India China Paradox

, Sheila Archambault, Leave a comment

The main question should not be if India will economically catch up with China but if India should try to catch up with China, said a scholar at a Heritage Foundation event discussing India and China’s future and current position in the international political economy.

Some leaders in India argue that India and China are different countries, with distinct cultures and histories, so India should feel no obligation to try to catch up with China, but instead, India should develop at its own pace and in its own way, said Raja Mohan, the Henry Alfred Kissinger scholar at the John W. Kluge Center in the Library of Congress.

The tradition of India’s political culture is not about hegemony, so India should not feel obliged to try to become the next hegemony, he added.

At the same time, “there is a lot to be learned from China, and China has a lot to learn from India,” said Mohan Guruswamy, the author of the book, Chasing the Dragon: Will India Catch Up With China? and the chairman of the Centre for Policy Alternatives in New Delhi, India.

“We (India) don’t have to learn politics from the Chinese,” but India needs to learn more about economics and industry from the Chinese, Guruswamy said.

“Last year foreign direct investment in India was $40 billion … we have never seen such kinds of flows coming into India,” and that makes the country hopeful, he said.

“If your own people have confidence in your system, then you will grow faster,” Guruswamy said. If India continues on the same course, the country could surpass China in 2027, but whether India decides to stay on the same course or can stay on the same course is another story, he added.

“There is hope for India if politicians don’t mess up,” Guruswamy said.

The central issue for India is not China, Mohan said, but instead, India should be more concerned with “gaining a better understanding about ourselves” and India’s domestic issues.

Derek Scissors, a research fellow in Asia economics at the Heritage Foundation, said he doubts both “the desirability and the capacity of India to follow the Chinese (economic development) path.”

For one thing, there is not a Chinese path, Scissors said. “Chinese development strategy in the 80s was a rural orientated strategy, and the development strategy in the 90s was an urban orientated strategy … the last decade the state has displaced the market.”

When talking about the Chinese path, it is “zigzagging all over the place,” which does not seem to be ideal, he added.

Scissors said he agrees with Guruswamy’s book that India must try to move from agriculture into industry, because services in India cannot absorb all the people in Indian agriculture, so industrialization must occur.

But, Scissors said, India should not try to match the extent of Chinese movement into industry.

Scissors said, there is a claim at the beginning of Guruswamy’s book and in the press that “China contributes greatly to global GDP growth,” which is technically false.

“China does not contribute anything to global GDP growth, China takes away from global GDP growth,” Scissors said.

GDP involves trade surplus, and China runs a trade surplus that takes wealth out of the global economy—trade deficit puts wealth into the global economy, he added.

“If India were to follow China in its path, which is not adding to global GDP growth but actually extracting global GDP growth, that would not be sustainable for the global economic system” and the international trading system would fall apart, he said.

“GDP is not a great measure of global economy,” Scissors said. Instead India should focus on living standards, and “India could surpass China in living standards” not by following the Chinese path but by following its own path.

Sheila Archambault is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.

 

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