governance, political economy, institutional development and economic regulation

Invite the Dragon in

Indian trade diplomacy has an alarming tendency to score a self goal. Our approach to China is like that of a chimpanzee thumping its chest to imitate a gorilla. It is delusionary for India to think it can compete with China in what it is already an expert: the supply of manufacturers at affordable prices. China is unabashedly expansionist and we need to recognise that. The only way we can deal with that is by letting them exploit the Indian market in a graduated manner, rather than put up trade barriers against China as our Industry leaders would want us to do (there is a government committee apparently trying to establish that Chinese turbines supplied to India for powr generation are substandard).

Here is a counter strategy. Collaborate with China. In fact we hve no option if we are not to end up being a pawn, a “card” that the West uses to contain China. Do we really want to be in the same space as Pakistan? We live in a tough neighbourhood and it is always best to keep talking with our neighbours;  Bangladesh, Pakistan and Nepal but it is unlikely that any of these are near term prospects for shared tarde and investment led growth for India. In any case all of them already frolick in the Dragon’s lair and we don’t have the deep pockets to seduce them. Lets stop tring to use nepal as a pocket borough and encourage it become a neutral “Switzerland” instead, a conduit for overland trade. We are far too similar in South Asia and too politically volatile for generating growth from within the region. 
 
China has none of our problems of cultural heterogeneity and religious fault lines. It works to a plan which gets implemented and its pockets are a larger than ours by an order of magniture. It is already building road and rail infrastructure right up to our and Nepal’s borders. We should encourage them to extend this and link it with Indian highways and the rail network. Invite the Chinese into the Indian market. Security hawks will baulk at this suggestion. But think of it. This would quadruple the market for India and increase it by one third for China. Sino-Indian overland trade, investment, tourism, exchange of students and cultural links will be facilitated. We could buy into each others growth rather than beggar each other.
 
More importantly, a Sino-India (yes in that order) collaboration would work to India’s benefit in the same way as Canada and the UK benefit from being special friends of the US. I know this analogy will not go down well because our leaders like to be larger than life and reality we have all bought into this delusion. China rolls out infrastructure at a rapid pace. Why not seek its help in developing the 100-200 “maoist” districts of India? Who better than China to deal with our indigenous Naxalites? An additional benefit could be our indigenous communists may then be induced to come out of the woods and into the current century.
 
None of this will happen, however, because South and North Block egos will never let such collaboration fructify. Our politicians are led by the nose by the heady mix of our diplomatic, military, space and nuclear energy establishment. Not surprising since high technology (coexisting with brutal poverty) is the expected lay of the land when “Rabudom” rules (an unholy alliance of Rajas, Babudom and their bonded laborers) .
 
Visionary leadership is not about thumping hollow chests. It is about putting the citizens interests before the fiefdoms and egos of the “Policracy”. We should welcome Chinese murtis of “Ganesh”; cars. computers, ACs, cement, fertilizers, food, and flowers if they are supplied cheaper than our own products. Lets learn how to do business. We have an indigenous word for it….”Baniagari” currently used as a perjorative by our educated, mostly rentier, glitterati. This is the need of hour not the waving of the tricolour. Business sustainability is about having to compete so that business interests, investments and jobs get channeled to areas of comparative advantage. If we assure China of business we can be friends and benefit from it. If we follow the path of aggressive, public finance led competition or attempt to build a counter block of political support in South Asia, we will score a self goal. Lets choose wisely.

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