanka, Maldives and Mauritius through ports and shipping. These are countries with which India has close links. This is a direct threat to India.China also built an artificial island near the Philippines. It was the first time that any country built an artificial island to lay claim to land . This is a clear warning to India that other countries like Indonesia can lay claim to Andaman islands.
The Chinese are an ancient and great civilization. Their wisdom comes from centuries of knowledge . China knows the power of propaganda and hence always projects power and wealth and to overawe its rivals. China has been one country for over 2000 years while India has been many kingdoms. The Chinese people are also largely of the same race without divisions of caste, language and religion unlike India.
How India is helped if China’s economy declines:
a. The price of oil , coal and other minerals like copper and zinc has come down only because the Chinese economy has slowed down. China bought most of the world’s oil and minerals and now they are buying much less. That is why the oil market collapsed. India has thus benefited greatly since India imports nearly 80% of its oil and important minerals. A slow Chinese economy benefits India.
b. The decline in Chinese economy has also caused its stock-market to collapse. To counter this recession, China devalued its currency for the first time in 25 years. This will make its exports cheaper . India gains since it imports 65 Billion US dollars worth of goods from China every year. Imagine that the price of Chinese steel and cement is 25% less than before. India would gain greatly since its construction costs would come down by 25% .
c. China will now have less money than before to encourage India’s enemies and neighbors. Aggressive programs like the Silk Route and Maritime Silk Route and overseas investments by China will come down severely. China signed huge deals last year with Russia to buy oil and gas. But now China has stopped such deals and Russia is upset. Many countries will now distance themselves from China .
d. China is very aggressive towards other countries and had a dispute with every neighbor. Other than India, China had problems with Vietnam, Philippines, Thailand, Japan and Korea. China will not fight on many fronts now if its economy is weak.
e. If China’s economy declines , then India will attract more foreign investment . Nearly 300 billion dollars has fled China. Some of this capital will be invested in India. Many Chinese companies are also setting up base in India. The best example is FOXXCOON, which is building 10 factories in India to employ at least 2 lakh people directly . FOXXCONN is the main producer of Apple phones and IPads. India will get such immediate benefits.
The great British Prime Minister Lord Palmerstone said 200 years ago : ” Nations do not have permanent friends. Only permanent interests “. He meant friendships between countries are very temporary . China will have less influence and friends now at least for some time.
America and Europe are very happy that the Chinese economy has declined . Their currencies have become stronger as Chinese currency has become weaker. USA and Europe do not want a Chinese collapse. But they want a more controlled China. Everyone would like to see their neighbor become a little poorer.
India does not gain if China collapses totally. But India gains if the Chinese economy slows down. Till now, the world thought that Chinese leaders were supermen and knew every trick. But the way the Chinese stock market collapsed, the world feels that worse is yet to come and China does not know what to do. The response of China to this crisis has been brave words and using its foreign exchange stock. But that cannot go on forever. There is immense corruption in China and its leaders are unable t o control it.
The Chinese leaders are nervous about the decline in its economy. There is an un-written agreement between the Chinese government and its people. The agreement is that “ Less democracy and more economic progress”. . Now if the Chinese government cannot deliver a growing economy, then there will be immense instability in China and it fears rebellions in Tibet and Western Muslim China.
We cannot predict how the Chinese will now manage their economy. If it declines further, then China will face serious problems . Even if it recovers, it will take years for the damage to be repaired. There has been a great psychological damage . The shock benefits India in the short and long term . We should not openly wish our neighbors bad luck. But who can resist a smile when a rich rival becomes poorer ?
One lesson for India is that Chinese troubles are due to its over-investment in infra-structure. There are hundreds of airports without planes, thousands of miles of new railway track without trains and new highways without cars. Bridges have been built where there are no rivers.
Indian politicians should note that excessive infra-structure has nearly destroyed China. In fact, even China’s friends are happy that China has been damaged. You see, “ the dog usually bites the hand that feeds it “.