Wealth (fu) and power (qiang) has remained the dream of
China throughout its long history. The best manifestation of this is reflected
during the modern period when China was down and out with the defeats it
suffered at the hands of foreign powers starting from the Opium War (1840). The
defeats demonstrated to the Qing dynasty (1644-1912) the importance of being
rich and powerful. A movement, which came to be known as “self-strengthening”
movement, was launched from 1861-1894 and carried out in three stages. During
the first phase (1861-1872), the slogan was ziqiang
(self-strengthening); the aim was to build up a strong military power through
the purchase and manufacture of modern weapons. Slogan for the second phase
(1872-1885) was fuqiang (wealth and power), and the aim was to build
modern enterprise such as railways, shipping, mining and telegraph with the
private capital. The third phase (1885-1894) was marked by building up of navy
and the establishment of modern iron and steel works. ‘Self-strengthening’ movement marked the
beginning of industrialisation and sowed the seeds of modern capitalism in
China. However, the modernisation campaign was constrained, as China adhered to
the Confucian traditions; had disliking for merchandise and discouraged private
enterprise and competition; and made no attempt to assimilate western
institutions, philosophy, art and culture. Secondly, whatsoever attempts of
modernisation were hampered by subsequent foreign aggressions: Japanese
invasion of Formosa [Taiwan] in 1874; the British attempts to open Yunnan in
1875; the Russian occupation of Ili in Xinjiang, 1871-72, French invasion of
Annam [Vietnam] in 1884-85, and Japanese aggression in Korea, 1894-95.
Five and half a decade later, Mao Zedong attempted to re-enact the ‘self-strengthening’
aura by following the Soviet model of industrial and agrarian development. Mao
was successful in turning China powerful (qiang) by building the largest
standing army in the world, but failed to make China rich (fu), as some
of the constraints of “self-strengthening” movement were inherent in his
developmental model besides the self-imposed isolation and economic
blunders.
Mao’s successor, Deng Xiaoping de-Maoised China, ended the
self-imposed isolation by initiating a policy of reforms and open door during
the 3rd Plenary Session of the 11th Central Committee of
the Communist Party of China (CPC) in 1978. The thrust of the reforms was in
rural areas, where a ‘contract household responsibility system’ was implemented
that linked remuneration to output. Besides, a two-layer management system
featuring the integration of centralisation and decentralisation was also
implemented. During the 3rd Plenary Session of the 12th
Central Committee in 1984, reforms were taken to the urban areas, and various
systems of ownership such as collectively owned enterprises, individual,
private and foreign owned enterprises were introduced and encouraged. During
the 13th national Congress of the CPC held in 1987, a three-stage
modernisation formula (sanbuzou) for the next 62 years was advocated,
which compared to the 33-year three-stage modernisation programme of ‘Self
strengthening’ Movement allotted double the time for realising the defined
strategic objectives. These three stages were defined as: 1) Doubling the 1980 GDP to end shortages of food and clothing (jiejue
wenbao wenti).
2) Quadrupling the 1980 GDP by the end of 20th
century and achieving a relatively comfortable life for all the people (dadao
xiaokang xueping).
3) Basically completing China’s modernisation by
mid 21st century, raising the per capita GDP to that of moderately
developed countries and achieving a fairly well off life for its people (dadao
zhongdeng fada guojia de shuiping) .
The new vision of modernisation paid dividends as China showed its
enthusiasm for merchandise and encouraged private enterprise and competition;
and made serious attempt to import advanced western technology and management
skills. China’s
entry into the World Trade Organization in 2001 brought in export boom,
registering almost 30% annual growth until 2007 capturing more than 10% of the
global market. Politically, China sought a stable and
peaceful surrounding. It is remarkable to note that ever since its Vietnam
adventure in 1979, China remained committed to peace with global powers and
regions in its vicinity. To everyone’s surprise, China achieved the first stage
by the end of the 1980s and the second stage in 1995 ahead of schedule.
The third and
fourth generation of Chinese leaders pursued the growth model relentlessly.
They not only legitamised the communist rule by adhering to growth model but
also set new benchmarks for developments. Especially during Hu Jintao’s tenure
(2002-2013), China witnessed unprecedented level of economic growth. China’s
GDP touched $8.3 trillion from a meager $1.20
trillion when he took over from Jiang Zemin, registering an impressive 10% and
above annual growth. Not only the financial crisis was effectively dealt with,
but it also together with other Asian economies contributed almost 50% to the
world’s economic growth during the slump. Rapid growth catapulted China to
second largest economy of the world leaving behind countries like UK, France,
Germany and Japan. Urbanization registered fastest ever growth anywhere in the
world, and by the end of 2012 over 52% Chinese were living in the urban areas.
