SEMINAR

ON

“INDIA AND CHINA GOOD NEIGHBOURS

AND GOOD COUNTERPARTS”

SUBMITED TO SUBMITED BY

PG DEPARTMENT SUKHCHAIN

OF COMMERCE CLASS : B.A.F. 1ST

ROLL NO. : 9007

TABLE OF CONTENTS

1. INTRODUCTION

2. RELATIONS BETWEEN INDIA AND CHINA

3. WAR BETWEEN INDIA AND CHINA

4. BORDER DEAL BETWEEN INDIA AND CHINA

5. REFERENCES

INTRODUCTION

While China and India’s average incomes remain low, their sustained economic growth of recent decades combined with their enormous populations (that each exceed the size of the OECD) has turned both countries into such large players that their economic scale is only exceeded by the United States, and possibly Japan. So though a large share of their populations remain poor, both China and India are already heavily integrated into the rest of the world’s trade and financial flows, making their current and future development impossible to ignore.

Most recently, as the developed world has slipped into a severe and prolonged recession – which many observers are calling a depression – China and India stand alone among major economies in registering positive growth, with the rest of the world’s economies hoping that these emerging giants will help to bring the rest of the world out of its deep morass. Nevertheless, these countries are fragile and are still in the midst of ongoing dramatic structural reforms, facilitated by their governments in some straightforward as well as peculiar ways.

Recently, the Chinese case has been cited as an example to the most developed countries of the potential virtues of a state-interventionist growth model to push through dramatic reforms, which could even be of use to market economies that are facing difficulty. Though there are many serious proponents of this view, and numerous lessons that can be learned from each country’s reform chronology, this line of argument may ignore the most important driving forces of each country’s development.

In the case of China and India, we have two contrasting views. According to the growth has occurred primarily in spite of the state, rather than because of it. Repeatedly, at the key inflection points in both economies’ recent growth trajectories, it was those reforms that reduced state intervention in key markets that created the opportunities that followed. In China, for instance, the disbanding of collective farms was an early and vital step, as was the decentralization of state control over business. In India, analogously, the removal of the licensing regime on business was a fundamental reform. This is not to say that the role of government was unimportant in either case. The gradual, yet decisive removal of many sorts of interventions and distortions across both economies is perhaps the most obvious similarity in their growth experiences. While the process was uneven and is still very much still ongoing, government decentralization allowed important reallocations to take place, putting resources into increasingly productive use, introducing growing international competition, and facilitating the productive human and physical capital investments that enabled growth to accelerate.

Although economic reforms in both countries were essential for the acceleration of economic growth, the role of the state has remained very important as regards the stabilization of the growth trajectory. In China the gradualist approach devised by the state has avoided the severe transitional crisis which struck the former Soviet Union and Eastern European countries in the early 1990s. The decision to avoid introducing a fully convertible currency and open the capital account sheltered China from the 1997 Asian Crisis and from

the full effect of the present crisis. In the Indian case, the manipulation of the value of the Indian currency and the remaining controls on capital movements have contributed to avoid part of the effects of the world financial turmoil. The step-by-step approach has proved to be a rather sensible policy. However, in both countries the action of the state in favour of the basic needs of the poorest part of the population has been manifestly too weak.

The examines a series of economic and human development indicators for evidence of the welfare and equity shifts in both economies’ growth performance. He finds that while both economies were at nearly the same position in terms of material well-being two decades ago, India was considerably behind in human development terms. And, despite solid economic performance for the Indian economy, China’s economic development index grew three times faster over the reform period. Nevertheless, India’s human development measures have grown more rapidly than China’s, thereby narrowing the gap in development quality. This is all the more impressive in light of the reduction in the regional polarization of these human development measures as well across Indian states.

The second contribution discusses the complexity of both economies’ economic transformations, and the feedback loops that have promoted the development and transformation of both economies (interpreting it through a fordian lens): by first increasing their scale, then their profits and investment, and finally facilitating various types of productivity-enhancing shifts. Evidence for these type of shifts is brought to bear, which seem likely to continue for some time, as the economies become increasingly integrated with the global economy.

