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India vs. China: Economic growth and national security

In Economy, history, National News, Opinion, sociology, Uncategorized on June 9, 2014 at 9:47 pm

DIH LOGOOn June 4, 1989, after three weeks of civil rights protests by nearly a million Chinese, many of them students, Chinese troops stormed a packed square in Beijing, killing and arresting thousands. The Tiananmen Square Massacre shocked the world and confirmed the belief, not that there was any doubt, that China’s political system is completely incompatible with that of the United States and pretty much any other democratic nation.

A quarter of a century later, it’s still largely incomprehensible why America is so tied to a country with no decency with regard to human rights. It’s about two things that shouldn’t surprise anyone, money and political power. There’s a little fear thrown into the mix as well associated with China’s massive military might and a government with no reservations about using it.

Labor costs are incredibly also low in China, with the average factory worker earning just one-tenth of what their American counterparts bring home, according to the Bureau of Labor Statistics. Cheap labor is an attractive prospect to American companies looking to expand production with fewer tax and employment expenses. It seems there is no end to U.S. manufacturers relocating in China; producing cheaper goods to be shipped back America and sold at a premium profit.

Contrary to popular belief, however, according to the Council on Foreign Relations, only 15-percent of U.S. imports come from China. That comes out to something like $29 billion of a $1 trillion monthly output. There are more than 1.3 billion people in China, many of whom, like their American counterparts, want, more than ever, the latest technology, fashions, entertainment and so on. Although it is generally exaggerated, a definite trade deficit exists between the two nations, which is unlikely to change anytime soon.

China or India? Which makes more sense for the US?

China or India? Which makes more sense for the US?

It’s entirely possible the United States should be looking a little further southwest for political and economic growth in Asia – India. After all, which would seem a much more stable and amiable political and economic ally? With more than 1.2 billion people living in 29 states, India is the world’s second-largest country and second-largest democracy, English speaking and primed for growth.

If India is a more lucrative and stable prospect, what’s holding America back from a greater fueling of the fire of partnership, economically and socially? Unfortunately, recent years have seen the U.S./India relationship strained over trade and intellectual property disputes. Plus, the Indian economy has had some rocky spots recently.

In 2013, the average median income per capita in India was around $1,200 (Compared to China at $2,100). Add to that, India’s economy has fallen off nearly 5-percent with 8-percent inflation and the country’s fiscal health is a major barrier. However, the election of a new prime minister, Narendra Modi has encouraged investors and the economy has reflected that confidence.

According to CNN Money, “The prospect of a government led by Modi has boosted Indian stocks by 15 percent so far this year. The rupee has responded too, gaining six percent against the dollar after a dismal performance in 2013.”

There are other more politically charged issues slowing down a more aggressive relationship with India, but most U.S. officials see the country as a thriving democracy and a strategic gold mine. Close to Afghanistan and Pakistan, a more advanced partnership between America and India would benefit both countries in terms of economic growth and national security.

America imposed sanctions against India in 1998 because of nuclear testing. But, thanks to former presidents Clinton and Bush, relations improved greatly and the two nations even signed a ground-breaking defense and civil nuclear (power) agreement.

With the possible exception of the political unknowns surrounding a new prime minister, previously a Hindu Nationalist, there is little reason to spend so much time courting the stagnant communist regime in China instead of nurturing a reasonably stable democracy, and growing economy, in India. In the end, it certainly seems that it would be much wiser for Washington to advance trade and economic partnerships with India.

 

Gery L. Deer is an independent columnist and business writer based in Jamestown, Ohio. More at http://www.gerydeer.com.

 

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