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Sifting through Berlin

Jun 12, 2007

Dr. Manmohan Singh expressed his views on the future of Sino-Indian ties with possibly more enthusiasm than Mr. Hu Jintao (the Chinese President) in Berlin last week. And this is in the aftermath of the Chinese refusing a visa to an Indian officer visiting Beijing on some official junket as he was from Arunachal Pradesh - a part of India that the Chinese consider as their own. By hoping to make China India's "greatest neighbour" and having the "strongest relationship" with it (should we read something more into the use of these adjectives?) Dr. Singh seemed to be more enthusiastic about the prospect than Mr. Jintao. Dr. Singh expressed a desire about the Sino-Indian trade reaching a target of US$ 40 bn by the year 2010. To put things in perspective, in 2006, India bought US$ 12.6 bn worth of goods from China and could sell goods worth US$ 5.6 bn to it. In the first four months of 2007, India-China trade has already touched US$ 11.4 bn. While Indian exporters bear the brunt of an appreciating Rupee, the Chinese currency's unwarranted under-valuation has made trade into India grow much faster.

It has been an argument that the Chinese imports into India are of low quality goods while India hopes to getting into niche high end products. What we forget in this rhetoric is that these mass produced goods are the ones that do not require too many skills and are thus the ones that India can happily mass produce if we get our power problems sorted out (China adds about 40,000 MW of generation capacity every year while India managed to add less than 25,000 MW in the last five years).

And there is always the niggling doubt about Chinese goods being 'dumped' at a price less than their actual cost of manufacturing. A financial daily today reports that low grade Chinese steel amounting to 7.5% of India's total annual steel production has been 'dumped' into India since the beginning of 2007.

A WTO report released on May 9, 2006 highlights that China is tops in the world for its anti-dumping cases. "For the 11th year in a row, one-third of the cases implementing anti-dumping sanction in 2005 involved China. Even though the total number of anti-dumping cases declined globally in 2005, the case volume involving China did not decline at all. Of the roughly 2,500 anti-dumping cases brought between the establishment of the WTO in 1995 and June 2004, 386 were against China, with measures imposed in 272 cases." So, our enthusiasm about our northerly neighbour needs to be tempered with some reality.

A holier-than-thou Mr. Bush
Mr. Bush's attempt in painting India with the same brush as China in his Johnny-come-lately act on global warming issues needs to be strongly protested against. China's huge addition to power capacity has also seen a drastic increase in its pollution levels as two-thirds of its power generation is coal-based. Also its rapid industrialisation has seen indiscriminate leveling of hillsides to build cityscapes. And out there, there is no recourse to law for the dispossessed.

India's environmental laws have been used to stall many roads and activities; Mumbai's Sewri-Nhava Sheva link that was first mooted thirty years ago, is still being debated upon. Korea's POSCO that would have completed putting up three steel plants in as many years in China, has been stalled by the Orissa state government on environmental and land acquisition issues for more than three years now.

And it is strange that Mr. Bush is pontificating on an issue whose existence he had refused to acknowledge just seven years ago and when the United States yet remains the world's greatest contributor to greenhouse gases. As of today, India and China are exempt from emission levels. And all their carbon credits earned can be sold to the deficit countries/companies. For once, India should be happy to have its "strongest" neighbour agreeing with it that the onus of reducing the existing greenhouse gasses is on the countries that put them there in the first place.

The out-reach partners
China, Mexico, Brazil, South Africa and India, among the world's fastest-growing emerging nations and representing about 42% of the world's population, were the chosen band of five by the all-powerful G8 that represent about 63% of the world's GDP. These five also have met and discussed even as the super eight spend time together in the German resort of Heiligendamm. Facing common problems and having similar agendas in their quest for growth will hopefully see them working cohesively to make sure that global growth becomes more equitable.

That way the anti-globalisation protests that mark every G8 summit will slowly lose their steam.


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