Françoise Lemoine and Deniz Ünal, examines the nature of these economies’ growing trade integration with the rest of the world, and changing specialization. While China has become a major hub of the increasingly segmented global production process, India has become more specialized in certain niche service sectors, with a proportionately higher price-quality composition. Yet major challenges remain for both: for India to broaden the industrial base of its economy beyond its current services niche, and for China to adjust in light of the crisis to improve its terms of trade.

Deals with macroeconomic policies and the exchange rate regimes of both economies. It suggests that considerable distortions may have been created by the monetary interventions of authorities that have de facto pegged the exchange rates of both countries’ currencies, and thereby led to the accumulation of large quantities of reserves, feeding into imbalances in the global economy that may have even contributed to feed the current crisis.

However, the exchange rate policies of China and India may have favoured the export growth of both countries – albeit probably excessively in the case of China – and contributed to partially shelter them from the world financial crisis. The sharp fall of exports after the eruption of the real effects of the world crisis will probably induce both governments to try to focus more of their growth on the development of their internal markets.

Notes:

Heston, A. (2009), ‘What Can Be Learned About the Economies of China and India from Purchasing Power Comparisons?’, forthcoming in Emerging Giants: China and India in the World Economy.

RELATIONS BETWEEN INDIA AND CHINA

India and China are two big countries not only of Asia but also of the world. They are two neighbouring counties and both have also preserved their five thousand years old cultures. They are agricultural countries and a great majority of population is rural. The lacks of villages spread all over the country and the rural population have been the main resources of the cultural expansion as well as of the economic growth of their respective countries.

The authentic details of India’s cultural evolution are found in Indus Valley Civilization [2500-2000 B.C.]. Then comes the Vedic period [2000-1500 B. C.] when we have the glimpses of intermittent details of the cultural development. The first detailed and historical phase of China’s cultural evolution was Shang Yin era [1765-1122 B.C.] and during the period of Chou [1122-756 B. C.] Chin [246-210 B.C.] and Han [206-220 A.D.] the Chinese Culture touched some great heights of attainments. This period of Chinese cultural evolution saw the development of the great philosophies of Confucius and Tao and marks the beginning of coordination between these philosophies and the Buddhist values. This kind of coordination found a parallel in India where the two great cultures Dravid-Aryan coordinated well with each other about 2000 B.C. and later the other cultures that reached India from time to time harmonized with Indian Culture so well that they became one with it.

The characteristic of harmony that Indian and Chinese Cultures achieved thousand of years ago made a great impact on the other countries of the world. As China and India are neighbouring nations, the quality of harmonization had a particular influence on the masses of the two countries. It can be noticed in the lives of the people living in the North-Western regions of India and of those living in the border areas of China.

1. The Indo-Chinese relationship was established long ago in the ancient times, on the basis of the quality of harmony present in both the cultures. It will require writing a big book to tell in detail about the long-standing cultural ties. However, I would like to mention in brief that it was in consequence of the profoundness of these cultural ties that hundred of Chinese scholars were the student of the famous Nalanda University much before the advent of Christ. The Chinese scholars participated in Buddhist Congregations [Sangeetis] ahead of others. They were the centre of attraction in the forth congregation [Sangeeti] held in Kashmir during the reign of Emperor Kanishka in the first century A.D.From the time onwards and up to the 19th century, the scholars of the two counties visited each other and strengthened the cultural relationship. In ancient times, if the Indian scholars like Dharmaratha, Kumarajiva, Buddhajiva, Dharmakshema and Sanghabhuti visited China, the Chinese scholars Fa-hein, Sung-Yun, It-Sing and Huentsang came to India.

Among them Huentsang was the Chairman of a Buddhist conference sponsored by the Indian Emperor Harshavardhana. It is not all. The way Huentsang and Fah-Yan enriched the Indian history by their writings, they became inseparable part of it. In other words, the

Indian history is incomplete without a mention of them. I am, therefore, in a position to say that the Indo-Chinese cultural relationship is not a past event of history but a reality even now.

