Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Lessons from China - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 15, 1997

    Lessons from China

    Despite all the coverage in the Indian papers about the recent 45-minute meeting between Prime Minister Gujral and President Clinton, the sorry truth is that most American newspapers ignored this "watershed" meeting which is supposed to take Indo-US relations to new heights. I would not be surprised if President Clifton's official diary classifies that 45-minute Gujral meeting as a catnap! After all, what lasting words of wisdom can a temporary Prime Minister say even if accompanied by a temporary Finance Minister with a (Hopefully) permanently irreversible economic policies?

    But when the Chinese visit the United States, the story is different. Leading newspapers and magazines write pages on the present status of economic and political relations between US and China. Major television networks cover the event with great care and respect. The President of the United States gives more than a 45-minute meeting to the great leaders who descend from China. And the President's diary will probably be marked: "Stay alert, important meeting!". For all its noise on political repression and annual pony-show debates on most favoured nation status, the United States is a major economic ally of China. The United States has a US$ 40 billion trade deficit with China and total trade between the two countries is US$ 100 billion. If the United States, as the Indian power would like us to believe, really cares for countries with democratic values and dislikes authoritarian regimes, then the US companies should be buying all their toys, garments, and plastics from India. If that were to happen, India's exports would treble and we would have foreign exchange surplus the size of China - over US$ 100 billion.

    But that is not the case. China - for all its terrible T's of Tianamen and Tibet still gets the other good T of Trade surplus while India is left groveling with a begging bowl and a 45-minute chat between important meetings. Times have changed and so has the prioritisation between economic gestures and political importance. The romantic notion of Kennedy and Camelot are dead in this new world of Clinton and Wall Street. Being free and independent matters less than being rich and having ability to buy whatever you want - including respect. Our policy makers are probably still playing the song "India is the world's largest democracy" over and over again like a scratched gramaphone record not realising that the world has moved to compact discs - a seamless economic world with no hiss and no soul. (Its a little bit like the Congress Party reminding us that they gave Indians freedom from the British hoping to win election so that they can punish us for another fifty years with their loot raj!) All this democracy and independence is good for a while but, then as the Americans say, what is the bottom line? The sad truth is that China has a response, India does not. "Okay, so you can take your tanks and gun down people once in a while. But can you deliver me 2 million garments of highest quality at the best price in my ware house in Carlifornia in 14 days? Fine, you get the order - I'll take care of Congress".

    While all these economic deals between US and China are being done, the Indian media will tend to have that sneering editorial slant of how China needs to be more democratic like India which has that special bond with the United States because both these great countries (USA and India, that is) value democracy and liberty. The problem with this sort of we-are-superior attitude is that it is a lie. In the eyes of the United States, India is that messy place somewhere between poverty and hunger while China lies within striking range of being an economic somebody. Sure, India has many bright individuals but - if they are really bright - the large US corporations will find a way to get them their green cards and give them a good life in the United States in exchange for their brain-power. In the 1980's the Reagan administration proposed the building of a neutron bomb - a weapon that would destroy the enemy population but leave physical place intact. In the economic warfare of the 1980's, the green card is the flip of the neutron bomb: it takes away the people but leaves the physical rot to decay further.

    I think its time to learn from the Chinese. If they don't care what the colour of the cat is "as long as it catches mice" we should proclaim that all our laws are dissolved unless they make sense. If the Chinese can redefine their communism as "socialist market" then surely we can add "market" to our socialism. If the Chinese can say that they no longer worry about making "each and every enterprise a success", surely we can throw VSNL to the wolves instead of supporting a monopoly based on extortion. If the Chinese understand that keeping sick state enterprises alive is an impossible task like "10 fingers trying to hold down hundreds of fleas", surely we can tell all our SEBs that they should collect their outstandings rather than take money from the government coffers. And if the Chinese can send tanks to knock some sense into their students surely we can send a few tanks to take care of striking employees.

    Don't get me wrong. I respect democracy and the right of the individual but if the country really wants to play this big economic game, then you have to play for the winning spot. There is no consolation prizes. The Chinese have done it successfully - just follow their script. And leave the journalists and policy makers to write their comments in newspapers which no one reads. What we need is for the White House diary to read: "Red Alert! Meeting with Sharpshooters from India".



    Equitymaster requests your view! Post a comment on "Lessons from China". Click here!


    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms