21 October 2016
Chinese President Xi Jinping (left) and Indian Prime Minister Narendra Modi should take advantage of the huge opportunities in further improving their countries' relations. Photo: Bloomberg
Chinese President Xi Jinping (left) and Indian Prime Minister Narendra Modi should take advantage of the huge opportunities in further improving their countries' relations. Photo: Bloomberg

Chindia: Why the two Asian giants should join hands

It seems like China and India are going to put down historical conflicts and join hands in the future. What kinds of opportunities will the so-called “Chindia” bring to China and India? This subject has been extensively explored in recent years, but it is still worthwhile to reexamine it under One Belt, One Road initiative.

China is of course more developed than India. But more than 10 years ago, the levels of development were more or less the same in the two countries. Logically, with a similar population base, and the same high rate of domestic demand, India should have a lot of room for growth. In addition, an aging population is a problem India won’t face in the short to medium term.

Given the chance for India to become another China in economic terms, many international investors dare not underestimate India.

For Chinese enterprises, the labor cost is no longer cheap in China; it is time to consider to invest in some other places. India could be an ideal choice. For example, Lenovo has already started its business in India successfully.

China’s strong manufacturing sector could be a threat to India, but at the same time, India may want to borrow China’s experience of rapid development over the past 20 years, and the way how the government and enterprises can work together, through the prudent introduction of Chinese investment.

Meanwhile, India’s high-tech strength would fit in well with China’s plan to build up its e-commerce sector.

As long as China would let India be the sub-leader of “One Belt, One Road” (after all, many of the shipping routes have to pass through Indian ports), the initiative stands a good chance to become successful.

In geopolitical and strategic terms, Chindia may have even greater potential. If the two countries can solve the border issue, and no longer try to contain each other, but become real allies, how will that change the whole Asia? This could be the “Asian renaissance dream” that Chiang Kai-shek and Gandhi both envisioned.

India potentially has a big influence over South Asia, Central Asia and the Middle East; it is also the main source of human resources to those countries.

China’s capital, on the other hand, is becoming more crucial to Southeast Asian countries.

If China and India work closely together, their regional influence would become almost unrivalled, and there will be little room for Western countries to step in.

Seeing the advantages, Many Indian scholars now appeal to abandon the “China Threat Theory” and embrace “One Belt, One Road”.

China and India are both countries with ancient civilizations. As long as they are strong economically, they can attract foreigners to learn their cultures and seek business opportunities. It may thus lead to a shift in global soft power.

Indian Prime Minister Narendra Modi, who has a nationalist background, is unexpectedly more pragmatic than his predecessor, especially regarding China-India relations.

In the past, most Chinese investments in India were related to government projects, and counterparties were largely selected by Indian officials.

But Modi now encourages Chinese private companies to enter India, and hope to introduce Chinese funds to promote India’s economic transformation.

Known for their low efficiency, Indian officials stationed in China are now under pressure. It is said that they have already improved the efficiency of visa issuance, and are mulling relaxation of investment rules to attract Chinese businessmen.

The article first appeared in the Hong Kong Economic Journal on May 19.

[Chinese version 中文版]

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Associate professor and director of Global Studies Programme, Faculty of Social Science, at the Chinese University of Hong Kong; Lead Writer (Global) at the Hong Kong Economic Journal

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