India and China are prosperous countries in many areas and the economic ties between them were established long ago along with their cultural relationship which afterwards became firm. In this regard, the first evidence can be traced to Magadh-Maurya era [5th and 6th centuries B.C.] in India. The Gupta period [5th century A.D.] shows further improvement. We all know about the economic and trade relationship that existed between the two countries since then to the first half of the 20eth century. It will not be of much relevance to discuss them here in detail.

After the Second World War the economic order of the world underwent a great change. Especially in the new economic situation India and China emerged as two great powers. It was a period of transition and it was extremely necessary to open a new chapter, but unfortunately there developed an atmosphere of bitterness. Why? It is not relevant to discuss the reason here, but I would like to add that in spite of this bitterness the two countries should not ignore the long and firmly established ties between them, nor can they afford to do so.The Sino-Indian economic relationship improved again towards the ninth decade of the last century. The Indian Prime Minister Rajiv Gandhi in 1988, the President K. R. Narayanan in May 2000, and the Prime Minister Atal Behari Vajpayee went to China on official visit in June 2003, and Mr. Li Peng and the Chinese Prime Minister Zhu Rong came to India in June 2001 and January 2002 respectively. These visits gave new dimensions to the improvement of relationship between the two countries and the trade relationship is improving day by day. The exchange of trade which amounted to 3 billion dollars per annum five years ago has now gone up to 10 billion dollars per annum. This is good indication but it should be raised further. There is every possibility for it; especially in the development of infrastructure for the increase of trade between the North-Eastern regions of India and Western China. The under developed regions of Burma can also be included in it. In this direction, the topic of opening of Nathula trade-root has come up. It is a very important issue that would prove an early solution and beneficial also. It is the demand of time that the two governments should sit together and think of some more measures as this and the participation of non-government agencies should also be encouraged.

Chinese economy is considered to be an advanced one in the world. It has maintained the

growth rate of 7-8 per cent for the last 7 years. India’s economy is also fast-moving. It has also the growth rate of 7-8 per cent per annum. But there is still a big challenge for both the

countries to bring the rural population economically at par with the others. Both the countries can cooperate with each other to a solution of this problem.

The Sino-Indian economic cooperation is now indispensable and their cultural ties can be the basis of a firm foundation for it. The liberal Chinese Government at present is well aware of the importance and cooperation of India. Therefore, the steps they have taken to have good relations with India on the basis of mutual accommodation are praiseworthy. India also recognizes the importance of China in the economic order of the world. They also have a keen desire to solve all problems by mutual discussion and create an environment for long lasting cooperation between the two countries.

The untoward happenings in 1962 created an atmosphere of mistrust in India for their neighbouring country which more or less still persists. It is essential to transform this mistrust to trust. If it is achieved, relations between the two countries would strengthen and would prove to be beneficial to both of them.

THE SECRET CYBER WAR BETWEEN INDIA AND CHINA

India discovered deadly Stuxnet internet worm from China targeting Indian strategic installations, computers, and networks. Bangalore is striking back like never before.

In Bangalore it’s called Chikku Sharbat. Is the nick name of Indian cyber worms that are creating havoc in Chinese Peoples Liberation Army (PLA). No one knows if and when India unleashed the ''Sharbat'' in Chikku-land (China). But the Chinese in latest round have desperately unleashed the deadly Stuxnet internet worm without being able to completely concealing the identity of the originating identities.

While Chinese hackers are known to target Indian government websites, the scale and sophistication of Stuxnet suggests that only a government no less than that of countries like US, Israel or China could have done it. "I think it's more likely that China is behind Stuxnet than any other country," says American cyber warfare expert Jeffrey Carr.

What is just getting unveiled is the scare among the Chinese Military about Indian Cyber Missile Chikku Sharbat originating from Bangalore.

One of the solutions may be that US Corporations should keep Bangalore busier with outsourcing contracts so that Indian cyber hackers working in Bangalore have less time to go after Chikkuland (China).

