China India Peace Threats Analysts

China India Peace Threats Analysts predicted a probable shift in world politics and economy to a global balance of power between China and India (Sengupta 2005). One-third of humanity comes from these two countries that waited for 3,000 for the event to come close to becoming real. Both countries' economies have grown at a marvelous rate in recent years since their rivalry in 1962. Today, they both target new markets and have begun doing business together.

China is the second largest trade partner to the United States and grows by 30% at roughly $14 billion in the present year. The economic surge among Asian giants could have tremendous impact. It could bring down pressure on wages, increase more job outsourcing, greater competition for investments and higher prices for fewer resources. Analysts, however, cautioned that these could also result in troubled relations. Chinese goods could flood into India or something untoward could happen at sea, in Tibet or Nepal, which would unsettle current ties.

These observers noted that despite India's swift growth, China keeps a 15-year margin, which did not show signs of narrowing. On the other hand, Chinese intellectuals took serious note of India's performance in democratic governance as a decided advantage (Sengupta). China and India are without doubt the emerging technological powers. They are among the most thickly populated countries in the world ((Dahlam 2007). China accounts for more than 20% of the world population while India comprised roughly 17%. They are already the fourth and 11th largest economies in the world.

In terms of purchasing power parity, they have already reached the second and fourth ranks. They are growing thrice as fast as the world average. Although their populations were comparatively low in the level of higher education, they had a significant number of highly educated people and skilled professionals, like scientists and engineers. They also registered substantial expenditures on research and development. These reflected a large innovation capacity to meet their own needs and for multinational companies at the same time. These qualifications, performance and capabilities raised their global value.

Innovations in these two countries would include knowledge new to them and new to the world. Tapping into the knowledge new to them would explain the speed of their economies (Dahlam). Their burst of power came at the time that the world was desperately needed new and clean energy technologies (Dahlam 2007). The growing buying power of their hundreds of millions of poor people would create huge demands for products. These would include cellular phones, computers and cars.

Manufacturing these products would energize business and improve the quality of life of their users. Millions of Indians and Chinese were achieving the economic status of the middle class of the developed world. This presented valuable opportunities to U.S. multinationals to form partnerships with firms in these two countries. These developments and potentials presented both a challenge and an opportunity. What happens to their economies would certainly affect that of the world (Dahlam). This would be the view from the outside of China and India.

But from the inside of the two countries, there could be threats to their alliance. From the start as an independent nation in 1947, India has always maintained an independent worldview in its foreign policy (Tucker 2003). Although India and China have embarked on a cooperative relationship in the last decades, India still views China as a threat. Thus, India continues to increase its nuclear capability and maintains stronger ties with the United States. India's foreign policy was directed at achieving status as a world power and influence.

It assisted the African National Congress of South Africa to eliminate oppression. It retained a neutral stance by co-founding the Non-aligned Movement until it sided with the U.S.S.R. out of convenience. Furthermore, it endorsed total nuclear disarmament of all nuclear powers, at the same time seeking nuclear-power status for itself. While openly condemning nuclear power, it recognized nuclear weapons as the means to attaining its goal of becoming a global force (Tucker). The relationship between China and India was unstable during and after the Cold War (Tucker 2003).

India always thought it had an ally in China as sharing important seats in world trade. But it was surprised when the border disputes between them intensified and, in 1962, China invaded portions of India and captured some of its territory. In response to the aggression, India continues to dispute the border between them at present (Tucker). The border dispute concerned the British-designated McMahon Line, which was not clearly established (Srivastava 2006).This was the Line of Actual Control, consisting of approximately 90,000 square kilometers of territory between the two countries.

It ended in an overwhelming psychological victory for China (Srivastava). In India's view, this issue persists and its leaders bring it up for discussion in each exchange diplomatic visit between them (Tucker 2003). Remaining conscious of the dispute, India continues to view China with apprehension on account of China's historic dealings with Pakistan. Much of Pakistan's weapon and technology, particularly nuclear capability, was provided by China. China considers Sikkim an "illegal annexation" of India and thus obstructs India's pursuit of a seat at the UN Security Council.

Another source of discord between the two countries is India's support of the autonomy and human rights of exiled Tibetan spiritual leaders. China regarded this as interference into internal affairs on the part of India. India also encouraged these Tibetans and other exiled Tibetans to express their views openly and to influence world opinion. India expresses the desire to maintain positive relations with China and claims not to consider China a threat. At the same time, its high-ranking officials have identified China and Pakistan as two of its principal threats.

