Anja Manuel’s book, published in March, 2017, is an excellent summary of China and India’s current situation, keeping in view all along the aspects that are of particular importance for the USA. She briefly outlines the history of the two countries, focusing on major events and factors still shaping national conscience. After that, she describes the operations of the two emerging powers along topics that are most important for the USA, and also gives advice on improving cooperation. She keeps on emphasizing that the rise of these two vast countries should not provoke fear in the USA, the rise of their economies will increase the market of American products. Her major advice is maintaining good relations and avoiding both bilateral and multilateral conflicts. Manuel’s book can provide laymen with a sophisticated summary, while experts of the topic can find the personal anecdotes and examples of the author interesting.
Anja Manuel starts her book with a brief introduction of China’s and India’s history, looking at the salient points. Both countries have histories of several thousands of years, and this civilisation-consciousness still affects the way their peoples think. She writes about major schools of philosophy and religions, pointing out how Confucianism and Hinduism continue to shape politics to this day.
She dwells on the marks left by humiliation by Western powers in the case of China and the colonialism in the case of India. She describes how the Chinese and the Indian economy have achieved their current levels. Furthermore, she introduces the most prominent historical figures, although she seems somewhat biased when linking the introduction of popular Gandhi with Mao Zedong, described previously in the book. She provides a comprehensive account of the political regimes of the two countries, the history of the Chinese Communist Party, and the recent decades of the Indian government. Finally, she briefly presents the most important elements of the bios of President Xi Jinping and Prime Minister Narendra Modi, and their rise into power. She skilfully collects the information required for the USA, aiming at strengthening and improving relations with China and India, to have a better understanding of the considerations underpinning the mindset and foreign policy of the two giants.
SHARING THE WEALTH
India has a much longer road to go to eradicate poverty than China. Some three hundred million people live under the poverty line of $1.25, and urban slums home some sixty-five million people in India. While the schooling of children could show a way out of poverty, often their parents do not allow them to go the extremely low-level institutions—as their work also contribute to the modest income of their families. The fact that more than 90 per cent of the population work in the so-called informal sector and are harder to target with benefits and other assistance makes India’s situation even worse. Only a very small number of Indian people hold bank accounts, which also aggravates the situation. The current system of benefits is plagued by a high level of corruption, the distributors of food aid often withhold even as much as one-third of the food, and sell them for cash.
Despite the state’s several positive anti-discrimination measures, a high number of the poor are Muslims, or members of the “untouchable” Dalit community. The caste system persists in the mindset of Indian people and the members of lower castes start from a particularly disadvantageous situation. Reversing the process partly cherished by British colonisers takes long decades. The public social spending of the country is only between 3 and 4 percent of GDP, compared to China’s more impressive 7 per cent.
The Chinese Communist Party effectively tackled the problem of poverty, lifting 400 million people out of poverty, which is still the base for legitimating its power. Slums, frequent in India, are not typical in China, partly thanks to the housing projects implemented in the country’s interior, which provide great masses of people with homes. Increasing inequalities, however, pose a serious problem—while the GDP per person in coastal cities is close to that of Portugal, the per capita GDP of interior provinces resembles that of Congo.
Although people do not concentrate in slums in China, the life of rural migrant workers is not easy. The book tells the story of two young girls who work in a factory assembling phones in Shenzhen six days a week and sleep in a dormitory room with other two workers. For migrant workers, it is the hukou system that represents the greatest difficulty, which allows citizens to receive social benefits only in their place of birth. Thus, the masses migrating from rural areas to the cities cannot expect any benefits. There have been several attempts to reform the system, but it is an extremely difficult task, regarding that most work opportunities are provided by the megalopolises of the Eastern Coast, therefore migration is concentrating here, which, in some form, must be curbed. It was announced in 2014 that 100 million migrant workers would be given an urban hukou by 2020. But there are some ridiculous conditions, such as how many times the migrant gives blood.
She advises US leadership that US giant corporations operating factories in these countries should be more attentive to working conditions, ensure health care and other benefits for workers. These corporations, using the cheap workforce of the country, contribute to the fact that millions of people live under harsh conditions; in addition, they could effectively improve their situation.
