July 13, 1998

Why Uncle Sam offers Beijing a warm heart and Delhi a cold shoulder

Jairam Ramesh

President Bill Clinton came to China. He saw; whether he conquered or concurred time alone will tell. But one thing is clear. Human rights notwithstanding, the special Sino-American relationship goes on. Indians are just not able to understand why. Why not India? After all, it is a democracy and also a big market.

True, we are more of a democracy than China. But there are some dimensions of democracy that China has in greater measure. Provinces in China have far greater economic powers than states in India. For example, 60 per cent of all revenues goes to the provinces in China. The provinces also account for 60 per cent of all expenditure. In India, the states get 50 per cent of all revenues collected but share just a third of all expenditure.

The Communist Party of China is able to publicly acknowledge mistakes. Some years ago, it declared Mao was 60 per cent right and 40 per cent wrong. In India, we deify our leaders and are unable to shake off their troublesome legacies. Recall Deng Xiaoping's aphorism: "What does it matter if the cat is black or white as long as it catches mice." In India, there would be endless debate on the attributes of the cat while the rodent population multiplied.

Americans have always felt a moral guardianship for China. In the late 19th and early 20th centuries, over 13,000 missionaries helped create an image of China in America that, in Barbara Tuchman's words, "carries an accompanying sense of obligation towards the subject of one's beneficence". The children of some of these missionaries became pillars of the American establishment. An example is Henry Luce, who founded Time magazine.

America's future history, thundered President Ted Roosevelt in 1905, "will be more determined by our position in the Pacific facing China than by our position in the Atlantic facing Europe". China has been a major issue in almost all US presidential campaigns since 1920.

American interest in India began in the '50s. Even then, it was seen largely in relation to China. India was the great experiment in democracy that caught America's fancy, just as its prodigal pupil embraced communism. Gradually, this fancy gave way to disenchantment with India's slow economic growth, inward-looking policies and niggardliness in publicly acknowledging American assistance. This coincided with the rediscovery of a "lost" China by the US.

Thus, history and emotion provide the foundation for the growing Sino-American commercial relationship. China's imports from the US are eight times India's. This is what gives Beijing greater leverage in Washington and even in some state capitals. Contracted American equity investment in China since 1991 amounts to some $28 billion. The figure for India is $9 billion -- $4 billion equity and $5 billion of FII investment in our stock market.

China is a make or break market for some key American companies in a way India is not. Fourteen per cent of Boeing's sales are to China. Proctor and Gamble sells more soap in China than in the US. It is a multi-billion dollar market for Microsoft. McDonald's opens a new franchise there every week. Ten per cent of Motorola's revenues come from China.

An economy growing at 10 per cent year after year -- and at 7 to 8 per cent in a "bad" year -- just can't be ignored. True, China runs a $50 billion trade surplus annually with the US. But cheap exports brings not just dollars to China but also new friends. Among the most aggressive US lobbyists for China are consumer organisations like the National Association of Retailers. India could also be a major exporter but its policies are choking exports of many consumer products. This is the major area of growth. Eight per cent of US imports are from China; India's share is a minuscule 0.8 per cent.

But trade alone cannot explain China's clout. After all, America exports more to Belgium than to China. One key "extra" for China is that apart from the US, Russia and France it is the only country which launches satellites commercially. In the next 10 years, one satellite will be launched every two days. China's satellite launches are a third the price of America's. This gives it enormous leverage with politically influential US hi-tech companies.

China scores heavily over India where it counts for the morrow -- on American university campuses. After being the flavour for a brief while in the '50s, India has dropped out of favour. The rich Indian diaspora is doing precious little to help. One of the richest donors to Princeton University is Gordon Wu, the Hong Kong magnate. He contributed $100 million some years back. With the imminent drying up of the PL 480 funds, whatever little intellectual interaction is taking place between India and the US will end.

The Indian scientific, political and military establishment thinks China has influence because of its nuclear arsenal. This is a profound misreading of reality. Its pragmatic policies, economic performance and manner of conduct give China a decisive edge over India. The sooner we understand this the better.

The author is secretary of the AICC's Economic Affairs Department. The views expressed here are his own.

Issue Contents | Write to us | Subscriptions

© Living Media India Ltd