Saturday, 30 October 2010

comparative advantage

Ask almost any European about the history of their continent, and they will at the very least be able to tell you about some of the past rivalries between countries. The one between England and France has been ongoing for centuries. However, ask those same Europeans about rivalries, past and present, in Asia, and you are likely to draw a blank. The more knowledgeable will cite the rivalry, which often borders on outright hostility, between India and Pakistan, or that between China and Japan, but few if any will point to the understated rivalry between China and India. The 1962 border war that the two countries fought, over territorial claims with their roots in incompetent British surveying of the region in the nineteenth century, is largely forgotten.

They will be aware that both populations are of a similar size: these are, by a long way, the two most populous countries on Earth. They will know that both nations have rapidly expanding economies; and, if they are really switched on, they will tell you that both are ‘emerging superpowers’. But their powers of comparison will end there.

That this rivalry exists I infer from my own observations, two of which I present here. First, Hindu nationalists frequently claim that the whole of Chinese culture derives ultimately from Indian culture and traditions. It is true that Buddhism was a significant cultural export to China, and how it originally arrived in the country is the subject of a major Chinese literary classic, Journey to the West, but overall this claim is too obviously ridiculous to require further comment. And it is worth mentioning that Buddhism is now almost nonexistent in India, while, in typically Chinese fashion, this philosophy masquerading as a religion quickly acquired a local flavour in the form of Ch’an (Zen) Buddhism. And it should not be forgotten that Chinese ships visited India during the Han Dynasty, not vice versa.

Second, a few years ago I edited The Routledge Encyclopaedia of Eastern Philosophy, and I was amused to discover that several Chinese contributors referred to “the Chinese subcontinent”. If India is a subcontinent, the reasoning appeared to be, then surely China is too. An ex-geologist wasn’t going to let them get away with that.

However, the most interesting aspect of this rivalry is the way it pits ‘the world’s largest democracy’, with its fractious cliques vying for power, against a regime that is widely regarded as totalitarian, where dissent is not tolerated. And the question that this begs is which of the two will ascend to global hegemony in the twenty-first century as the United States inevitably declines. Or will each act as a counterbalance to the other?

Anyone who has played the proprietary board game Risk will be able to predict the likely outcome. This game quickly reaches a point where there are only three players, and at this point the two weaker players gang up on the strongest. And the US strategic alliance with India follows this pattern. However, in the game the strongest player quickly loses their superiority, at which point they join the weakest player against the new strongest player. So alliances are fluid and subject to change at very short notice, with each player having as their ultimate objective the utter defeat of the other two. Such cynicism is a factor in the alliance between India and the United States, although ‘defeat’ in the twenty-first century will be measured in economic rather than military terms.

Before moving on to a detailed comparison of the strengths and weaknesses of India and China, it may be instructive to examine how each country dealt with the irritation of a Portuguese enclave on its soil (both had been established in the early sixteenth century). Following demands that Portugal surrender Goa, which were rejected, the Indian army simply marched in and unilaterally annexed the enclave in 1961. Meanwhile, as it had done with Hong Kong, China negotiated a friendly handover of sovereignty regarding Macau.

The way in which China arranged the return of its territory reflects the legalistic Chinese mind and is straight out of the Sun Tzu playbook (The Art of War). By contrast, the way in which India reclaimed Goa probably had much to do with the entire country having been under colonial subjugation until quite recently, and the problem was tackled in the way it was for reasons of national pride. As a postscript, Goa is now the richest Indian state, although this may be a reflection of the reason for its seizure by the Portuguese in the first place. It is unlikely to be based on any legacy bequeathed by these former colonial masters, if Macau is anything to go by. It was allowed to develop as a seedy little town that relied on gambling for almost its entire income. And lax governance before the handover of sovereignty in 1999, in an echo of the control once exerted by the mafia in Las Vegas, allowed the casinos to be run (discreetly) by triad societies, and gang-related violence was commonplace. Unsurprisingly, this is now far less prevalent under Chinese rule.

Another point that suggests a fundamental difference between the two countries can be gleaned from the most recent ‘rich list’ published by Forbes magazine. There are two Indians in the top five, and a further six in the top hundred. There are no mainland Chinese in that hundred, although there are three Hong Kong Chinese. However, Hong Kong has always been a separate economic entity, and this has not changed since the resumption of Chinese sovereignty, so the contrast remains valid. Given that the Chinese economy is more than 2.5 times the size of the Indian, then inequality of wealth distribution is clearly more extreme in the latter. This seems to me to be a serious long-term disadvantage.

A third point of difference is how the two countries have dealt with local foreign invaders in the past. The Mongol and Manchu invaders of China were eventually assimilated, becoming culturally if not ethnically Chinese, but the Mughals, descendants of the Mongol Timur Lang (Tamerlane), brought their own culture with them, and it is usually Mughal architecture such as the Taj Mahal that is thought of as quintessentially Indian. They also brought a new religion (Islam), always a bad move, in this case because it created a tension between indigenous Hindus and the Muslim newcomers that persists to this day. Although tensions have eased in recent decades, there are still sporadic outbreaks of inter-religious violence, the most recent major incident being in Gujarat in 2002.