The presence and social acceptance of corruption presents a great problem in both countries, making it harder for foreign companies to succeed, and preventing inbound investments.
Corruption means significant loss to the economies of the countries, draining considerable funds from public services. In China, one estimate concluded that a full 10 per cent of government spending is either misused as bribes or simply stolen. Permits sold in a corrupt manner then lead to poor-quality buildings that will crumple in the first natural disaster, killing thousands of people.
Xi Jinping’s anti-corruption campaign, the ‘tigers and flies’ movement has led to the punishment of several powerful politicians and military leaders. While some think that it is simply a purge of Xi’s political rivals, it might have a positive impact on the attitude of the country’s population. For the Chinese, several corrupt practices are part of the ceremony of making business, while for their US counterparts is sheer bribery—such as the custom of giving gifts, which is part of the tradition in India. The question remains, however, as to whether the amounts published—possibly taken by members of the Communist Party—serve the reassurance of the people or they unveil the extent of corruption unknown before, weakening confidence in the Party.
While in China ordinary people do not object corruption, protests are frequent and private individuals are involved in the combat in India. In addition, India’s legal system is more developed than that of China, and includes several anti-corruption laws. However, the country’s rampant bureaucracy still allows room for illegal practices. As we have already mentioned in connection with benefits, the official distributing food portions sells some of it to the poor for cash, resulting in the indignation of ordinary people. Partly, it was the protests of activists that led to the defeat of the Congress Party, and helped Prime Minister Modi form his government. The BJP Party campaigned hard on fighting corruption, and they seem to have succeeded in making changes in New Delhi since they were swept into office, by, among others, holding transparent auctions for private sector permits and contracts.
The most effective solution, however, has come from billionaire Internet entrepreneur, Nandan Nilekani, who is celebrated as a kind of folk hero. He created Aadhaar, a programme that generates a national identity number for every Indian by taking their fingerprints and iris scans, therefore their identity is easy to check, even in a mobile phone application. With this latter function, citizens can identify themselves with their mobile phones and get access to the assistance to which they are eligible.
THE YOUNG AND THE OLD
An aging population presents an increasing problem for China. At the moment, there are more than 200 million people in China over the age of sixty, but this age group is set to double by 2030. While the family planning policy adopted in 1980, which partly caused the problem, has been demolished, the process seems irreversible. The traditional Chinese model of children and grandchildren caring for the elderly when they are incapable of work puts the burden of supporting their families of eight on the shoulder of only children. While also the government acknowledges its irrationality, no pension scheme has been established to cover the entire population. Another task to resolve is expanding the health insurance scheme, as currently it covers only 40 per cent of the costs of treatment, and many poor people do not even know about this partial support. Their elderly care is, however, still enviable compared to India. We have already mentioned the difficulty of targeting Indian citizens, but the real problem is collecting the contributions. The state has no means to collect the amount required for elderly care from the wages paid in the informal sector.
Pension, however, is not a primary issue that India’s young society must resolve; for them, employing their youth bulge and taking advantage of the resources that they represent in order to drive economic growth poses a challenge. Their education system is extremely underdeveloped, more than 300 million Indians are illiterate, and the average time spent in education is five years. While India’s higher education standards are rather high in the IT sector, and graduates make good professionals, brain drain causes serious problems, and numerous Indians with university degrees emigrate to, for example, the USA, for work.
For the United States, building private health care facilities in both countries might present a market, and also for pharmaceutical companies and operators of retirement homes, as there is an increasing number of Chinese and Indian people who can afford these. These highly experienced companies can help China gain the know-how required for caring for its aging population.
ENERGY VS. THE ENVIRONMENT
The Chinese government and ordinary people are more and more concerned by the danger of environmental degradation, and several breakthroughs have been made in this field. Their motivation is quite understandable; air pollution has detectably decreased life expectancy in cities even though city dwellers spend entire days wearing face masks, and their complaints have reached the uncensored domain, thus leadership cannot leave them unaddressed.
The situation is even worse in India, the quality of air in cities is well behind that of China, and WHO has recently revealed that thirteen of the most polluted cities of the world can be found in India. The view that improving the situation of the poor is incompatible with environmental stewardship persists, but there are glimmers of hope as a new generation of officials and business leaders can see a solution increasingly important. The rigid attitude of the older ones, however, hinders international cooperation in transforming energy production.
