FRIDAY, APRIL 26, 2024
Binayak Datta
The picture below sums up aptly what China means to the world…and anybody judging China otherwise, would rather go by Somerset Maugham’s “The Summing Up”…and he writes..“Our natural egoism leads us to judge people by their relations to ourselves. We want them to be certain things to us, and for us that is what they are; because the rest of them is no good to us, we ignore it.” What Maugham didn’t add, was that – you got to pay the price as well! See the graphic – you’ll know what I meant...the ghastly picture is from circumstances originating in one country – that country itself is seen growing and look at the plight of the others (including ours of course). And this is the IMF’s current projections of world economy!
The point is, we frequently get carried away by people and would like to personalize them with ourselves – feed our egos well, go over-boards and arrange the best and the costliest of events and finally find out (in Maugham’s words), we woefully misjudged ground realties. We forgot for example, after not even six months of ours extending the best courtesies at the best beaches of Goa – we discovered the vilest treachery at Doklam in 2017. We forgot, how consistently they went on supporting the Pakistan-based international-terrorist. We forgot how they blocked our way into the NSG and wouldn’t say yes to our UNSC entry.
So, we were back after all of those “informal summits” and lo! There at Galwan, we lost 20 brave-hearts…we can go on debating who entered how many kilometres, but 2 things are important…a) the immediate...recover status quo-ante and b) in the mid-term, plan out elaborately, life without China – on the economic side.
I would like to confine myself today to the second one – the economic side.
My Take: On the economic side, 40 years ago, India and China had nearly same sized economies around $190bn each. 40 years back their per-capita income used to be $195 against ours $267. Today they are $9,700 against ours just $2,200. That’s China…guided by costs in place of values, speed in place of quality, Bulk in place of the unique, the Communist-party in place of people! The only supreme addition is R&D. We on the other hand, would like to believe, its values rather than costs that guide us, its quality rather than speed that motivates us, its uniqueness rather than bulk that we are trained to deliver, the only difference is that of R&D where we lag behind. Our “trading” mindset often stands in the way of a “manufacturing” mind-set. Whereas our R&D spend is around $94 bn, China spends around $519 bn (UNESCO’s data). That’s the big picture.
Now the specifics; 15% of our total Imports are from China, but that figure is hardly 3% of China’s global exports. Only 5% of our total exports go to China, but that’s not even 1% of their imports. So, if we go and throw a couple of Chinese-made colour television sets onto the streets – how does it impact them? As on date there are about $2 trillion Chinese Investments in Indian FDI markets.
But, whilst the military stand-off part may cool down at least temporarily – with our diplomatic deftness, our international relations within the “Quad” and with the “Five Eyes”, increasing actions at the South-China Seas, or cornering them on Hong Kong (we’ve stakes of 50,000 Indians there) all this will still not solve our problems – more sustainable time-bound initiatives are required on the economic, more precisely at the manufacturing front.
Here I would suggest, make a program for say 5 years in 5 areas – of Imports of Chinese produce say, semi-conductors and processors, equipments for power plants, metro- coaches, fertilisers and pesticides, APIs for pharma, white goods, components for the electronics and telecom industry and auto-parts. An MSME industrialist manufacturing voltage stabilizers and welding units explained, his industry has to shut shop if imports from China are stopped or delayed today!
A good part of the manufacture is exported under the much touted, “Make-in-India” program. So, any sudden disruption will be a sure-shot on our own feet! Without sufficient grounds in the WTO, we cannot much tamper with duty rates – so we have to be cost effective – which means our logistic costs primarily have to come down by using all channels of transportation effectively. Our taxes and interest rates have to be on par with international rates – for example if we are selling Rs 21 oil at Rs 80 with taxes, that’s no-no! Second – short-cuts and “jugaads” have to give way for research and quality. Third - we must at first-site be viewed as a free, democratic, diverse and egalitarian society. Our relative slowness has to be commensurate with these essentials, they don’t find in China. World investment bankers have to smell a value-based, cost effective, quality centric, R&D driven and people-oriented manufacturing excellence-centre in us.
And if that is not to be – China will lose but We won’t gain either. In fact, trade tussles last year drove out 56 companies from China, 26 went to Vietnam, 11 went to Taiwan, 8 to Thailand, 2 to Indonesia, 6 went back and just 3 came to India.
And in conclusion: We have to aim at being “Opposite of China” – not “another China” – that’s what the world community would expect. We should be the proverbial “Strong Silent Man”, no massive events with say a US President hurling patronizing comments like “they’ve come to blows, I’m trying to help..” et al..,.or expensive road shows with other visitors, in Maugham’s words, let not our Natural Egoism lead us to misjudgements of international positions. Let’s be India!
(Binayak Datta is a
Finance Professional)