This introduces the most significant difference between the two countries, which lies not in their systems of governance but in their levels of ethnic homogeneity. While India is a mosaic of different ethnic and religious groups, 98 percent of the Chinese population is Han Chinese. The relevance of this may not be obvious, but it must influence the ease with which it is possible to rouse nationalistic fervour: a large homogeneous population is more easily persuaded of a course of action because there are no competing loyalties; a heterogeneous population requires that compromises be made. However, whether this turns out to be a handicap depends on global events and trends in the next few decades: compromise can be a valuable tool in turbulent times.

India has the added disadvantage of its caste system: I assume that the situation has ameliorated in recent decades, but it cannot be a good idea to stifle talent at the low end of the social scale while promoting those with little or nothing to offer the wider community simply because of the family they were born into. There are echoes of the English class system here, although caste does seem to be a more pernicious discriminator. Of course, China does have its ethnic tensions, notably with its reluctant Tibetan citizens and with the Uighurs of Xinjiang, but these are peripheral areas that are not part of the Chinese heartland, and events in either place are unlikely to have a strategic impact on the rest of the country.

Having mentioned Risk earlier, it is appropriate that I point out two other board games that frame the most intriguing of all the contrasts between the countries: shaturanga and wei ch’i. The ancient Indian game of shaturanga is generally regarded as the forerunner of modern chess, while the Chinese game wei ch’i is now more widely played in Japan and is better known in the West as ‘go’. And while it is accurate to label chess a battle, go is a war and as such requires acute strategic vision in addition to tactical nous. It is in keeping with how the Chinese tackle any situation: they always play a long game, which is important to bear in mind when attempting to predict the aims, ambitions and future behaviour of their country. Chess, on the other hand, is a game with more short-term, limited objectives: as Francisco Pizarro discovered during his brutal conquest of the Inca empire in 1532, capture the leader and the game is won. There are no leaders in wei ch’i, making it impossible to achieve victory with a single stroke.

It is important to bear in mind that the Chinese have never, in their long history, had a say in the choice of their leader. In fact, it’s possible that, excluding a few much-publicized dissidents, they don’t even want such a choice: I recall a late-night conversation with a group of Chinese friends in which the consensus was that what the Chinese needed was another emperor! Indeed, it is likely that such an arrangement, with its roots in Confucian philosophy, is one reason for the ease with which the Chinese government has been able to secure the acquiescence of its population. They have an emperor, Hu Jintao, complete with his grand vizier, Wen Jiabao. But what sets this pair apart from the emperors of old is that in 2012 they will disappear from the scene. And I really do mean disappear. The era of the ‘paramount leader’ (Deng Xiaoping, who retained this pompous title even on his deathbed) is over. Jiang Zemin was a self-important imitation of his mentor Deng, but the blueprint for future leaders seems far more likely to be ex-prime minister Zhu Rongji, who retired in 2002 and promptly vanished from the radar. The West could learn a thing or two from this philosophy.

Meanwhile, although India is proud of its democratic traditions, this does come with disadvantages: the short-termism that is built into the capitalist system has repercussions, especially with respect to the speed and efficiency with which major infrastructure developments are planned and built. However, India has two significant advantages: it has a large pool of people who are completely fluent in English, which is likely to remain the world’s lingua franca for the foreseeable future; and it is a world leader in information and communications technology (ICT). Unsurprisingly, though, the Chinese are aware that this is the case and are already taking steps to remedy the situation. It is impossible to ride the Beijing subway, as an obvious foreigner, without someone coming up to you to practise their English. And thousands of Indian ICT professionals are currently working in China—teaching the locals the tricks of the trade. I’m irresistibly reminded of Lenin’s famous quote about the capitalist selling you the rope with which you eventually hang him.

In fact, India has earmarked US$3.4 trillion for infrastructure projects over the next five years, but this is dwarfed by what is happening in China, which inter alia is in the process of building a countrywide high-speed rail network at a speed that is little short of astounding. China already has the longest such network in the world, but within the next two or three years its network will be longer than that of the rest of the world combined. Budgets, naturally, are not disclosed, but one can assume that China can afford it, given its massive trade surplus.

Ironically, Hong Kong will be almost the last major Chinese city to be connected to the network. It is scheduled to be online by 2016, part of the delay being the result of widespread nimbyism in the territory and claims for compensation by those affected. Neither is a problem in the rest of China, for obvious reasons.