The urbanization opened up real estate sector, and in fact became catalyst in
maintaining and sustaining rapid growth; as a result the ghost cities in China
also registered an increase, and the gap between China’s haves and have-nots
have widened as could be seen from the rural urban income levels in China.
The fifth
generation leader Xi Jinping has advocated the notion of China dream and would
be on a mission to make
China a fully well off society by 2020 by doubling the 2010 GDP. If done
China’s GDP in 2020 will reach around $12.54 trillion. However, it has also been reported
that China’s GDP by 2020 will reach $16 trillion, close to the US economy in 2012.
Probably the sixth generation leadership in China would be able to trounce the
US as the largest economy in the world and gradually achieve the task of making
China a developed nation by the mid of 21st century.
It is this context that the visit
of Premier Li Keqiang to India should be viewed and analysed. Chinese leaders
have a long-term agenda of economic development and the trade with world
including India would be high on the agenda. Politically, even though China has
taken maximalist positions vis-à-vis its disputes in the region, however, it
would not wish to see them spiraling out of control and jeopardize the economic
agenda that was set in 1979 and more specifically by way of initiating the three
step strategy for making China a developed nation by the middle of this century
in 1987. The bilateral trade between India and China could
be a catalyst in sustaining the domestic growth in China on the one hand and maintaining
the desired continuity in the bilateral relations on the other. Secondly since
the US would also be looking towards India for greater trade and investment,
job creation and economic growth, China would like to compete with the US in
Indian markets for getting a sizeable pie, be it the infrastructural
development, power and energy sector or the telecom and banking sectors.
We
may refer to Chinese president Xi Jinping’s recent speech at Boao forum for
Asia, considered
as ‘China’s Davos’, which was attended by people from political, and academic
affiliations but dominated by the business leaders. Xi Jinping in his speech
talked about peace, development, cooperation and mutual benefits. He said
China’s trade with its neighbors has grown from $100 billion and more to $1.3 trillion in the last decade.
Talking about the future trends, he said it is projected that in the coming
five years, China's import will reach some $10 trillion and China’s outbound investment to $500 billion; and also the number
of its outbound tourists may well exceed 400 million people. Li Keqiang would
have large Indian market in mind and as expected is leading a huge business
delegation. It was revealed by Chinese Vice Commerce Minister Jiang Yaoping on 16th
May that an investment promotion mission will travel to India next week to
follow up on the work of three earlier missions sent in 2008, 2010 and 2012. Jiang
said the nature of the trade relationship was changing, particularly with India
emerging as the biggest destination for project contracts for Chinese
companies. According to him as of March, 2013, Chinese companies had completed
projects in India worth $35.1 billion .
Bilateral
trade between India and China reached a record $73.9
in 2011. In 2012, the trade faced a downturn and reached only $66.5
billion and the deficit of $29 billion for India. Even though both countries
have pledged to take the figure of bilateral trade to $100 billion by 2015,
however, in the face of ballooning trade deficit and declining volume throws
new challenging to the future leadership in India and China alike. India would reciprocate provided the balance of trade
issue is addressed through a bigger market access to Indian companies in the
Chinese markets. The investment in high speed railway and other infrastructural
building projects could be considered as big opportunity windows to both the
countries. For India it could prove as
an opportunity to learn from China experience, for it was during last 30 years
of experience that China could develop its own technologies, perfect
its manufacturing facilities, bring in
new managerial practices and become self reliant in many sectors, like
heavy machinery and computer hardware.
Notwithstanding the fact that
both India and China no not want the border to be an irritant in developing
bilateral relations in other areas, especially trade and investment, culture
and people to people relations, but the recent border standoff is also a
pointer to the fact that India-China relations remains “fragile” and the hyper
sensitive nature of the border issue remains at the core of trust deficit and
mutual suspicion, if not handled properly could rekindle the animosities in no
time. It almost jeopardized the visits of Indian External Affair Minister
Salman Khurshid to China and Chinese Premier Li Keqiang’s India visit.
Therefore, it becomes pertinent for both India and China to show political will
and resolve, and reach an agreeable resolution of the border as soon as
possible so that a way is paved for a firmer hand shake and trust between the
two. India and China should also take a cue from the deteriorating Sino-Japanese
relations that shows that the trade volume not necessarily mitigate the
political and security deficit.