FUTURE WAR BETWEEN INDIA AND CHINA

India has been buying weapons and trying to build them for decades. It has been buying junk from Moscow (Flying Coffins) and has been unable to produce weapons on its own. The list of Indian failures is long. Kevari Engine, Tejas LCA, Trishul, Nag, Agni Arjun and Brahmos are a few examples of the total failure of the Delhi arms. Indian missile failuresDespite spending humongous amounts of money the bureaucrats of the Ganges have been unable to make Bharat self-sufficient in arms production. It is the only country of any sizable size which cannot produce arms that it can export. This colossal failure of the Bharati arms industry has filtered down to the total lack of any credible manufacturing from Goa to Gurdaspur.

Of course the Tatas and the Birlas have pulled rabbits out of their hats with huge smoke and mirrors that make the average Bharati think that the paradise of the shantytowns in Mumbai that encompass half of the population of the city are part of Shining India. Bharatis are incapable of looking at the extreme penury around them and blind to the filth right outside the Delhi airport. They cannot smell the stench of human excrement right outside the Mumbai airport and oblivious to the fact that 80% of the population takes a dump every morning on the railway lines. A nation that does not have working toilets for 80% of its population is proud of the fact that it can turn on a switch on a Russian launcher and a Soviet era engine designed and made in Moscow. It is disgusting that the country which has the lowest PER CAPITA GNP in South Asia and has most of the world poor declare itself a Space power. A society full of untouchable, Sati, widow incarceration, and caste in incapable of any shine. The Slumdog power has 89 insurgencies with 40% of its territory under rebel control–this is “Incredible India”. Nothing incredible about the IT power whose revenues from the Call Centers are half that of IBM. There is no shine in the country where 450 Dalits and Untouchables eek out a living as slaves and 150 million Muslims simply survive.

The Slumdog power mesmerized by Bollywood (filmed outside Bharat) cannot come to terms with the simple fact that 80% of its population lives below $2 per day with the hunger index placing it below Burkino Faso. Why doesn’t Russia transfer plane technology to India?                 

One out of every 200 Indians is already employed by the Indian Armed Forces. Three out of every four Indians already live at or less than $2 a day. Bharat Sarkar (the Government of India) has, however, now jacked up the defence budget by a massive 55 percent. Who is India going to fight with?India has 3,773,300 troops, plus 1,089,700 paramilitary forces India’s army is second only to China in size. The Indian Air Force, with a total aircraft strength of 1,700, is the world’s 4th largest. The Indian Navy already operates some 13 dozen vessels with INS Viraat as its flagship, the only “full-deck aircraft carrier operated by a country in Asia or the Western Pacific, along with operational jet fighters.” Who is India going to fight with?          

India has six neighbours; Pakistan, Bangladesh, Bhutan, Burma, Nepal and China. India now spends a colossal $32.35 billion on defence, Pakistan $4.8 billion, Bangladesh $830 million, Nepal $100 million and Burma $30 million (according to Business Standard, India’s second-largest financial daily, “There is no apparent reason for India to understate its defence budget. No IMF conditions constrain defence spending…. But India continues to camouflage what other comparable liberal democracies transparently show as defence spending). Collectively, Pakistan, Bangladesh, Burma and Nepal spend $5.7 billion a year on defence. Who is India going to fight with?                              

Yes, there’s China and the People’s Republic spends $80 billion a year on defence. According to a report by Stratfor, the Texas-based private intelligence agency, “China has been seen as a threat to India, and simplistic models show them to be potential rivals. In fact, however, China and India might as well be on different planets. Their entire frontier runs through the highest elevations of the Himalayas. It would be impossible for a substantial army to fight its way through the few passes that exist, and it would be utterly impossible for either country to sustain an army there in the long term. The two countries are irrevocably walled off from each otherl…. Ideally, New Delhi wants to see a Pakistan that is fragmented, or at least able to be controlled. Towards this end, it will work with any power that has a common interest and has no interest in invading India.”