Replacing coal-based energy production with renewable energy sources lies in the interest of both countries. China is the world’s number one coal producer and user, and India is second. The difficulty of the transition is mainly caused by the low price of coal, and there is a long road that the emerging giants have to go until all layers of their societies are provided with energy, thus its cost is not negligible at all.
Providing clean water is another central task. Due to China’s unfortunate geographical features, its northern half is much drier than the southern areas, and the rivers supplying these areas originate from Tibet—thus, it is strategically crucial to secure this province. India’s water supply is sufficient, but it lacks modern infrastructure—instead of using modern irrigation methods, small farmers dig their ever-deeper wells themselves, severely depleting the groundwater. Water treatment of the rivers is yet to be solved, the waters of the Ganges are extremely polluted because of overpopulated cities and water rituals, but it does not discourage local people from bathing in the river. There has been a plethora of schemes to clean up the Ganges, but the central government cannot persuade the leadership of the states to take action.
Water shortages could cause conflicts between the two countries, as the River Brahmaputra runs from the Tibetan plateau to India and the Chinese Liberating Army has already come up with the idea of diverting its waters into China. Although it poses a technological challenge, if implemented, it is the most likely to lead to a military conflict. If the pollutant emissions of the two countries make climate change accelerate, it is definitely dangerous also for the USA, thus it is in its interest to help China and India reform their energy production. However, they often feel the attention focussed on them unfair, as their pollutant emissions still have not exceeded that of the USA or Europe. As China is at the vanguard of developments related to green energy, cooperation could be beneficial also for the USA, and it is not as a sensitive topic as it used to be.
The existence of censorship filtering Chinese press and internet extremely effectively does not bother the majority of the society. Although they are aware of the fact that their messages are monitored, they see it as a kind of deal in exchange for living under much better circumstances under the Communist Party than their ancestors did. Land grabs, labour reforms, freedom of religion and pollution are topics that trigger protests. Although the Internet permits some dissent at the margins, we can hardly talk about a civil society. Interestingly, it was censorship that has brought about the change experienced in the younger generation: as the events of the 1989 Tiananmen Square crackdown are often completely unknown to Chinese people growing up afterwards, the memory of the state’s violent intervention does not discourage them from expressing their opinion in an ever-more assertive manner.
This change of attitude and social tensions are expected to reach a kind of breakpoint in the coming decades. Until then, however, the Party continues to apply manipulation by nationalist sentiments—such as mentioning the war crimes of the Japanese or the Diaoyu island dispute— if Chinese citizens seem too discontent for any other reason.
India’s situation is completely different. Free elections have been held since India gained its independence in 1947; citizens are granted freedom of speech and they use it. Surprisingly, with thousands of annual protests and countless nonprofit and citizen advocates, India ranks a low 80 out of 199 countries in press freedom. The government sometimes blocks political content online, some bloggers are arrested and there is violence against journalist as well. The government is suspicious of non-profit organisations, especially those receiving foreign funding.
The United States can attempt to call on India to curb censorship on online content and stop restricting the work of non-profit organisations—these are not impossible to attain.
THE NEW MERCANTILISTS
Aid has a central role in the diplomacy of both countries. While India legs behind China in terms of the amounts dedicated to this purpose, it spends a lot on its close neighbours, emphasising that it defines itself a peaceful power. Although India is the home of one-fourth of the world’s poor, Hinduism and Islam are both religions encouraging helping others, thus the government pursues an aid policy lacking explicitly political interests.
In its aid policy, China is a 21st-century mercantilist—it helps its own companies and drive economic growth by increasing grants, government loans, direct investments and trade. Conditions of Chinese aid are not as harsh as the ones related to Western aid, but China has a very different definition of aid.
The various investments, almost without exception, provide work for Chinese companies. The investment projects of One Belt, One Road (OBOR) initiative will all be implemented through Chinese loans. These allow China to use its large foreign capital, and also provide work for its state-owned companies struggling with overcapacities. And the countries concerned are more likely to feel grateful and side with China in a potential dispute.
