The two Asian giants

Indian Prime Minister Narendra Modi (left) and China's President Xi Jinping.
Indian Prime Minister Narendra Modi (left) and China's President Xi Jinping. PHOTOS: AFP

Here are excerpts from a new book, India Rising: Fresh Hope, New Fears. It is written by Ravi Velloor, a veteran journalist who was The Straits Times’ South Asia Bureau chief and is now associate editor.

ON INDIA AND CHINA

Asia's two most ancient civilisations are not fated to live in rivalry. Unlike Japan, which borrowed the Chinese script and a good part of its philosophical system, then took the mainland by surprise by defeating it in war in 1894-95, there is no historical grievance in China against India. Instead, most Chinese avoid talking of the 1962 border war, partly because it happened during a turbulent period in China's history, the Great Leap Forward.

That said, a mild condescension towards India and a proclivity to regard it as a lesser power is undeniable. I once heard Fu Ying, when she was the Chinese vice-foreign minister, describe India as "well-behaved".

Still, there is little question that the Chinese also know that India is the only nation that can truly challenge its dominance over Asia, even if they are loath to concede it. After the May 1998 nuclear tests, which India arranged surreptitiously, escaping the attention of US spy satellites, it was China that took the lead in drafting the UN Security Council Resolution 1172 that condemned the tests.

 
 

And for all its talk of appreciating India's desire to play a larger role in global affairs, it is unlikely to back a permanent seat for India in the UN Security Council, especially if it comes with veto powers. In the Chinese mind there can only be one tiger on top of a mountain.

The developing India-US-Japan relationship is the game changer in this scenario because there is no knowing where it may lead; the last thing Beijing wants on its doorstep is an Asian version of Nato. It is in China's interest, even more than India's, to settle the border quickly and thus remove a powerful magnet driving the India-US partnership, which extends to Tokyo and increasingly, Australia. More and more, the talk is of an "Indo-Pacific" region and China is the stuffing in this sandwich. To break out of that vice it needs a neutral India. If (Chinese President) Xi Jinping is serious about his vision of an Asian security concept in which Asians alone determine their destiny, China will need to start treating India as an equal.

As the Chinese economy slows, and India's accelerates from its lower base, China will also need access to the vast Indian market for its goods and services. Convincing New Delhi to sign on to its belt and road project would bring benefits to both. The question now is whether Beijing will see it in its interest to have a fair settlement of the border and move on, or think the other way - that it has the power to stand its ground and gains nothing from doing a deal, especially with an India that is ever more firmly in the US camp. That is a judgment only Beijing can make.

Whatever happens in the decade ahead, one thing is clear: the two are not going to carve each other's names on trees. But as long as the wariness is kept in check, and the contacts build, there will be a healthy exchange between the two civilisational powers. For now, that should be good enough for Asia.

INDIA IN A STRATEGIC SWEET SPOT

India's security is best guaranteed by a rapid buildup of its economic power. At the moment, it is between 12 and 15 years behind China in its development and the gap is not easily bridged, particularly since Beijing is steering its own economy towards a more efficient model while India continues to flounder with old ways of doing things. (Indian Prime Minister Narendra) Modi is aware of this weakness but his go-it-alone personality shuts out the outreach to rival parties and interest groups necessary to build the consensus on which the pillars of a new economic regime have to rest. Even if India, rising from a lower base, outpaces China's economic growth by 2 percentage points every year for the next two decades, it will still not have the larger economy. Such is the gap between the two.

On the other hand, advances in science can lead to fortune for India. Already, it has leapfrogged what used to be its abysmal communications infrastructure by having the fastest-growing market for telephony. The amazing burst of smartphone sales, for instance, is showing up in areas like online shopping.

India Post, the 160-year-old postal giant, had been pondering closing many of its 155,000 post offices. Today, after linking up with some 400 e-commerce companies, it is enjoying a revival with cash-on-delivery parcels handled by the department clocking annual growth of 300 per cent. Morgan Stanley and Goldman Sachs forecast that online retail buying in India will leap from US$3 billion (S$4 billion) in 2014 to US$100 billion by 2020. Currently, less than half of Indians are connected to the Internet. Small wonder that Amazon is investing US$2 billion in India.

Likewise, it has the opportunity to build a clean future. Solar technology, for instance, is getting increasingly cheaper just as sun-soaked India's energy demand is poised to double. For the first time, the cost of producing solar energy has become so cost-effective that it has achieved what is called "grid parity" with coal, thus far the cheapest fuel. China is retooling its economy to repair the awful impact its growth has had on its environment. India has the opportunity to avoid the pain substantially. Rapid economic growth is important for India's defence posture as well.

The military budget has to grow in tandem with the economic pie, or the distortions caused will pull away funds from vitally needed sectors such as health and education. (Already, smaller countries in its neighbourhood like Bangladesh and Sri Lanka have progressed faster on the UN Millennium Development Goals.) India cannot afford to drop its outlays on building skills and improving public health.

If the near-term strategic target is some sort of parity with China, the goal is nowhere close to being reached. India is significantly weaker. Indeed, given India's poor defence preparedness and the character of the nervously fearful (then Defence Minister) A.K. Antony, China could have walked into Arunachal Pradesh at any time; or at least taken strategically vital Tawang. That it did not do so should be credited more to Beijing's restraint rather than respect for or recognition of India's strength. Perhaps fear of pushing India too close to the US camp was a factor as well in the Chinese calculus. But the Chinese attitude may not stay fixed for all time; already there are signs of a recalibration by Beijing at many levels on its approach to India.

Modi knows that the Asian Century cannot be realised unless China and India settle their outstanding issues and allow their economic relationship to flower. The Indian leader has been pushing China to take a strategic view of the relationship and strive for an early border settlement, but it is difficult to envisage that happening too quickly. Both sides have their limitations.

A version of this article appeared in the print edition of The Sunday Times on May 01, 2016, with the headline 'The two Asian giants'. Print Edition | Subscribe