Short-termism is not a problem in China either. Take a look at the country’s activities in Africa: securing resources, certainly, but also buying influence. Cash in the bank a couple of decades down the line. This is what most alarms the West, because unlike the way European colonists ravaged and plundered the continent in the nineteenth century and gave nothing in return, China is giving something in return for what it takes out, notably in the form of major construction projects. The shadow of colonialism still hovers over Africa, and with this in mind it is not difficult to predict the direction in which most African countries will lean if it ever becomes necessary to take sides.

So, what is China’s global strategy? Its leaders are surely aware that the country will become top dog in the international hierarchy by mid-century, and I’m sure that every one of them has read The Art of War. It should be required reading in every seat of political power from the White House to the Kremlin. However, the one mistake we should not make is to draw global conclusions from its relations with its immediate neighbours. The spat with Japan over the Diaoyu Islands should be seen as a renewal of the age-old hostility between these two countries, dangerous possibly, but not part of a larger plan by China, except perhaps to put pressure on Taiwan (the islands are closer to Taiwan, which has its own claim to these barren rocks, than they are to the mainland).

Chinese territorial claims in the South China Sea are more sinister. To make it clear how outrageous these claims are, I’ve included a map:

It can be seen at a glance that these claims are utterly without merit: most of the area claimed by China is closer to at least two other countries, and most of the southern half of the area claimed is closer to no less than five. However, unless you happen to live in the region, there should be no grounds for concern. The frontiers of the Chinese empire have ebbed and flowed over the centuries in time with the strength or weakness of the centre. But Chinese muscle flexing, because that is what it is, begs a wider question: why play the bully? You can be sure that there is a reason, but it’s the long game again. As is the highway that will one day connect India and China. China has already driven a major road through Tibet and into Nepal, which could be interesting: a poor Hindu country, nominally a cultural client of India, may well believe that its future prosperity lies to the east, which will offer more reliable transportation of goods and people to and from the outside world.

And as that highway edges closer to the Indian border, I leave you with one final image: a few years ago, the BBC’s satirical show Have I Got News for You featured an opening animation sequence that included a train à grande vitesse screaming across the French countryside and entering the Channel Tunnel, only to emerge on the English side as a rattling suburban boneshaker that would not have looked out of place in a provincial railway museum.


  1. Wow!
    That was extremely interesting Dennis. Very good reading and excellent writing. Do you ever submit your articles to magazines for publication? I would think it would be picked up in a heartbeat...

  2. Excellent.
    Thank you for putting your time, and effort into this piece.
    The thirst, and pursuit of energy will dictate their and our future.

  3. To answer your question Pat, I do have a long-term aim of publishing my better work, although I've not taken any concrete steps in this direction to date. Any suggestions for possible outlets would of course be welcome.

  4. It took me a while to get through the piece but it was well worth it and rewarding. I have to admit, my knowledge of the history of China and India is rather piecemeal and episodic. This really tied the past and the future together for me.

    I have been learning a lot about Thailand thanks to my two nephews who have been very involved in Thai culture for years.

  5. Very well-founded observations, Dennis. I believe you may be right in the notion that Western-style democracy will not work in China, simply because there are no cultural, sociological or institutional roots to support such an undertaking. I also believe you are right in observing China's long-term strategy of slowly but surely edging its way to the world's next superpower, both economically and and technologically.

  6. You mentioned above that you're aiming to publish.

    Please do! And let us know where to buy it.

    This was one of the best articles I've read on the subject. Clear, concise, and with a journalistic birds eye view and distance that is rare to the point of extinction these days.

  7. India and China are the perfect partners, If they wanted to be.

    India has heart, passion and amazing customer service.

    China are organised and mass produce products to a high spec.

    Perhaps if they held hands they could take over the world...

  8. Lol, I think India still harbours some resentment over 1962. My dad certainly does, anyway.

  9. A fascinating and highly informative essay, Dennis; thanks so much for drawing my intention to. There is a small point of historical information that I touched on in one of my blogs last year about Ghandi – I’m not an admirer – and Indian nationalism during the Second World War, concerning the peculiar blindness over the malign nature of Japanese imperialism, particularly in relation to China. The Indians seemed to ignore what was happening in China from 1931. So, when the Japanese appeared on their doorstep they, in their fight against rather mild British imperialism, dying by degrees, prepared to welcome them in, either as a result of Ghandi’s Quit India campaign, or more directly by organising an army to fight on their behalf, the strategy of Subhas Chandra Bose.

  10. An interesting point about Japanese imperialism Anastasia. As I pointed out in The Fat Man Cometh, Japanese imperialism is also ultimately responsible for the situation on the Korean peninsula.

    Another point, which I wasn't aware of when I wrote this essay, is that China has started to build dams on the headwaters of the Brahmaputra and other rivers. Another case of India shooting itself in the foot: India has recognized China's claim to Tibet (which I don't), thus making it difficult to complain about what's happening on the other side of the border.


Please leave a comment if you have time, even if you disagree with the opinions expressed in this post, although you must expect a robust defence of those opinions.