The USA is concerned by China’s activity. If it is not the USA that grants aid, then it cannot influence the specific countries by imposing the conditions. For India, China’s expansion in Southeast Asia may raise concerns. Traditionally, India has had a leading role in this region, but might feel increasingly surrounded. Neither the USA or India has other choice than encouraging closer trade relations with the other two countries, maintaining the good rapport and avoiding conflicts.
THE WORLD THEY WILL MAKE
The currently functioning international organisations were established after World War II had been closed, and were construed according to the norms of Europe and the USA. In their current state, they are obsolete, and emerging powers cannot find their place in them. China has the second largest national economy but still does not fulfil a position fit to its size in such organisations as the WTO or IMF. The two giants should be involved in their reforms not just because of their economic might but also because their experiences could be valuable for the West.
China’s growing role is demonstrated by the establishment of the Asia Infrastructure Investment Bank (AIIB), with India as an enthusiastic member, as it could help with the infrastructure developments of the country. Washington has so far refused to join, although its fears seem pessimistic. AIIB, for example, will grant loans in US dollars and not renminbis, as it was feared earlier, and Chinese capital will enable such infrastructure developments that have been never implemented during the sixty year-long operations of the World Bank.
China is increasingly active in the UN as well, contributing considerable amounts to the budget of peacekeeping forces. This, again, should be reassuring for the United States, since China is not unwilling to participate in existing organisations, it just simply seeks to assert its rights.
As for UN membership, India pursues the policy of non-commitment, voting with the USA in less than one-third of the cases. There is a plan to include India in the Security Council, but both China and Russia object.
Veto rights in the World Bank and IMF should be reformed, too, and the two giant should be encouraged to enter into mutually beneficial regional trade agreements. Naturally, India and China want to assert their rights and increase their influence, and will not always agree with the USA. This must be respected by the US party. The existing organisations, however, should not lower the standards related to environment or labour; the two countries should accommodate to them. As they both seem more willing to take more responsibility, the USA should take advantage of their resources, and shape the international system more equitable together with them.
THE NEXT MASTER AND COMMANDER
With its emphasis on soft power, India has not made many enemies. India’s leaders have been mostly preoccupied with Pakistan and China. There have been several border disputes over the Himalayan border since the times of British rule, and nowadays the concentration of China’s infrastructure developments in the region causes tensions. For India, the developments implemented within the OBOR framework might also raise concerns—China is building such facilities in the region that could be converted for military purposes, such as ports, which, in addition to trade, can also serve as a base for navy.
China’s activity is, however, put in a new perspective if we imagine what it can see from its coast towards the sea: from Japan as far as Taiwan and the Philippines, there are islands of powers that are hostile, or at least cool towards China. This area, called as the “first island chain” by the Chinese partly justifies China’s attempts to create its own bases on these waters. Passage through the Strait of Malacca is crucial, as oil from the Middle East to China moves through here.
China’s growing activity—especially around the Pacific Ocean and the Himalayas—has increased India’s military spending, and Modi raised the country‘s defense spending by 30 per cent to $52 billion for the fiscal year 2016-17, and asked the United States to help it build several modern aircraft carriers. Since the end of World War II, the USA dominated the region of the Pacific and the Indian Ocean, but this period has ended. The USA must acknowledge this, as well as the fact that their “Pivot to Asia” policy might sound threatening to the Chinese. China has become a power of such size that could have an army of that size; it is a natural process.
Manuel suggests more frequent communication with China, and laying down sound rules about what is acceptable for the United States and what is not, for example, in cybersecurity. She also pushes for joint military exercises, recommending that the USA and India should also involve China in these.
Manuel recommends that the unites States should take post-independence British-American relations as an example in their attitudes toward China and India. Great Britain treated the upstart United States with subtlety, knowing that maintaining good relationships was ultimately its interest, and that the Americans saw them as a model because of their position of advantage.
Thus, Anja Manuel’s advice includes tolerance, cooperation, taking into account the legitimate interests of the two countries, but, at the same time, assertively pushing back on border encroachments; and ultimately, creating a peaceful co-existence, enjoyed by all three countries.
Author: Fanni Maráczi