Furthermore, Indian newspapers in March 2003 announced the purchase of Su-30 MKI aircraft as enhancing China's nuclear capability (Tucker). China and India signed a pact for mutually beneficial relations under the Five Principles of Peaceful Coexistence, as published in the 2001-2002 annual report of the Indian Ministry of External Affairs (Tucker 2003). It has been India's intention to establish such relationships on the basis of equality and responsiveness to each other's interests. But China has not been responsive to the chronic border conflict in refusing to consider India an equal.

An Agreement on Confidence Building Measures concerning these borders brought the two countries to a series of constructive and cooperative efforts for the 21st century. After 13 meetings of the joint working group, the problem has not been resolved. There were other memorandums and agreements signed in New Delhi on January 14, 2002 on science and technology, outer space, tourism, phyto-sanitary steps and provision of hydrological data on the Brahmaputra River during floods to India by China.

India and China are considered the world's largest developing countries and thus possess the responsibility of promoting economic development. World leaders also see them as sharing more similarities than diffused by differences as both declare the desire to cooperate with one another in bilateral trade. That trade has grown from U.S.$265 million in 1991 to $3.6 billion in 2001. The increase from 2000 to 2001 alone was 23.4%.

But real bilateral cooperation still requires settling and changing their perception of threat from each other, the elimination or avoidance of rivalry in regional issues, improved relationship with Pakistan and, most specifically, a genuine solution to the long-standing border dispute (Tucker). A comparative study of the growth prospects in China and India revealed capital formation as the key factor in the surge of their economies rather than growth of total factor productivity (Heid and Dougherty 2007). Capital formation has been behind China's excess of growth as compared with India.

But a likely increase in household savings in India could make up for the decrease in labor force growth and, as a result, overtake China's growth in the ensuing decade. India would also be more likely to formulate policies to improve its total productivity. Consequently, it could produce faster output growth yield than China's and catch up with it. Indian institutions are also more pliable than those in China (Herd and Dougherty).

The Pakistani Institute of Strategic Studies said that the nuclearization of South Asia three years ago increased the tensions in the region, particularly Pakistan, China and India (Kyodo 2001). Pakistani General Pervez Musharraf said his country expects continued help from China for minimum protection against major rival, India. This, according to General Musharraf, was to maintain strategic regional balance in Asia. The United States often accused China of assisting Pakistan bolster the latter's nuclear and missile capability.

To this, General Musharraf responded that the defense cooperation was necessary and valid within the legitimate "bounds of international regimes." He added that, while Pakistan would want peaceable relations with India "with dignity and honor," he did not perceive this as a probability at this time as long as the trouble over Kashmir persisted (Kyodo). Overall comparisons showed that China was ahead of India in economic and regional political aspects (Prime 2006). China surpassed in terms of savings and investment, foreign trade and capital inflows, output growth and per capita incomes.

But India could catch up if it successfully encouraged private companies to compete and survive, put a check on poorly performing financial institutions and those yielding to political compromises. These measures could help boost India's savings and investment. On the other hand, China also needed to catch up with India's institutional strength (Prime). But both continue to be plagued with respective problems.

China continues to suffer from serious situations, such as an uneven competition in the private sector, a very sluggish financial sector, and trade patterns, which enhanced foreign but not domestic markets. It appears ahead of India because of the time element. It instituted reforms more than a decade before India's. Nothing could tell when and how India could catch up or match China's phasing. Some critics assumed that China's successes became the basis of its regional leadership in the 21st century.

Understanding the underlying forces behind the development of their respective economy could determine which was clearly ahead (Prime). Different articles discussed the life sciences industry in China, outlook in India, a supportive environment for outsourcing in China and outsourcing to India (Business Editors 2007). The life sciences industry article tackled specific developments in China and changes in its biopharmaceutical industry, specifically biologics, pharmaceuticals, bio-services and chemicals. The outlook on India discussed market size, anticipated growth, therapeutic area, its top 10 companies, and the current position of the country.

The supportive environment for outsourcing to China discussed the prospects of a strong government support, the establishment of an emerging middle class, lower research and development costs, higher talented and lower-costing human capital, and resources for the biotechnology, pharmaceutical and outsourcing sectors. And outsourcing to India considered cost advantage, research infrastructure, the clinical market and increase in outsourcing opportunities for Western investors and health service providers.

Policy changes appeared necessary to handle stiff administrative price controls, high import tariffs and tax and current patent laws, which were problem areas in India's pharmaceutical industry. In China's case, protection of intellectual property, a strong capital market, better observance of regulations and the language barrier were the issues needing to be addressed. The articles would use business models for application in both countries in areas such as partnerships, mergers and acquisitions, joint ventures, and relocation with outsourcing links (Business Editors).

A study group investigated the feasibility of a foreign trade agreement for China and India in April 2005 (Srivastava 2006). Such an agreement, under the World Trade Organization, implied a zero duty on goods. But it did not cover services, FDI or movement of persons. The study recommended that both countries should identify.