India and China
By Justice Katju
In the 21st July print issue of The Week, there is an article by Santosh Pai titled ‘Neighbours with benefits’, below which is written ” There has never been a better time to pursue a trade deal with China ”.
Mr Pai says that ” There is growing recognition that selective Chinese investments can help India achieve multiple objectives ”
With great respect to Mr Pai, I submit that he has no understanding of economic and political realities.
To understand this one must know that China of today only pretends to be a socialist country, but in fact it is capitalist and imperialist.
It is in the nature of capital to seek avenues for profitable investment, markets to capture, and cheap raw materials.
After its industrialisation has developed to a certain level a country turns imperialist, that is, it seeks overseas markets and raw materials. That is why England conquered India and other countries, France conquered Algeria and Vietnam, and Japan conquered Korea, Manchuria, and part of China.
In the 1930s and 1940s Nazi German imperialism was the real danger to the world, and not British or French imperialism.
This was because German imperialism at that time was rising and expanding, and hence aggressive imperialism, while British and French imperialism were on the defensive. While the latter only wanted to hold on to their colonies, the Nazis wanted to conquer and enslave other countries. Hence the Nazis were the real danger to the world.
Similarly, today the danger to the world is not from America or Europe but from China, because the Chinese are on the road of aggressive expansionism in the world. With their massive industry seeking markets for its goods and cheap raw materials, and with their huge 3.4 trillion dollar foreign exchange reserve hungrily seeking avenues for profitable investment, the Chinese are today aggressive imperialists, and the greatest danger to the world.
It is true that the Chinese are not presently expanding militarily like Nazi Germany or fascist Japan, but they are aggressively expanding economically by penetrating and undermining the economies of many countries of the world. In the last decade Chinese overseas investment has skyrocketed. Today the Chinese are almost everywhere, Asia, Africa, Latin America ( despite the Monroe doctrine ), and of course USA and Europe.
Their Belt and Road Initiative is a network of roads, railways, oil pipelines, power grids, ports and other infrastructure projects connecting China with the world. It aims at improving infrastructure and connectivity between China and the rest of Eurasia in order to dominate it. China’s focus is often on vital infrastructure like ports e.g. Gwadar in Pakistan, Piraeus in Greece, and Hambantota in Sri Lanka, the aim being to get a strategic foothold in these countries.
By selling goods at less than half the price at which the American or European manufacturer can afford to sell (in view of the higher labour cost in Western countries ), the Chinese have destroyed many American and European industries. Now the Chinese are seeking to capture the markets and raw materials in underdeveloped countries by dumping goods at very low prices so as to make the local product uncompetitive.
Pakistan, for instance, is flooded with cheap Chinese goods. While capturing foreign markets, the Chinese were carefully protecting their own by high tariffs. It has to be said to the credit of Donald Trump ( when he was President of USA ) that he called the Chinese bluff, and bluntly told the Chinese that you can’t have 25 per cent tariff on import of automobiles into China, when USA imposes a tariff of only 2.5 per cent for import of cars into USA.
Trump imposed tariffs on several Chinese goods and announced more in the future. To this, the Chinese announced retaliatory tariffs, but that hurt Americans little.
It is well known that the Chinese have no business ethics, and that is why many American and European companies are reluctant to hire Chinese from mainland China, as they often commit espionage of industrial secrets.
Since I am an Indian, I would like to refer to China’s economic relations with India.
As is well known, India was a British colony till 1947, and the British policy was not to allow setting up a heavy industrial base in India, as otherwise Indian industry, with cheap labour available to it, could grow and become a big rival to British industry.Hence our British rulers only allowed Indians to set up light industries like textiles and plantations.
However, after Independence a certain degree of industrialisation took place in India and we started manufacturing goods which we had to earlier import.
Now the Chinese have, to a certain extent, penetrated our market at the expense of our domestic industries. An article entitled ‘ How Chinese companies are beating India in its own backyard ‘ published on 12 December. 2017 in The Economic Times gives some interesting details.
Indo-Chinese trade is heavily skewed in favour of the Chinese.
Indian exports to China in 2017 were of 16 billion dollars, mainly of raw materials. But its imports from China were of 68 billion dollars, mainly of value added goods like mobile phones, plastics, electrical goods, machinery and its parts. This is typical of the relation between a colony and an imperialist country. Chinese companies use aggressive pricing, state subsidies, protectionist policies, and cheap financing provided by the Chinese government.
In 2021, imports from China grew by 45% in a single year, and trade defici vis-a-vis China crossed $100 billion, while India’s exports to China stood at a paltry $17.5 billion. India is now importing almost 6 dollars worth of goods from China for every dollar worth of goods exported to that country.
In certain sectors Chinese companies dominate the Indian market e.g. in the telecom sector, 51 per cent of which has been captured by the Chinese. Indian homes are full of Chinese goods e.g. fittings, lampshades, tubelights, etc. now the Chinese want to go further. Their companies like Huawei, ZTE, Lenovo, Xiaomi, CSITEC, CMIEC, Haier, TCL, Jiangsu Overseas Group Companies and FiberHome Technologies are aided by the Chinese government and aggressive diplomacy to spread all over the globe.
These companies are in high tech, intercom, computers, metallurgy, steel etc and have deeply penetrated India ( and other countries ).
In his article Mr Pai says ” India has not received sufficient investment from China ”. Perhaps he has not read the theory of the German economist Friedrich List, as explained below :
https://justicekatju.com/some-thoughts-on-economics-for-india-3367197d1551
Those who think, like Mr Pai, that the Chinese danger can be averted by sweet words and ‘Hindi-Chini bhaichara’, fail to understand the nature of Chinese imperialism, based on certain iron objective economic laws which operate irrespective of one’s subjective personal wishes.
To keep thinking that one can improve relations between India and China is just wishful thinking and living in La-la Land. It is like imagining that a fox and a chicken can coexist in the same pen. To ignore this danger will be behaving like an ostrich, like Neville Chamberlain who kept thinking that Hitler was no danger, and only needed to be appeased, until it was almost too late.
The Chinese of today are imperialist ravenous wolves, and only if the countries of the world realise the danger and put up a stout united opposition to them that the Chinese can be stopped from swallowing up other nations.
