Embrace China, not USA

Reduction of incomes of the developed countries is necessary to increase our share and this will only be possible if China and India join hands.

Prime Minister Narendra Modi has been trying to bring foreign investment from NRIs and multinational corporations—from the United States in particular. But the bonhomie is superficial. The standoff on major contentious issues continues. The US has not relented on the increase in fees for H1B visas. A permanent solution to the food subsidies being given by the developing countries has not been found.

This has held up progress in the WTO. There is no softening of stand by US companies on making investments in Indian nuclear power sector. Obama has not agreed to pressurise Pakistan to refrain from abetting cross-border terrorism. Neither has he given a concrete assurance of supporting India’s case for a permanent seat on the UN Security Council. Modi has not only failed in securing anything concrete or substantial from President Barack Obama, nor has he been able to soften him up on the continuing standoffs. Perhaps the US is riled by Modi’s decision to buy increased quantities of oil from Iran. 

The lack of progress is indicative of different world visions of the two countries. The US wants to maintain its dominance in world economy while India wants greater share of the pie in conformity with her growing prowess. Basic question is of distribution of global income between the developing and developed countries. Presently, about 25 per cent people living in the developed countries get 75 per cent of the global income while 75 per cent people living in the developing countries—including China and India—get about 25 per cent of the global income. 

The advent of colonialism led to reduction of China’s share to two per cent and India’s share to one per cent at the time of our independence. We have been able to make only small progress in last 60 years of “win-win” cooperation with the developed countries. India’s share of the global income has seen a paltry increase from one to two percent. Reason for this slow progress is that we have been trying to increase our share without seeking a reduction in their share. 

At this pace of win-win approach, it will take many thousand years for us to get our legitimate share of 75 per cent of the world income. Reduction of incomes of the developed countries is necessary for us to increase our share and this will only be possible if China and India join hands.

America has advanced technologies while China has cheap labour and large savings. We can access advanced technologies by befriending America. On the other hand, we can gain through manipulation of the world markets by befriending China. We have to assess whether advanced technologies will be more beneficial for us or manipulation of the world markets.

America’s technological supremacy is eroding. That country has not been able to make any major commercially viable invention after the internet. Moreover, America has transferred most of the advanced technologies to India and China through FDI. We have been able to generate desi version of certain technologies that were denied to us by America. 

India’s advantages

The supercomputer and cryogenic engines for our space missions are case in point. Research work too is being increasingly transferred to India to avail of the low wage rates of the scientists here. Future technological inventions are more likely to take place in India. India will have some access to these even if the patents are held by foreign companies. Surely, America still has control of some advanced technologies like the patriot missiles and stealth aircrafts but these are few and getting fewer. Correspondingly the benefit to be derived by us from friendship with America will become progressively less.

Benefits from friendship with China are of an altogether different nature. China and India have the winning combination of advanced technologies and cheap labour. American companies are unable to compete with us. America’s exports are declining. The US government is running massive budget deficits. America has had to borrow huge amounts of money from us to keep its economy afloat.  China has a comfortable foreign exchange reserve of US Treasury Bonds. Our holdings of these bonds is also substantial though about one-fifth of China’s. China and India can sell their holding in the open markets. That will lead to a crash of the US dollar. 

It will not do to run after the PIOs. These gentlemen have abandoned their motherland and are reaping benefits from the anti-India policies implemented by the US. The PIOs gain when the US increases H1B visa fees. They will face less competition from newer immigrants from India. The PIOs will get more jobs in the US farm sector if India dismantles her food subsidies. PIOs will get more jobs in the US nuclear power companies if India dilutes her Nuclear Liability Act. 

Win-win cooperation is not possible with the US. Instead of looking west, we must look east and seek cooperation of China on following issues. One, we must make a common strategy for using our holdings of US. Treasury Bonds and making America to bow to our demands. Two, we must make cartels for the export of natural resources like ores, timber, potash, etc. Three, we must make a call for removing the patents regime from the WTO. Lastly we could ask for free movement of natural persons.

Resources of the world belong to all the people of the world. Every human being should have the right to enter any other country. National governments may require the immigrants to follow the culture and spirit of their country but they should not have the right to bar their entry. These agreements will lead to the establishment of a just world order and also provide huge benefits to India.

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