To be certain, India and China are not military rivals. Who is India then going to fight with? Bharatiya Sthalsena (the Indian Army) has a total of 13 corps, of which six are strike corps. Of the 13 corps at least seven have their guns pointed towards Pakistan. The 3rd Armoured Division, 2nd Armoured Brigade, 4 RAPID (Reorganised Army Plains Infantry Divisions), Jaisalmer AFS, Utarlai AFS and Bhuj AFS are all aiming at splitting Pakistan into two (by capturing the Kashmore/Guddu Barrage-Reti-Rahimyar Khan triangle). The News. Bharatiya Sthalsena Sunday, March 01, 2009 Dr Farrukh Saleem. The writer is the executive director of the Centre for Research and Security Studies (CRSS).

Yes, there’s China and the People’s Republic spends $80 billion a year on defence. According to a report by Stratfor, the Texas-based private intelligence agency, “China has been seen as a threat to India, and simplistic models show them to be potential rivals. .

In fact, however, China and India might as well be on different planets. Their entire frontier runs through the highest elevations of the Himalayas. It would be impossible for a substantial army to fight its way through the few passes that exist, and it would be utterly impossible for either country to sustain an army there in the long term. The two countries are irrevocably walled off from each otherl…...... 

Ideally, New Delhi wants to see a Pakistan that is fragmented, or at least able to be controlled. Towards this end, it will work with any power that has a common interest and has no interest in invading India.”                 

To be certain, India and China are not military rivals. Who is India then going to fight with? Bharatiya Sthalsena (the Indian Army) has a total of 13 corps, of which six are strike corps. Of the 13 corps at least seven have their guns pointed towards Pakistan. The 3rd Armoured Division, 2nd Armoured Brigade, 4 RAPID (Reorganised Army Plains Infantry Divisions), Jaisalmer AFS, Utarlai AFS and Bhuj AFS are all aiming at splitting Pakistan into two (by capturing the Kashmore/Guddu Barrage-Reti-Rahimyar Khan triangle). The News. Bharatiya Sthalsena Sunday, March 01, 2009 Dr Farrukh Saleem. The writer is the executive director of the Centre for Research and Security Studies (CRSS)

CHINA AND INDIA SIGN BORDER DEAL

India and China have signed an agreement in Delhi aimed at resolving a long-running dispute over their Himalayan border.

India's national security adviser said it was "one of the most significant documents" signed by the two countries.

The agreement was sealed as Indian premier Manmohan Singh met visiting Chinese counterpart Wen Jiabao.

The world's two most populous countries fought a bitter war over their largely unmarked border in 1962.

'Major process'

India's National Security Adviser MK Narayanan told Indian television that Indian and Chinese officials had worked out a roadmap for resolving the disputed 3,550km (2,200 mile) border.

"It shows a lot of give and take on both sides," he said.

"We are very hopeful that this document will be the starting point of a major process in the settlement of the boundary dispute between India and China."

The joint statement by the two countries did not go into specifics on the issue, talking of "political parameters" and "guiding principles".

However, China has now formally given up its claim to the state of Sikkim.

The joint statement refers to "the Sikkim State of the Republic of India".

Until now, China had never recognised India's 1975 annexation of Sikkim.

On the remaining issues of contention, the statement said "special representatives" would negotiate the issues, adding: "Both sides are convinced that an early settlement of the boundary question will advance the basic interests of the two countries."

 We are going to put in place a bridge of friendship linking our two countries, a bridge that will lead both of us to the future 

Wen Jiabao

Trade powers ties

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Both sides have previously claimed the other is occupying parts of its land.

While India has accused China of occupying territory in Kashmir, Beijing has laid claim to territory in the north-east Indian state of Arunachal Pradesh.

IT connection

However, analysts say the border differences have been played down in recent times as China and India developed a blossoming economic relationship.

In addition to the border plans, Mr Wen said the two countries had set a target of increasing annual trade to $30bn by 2010.

China also reiterated its support for India to be given a permanent seat on the UN Security Council.

On Sunday, Mr Wen visited Bangalore, where he urged closer ties in the fields of science and technology.

"If India and China co-operate in the IT industry, we will be able to lead the world... and it will signify the coming of the Asian century of the IT industry," Mr Wen said.

The Chinese premier is on the final leg of his first South Asian tour since taking office last March

Tibetan exiles have protested in the past against the border talks

REFERENCE