Facade vs reality of Chinese/Indian politics of growth: Lessons for today

In my first interview on ‘Offensive Defense’, I explained the history of Chinese economic rise, based on my book, ‘Containing the China Onslaught’, and that this growth was more a function of precision in their political steps rather than their economic mastery.
China and the US behaved very strangely during a 50-year period of Chinese growth, when the US gave all levers of power, at their expense, to China. Again, they are behaving strangely, but this time with intense rivalry. Corona has also hit them and their relations, with the US and many other countries charging China with manufacturing the virus and sending it to the US and other countries. Together, they were invincible, but with the US opposing China, it is weak.
Chinese growth
India and China shared 50 per cent of world’s GDP equally from 1AD to 1830 AD, and then surprisingly also fell equally to 5 per cent from 1830 to 1970 together (period of colonial rule and first two industrial revolutions).
Everything changed from 1970 after US-China understanding, IR 3.0, end of colonial rule and in 2017, China was 25 per cent and India 5 per cent of the world’s GDP (PPP terms). This miracle was mostly due to China holding the hands of its arch rival US for achieving growth, and not for any political reason, and India remaining the same non-aligned centrist country, with many phases of crony capitalism. China helped the US to neutralize its Cold War rival, the Soviet Union. But there was no need. When the US started actively helping China in the Eighties, the Soviet Union had almost collapsed under another US policy of encouraging democracy in Russia with help of leaders like Boris Yeltsin and Mikhail Gorbachev — and without the US firing a single bullet. Such was the intellectual power of the US, and Deng Xiaoping called Gorbachev an idiot for destroying the powerful Soviet empire. History will only determine who contributed to humanity more. Gorbachev was the West’s observer just before the Tiananmen massacre, and Deng walked him through Tiananmen Square and convinced him that no massacre was on
the cards.
Mao wrote his version of ‘100 year marathon’ in 1950 aiming to take over the US in hundred years after independence. Mao tried to anchor growth with the help of extreme Maoist ideas like great leap forward, Red Guards etc. and failed miserably. There were famines. Mao understood the need to understand how capitalism works from the most powerful country, the US, with the highest GDP. Mao’s genius was that he fitted the China narrative with the promise of helping the US vis-à-vis Soviet Union problem.
He met Nixon in 1972, fully knowing that Nixon had an allergy to Indira Gandhi, after his unsuccessful attempt to help Pakistan in the Bangladesh war in 1971, and would not encourage India to join the American market bloc, the only other bloc with huge numbers being considered for collaboration by the US before the 1972 meeting. When Chou En Lai laughed loudly at Nixon’s mention of Indira Gandhi as a witch/bitch, the Chinese leaders knew they had won. Deng Xiaoping was attacked during the Cultural Revolution by the Gang of Four, the radical supporters of Mao. He and his family remained in jail till 1976. Mao died in 1976 and his chosen successor, Hua Guofeng, took over. Deng’s superior political skills and broad base of support soon led to Deng’s leadership both in party and government in China in 1980-81. Deng’s ascension to leadership changed everything from Mao’s radical thinking in the polity and business. Deng co-opted the US and started fooling everyone with spiel.
Deng prepared plans with US help and China started growing. He acted as if he was trying for democracy in China (to fool the US), but remained committed to Communism and convinced the US about the process. He also convinced the US to let the Communist Party continue for sometime which will gradually become democratic as US analysts believed that prosperity will force China to be a democracy. Deng’s façade of impending democracy in China was so strong that top US officials believed that and tried to bring it early when the CIA encouraged Tiananmen agitation for more freedom. When the agitation became very big, the Chinese knew it had to be crushed to maintain high productivity. They had no agent to complete this work, and on his retirement in 1987, the strong man Deng was appointed as Defence Minister. He crushed the agitation along with some generals, but 10,000 were killed (initial news said 200 were killed), and a few Chinese battalions revolted. Someone had to be punished, and again there was talk of Deng being executed. At this stage, Deng got a written letter from Bush Sr. that he sympathized with him, but would not support him openly. Bush writing such a letter saved Deng, but the letter is still a mystery (why did Bush Sr. have to write a letter). Or maybe, the Tiananmen massacre was a joint strategy of US/China so that huge profits of American companies in China continued with regimented labour giving very high productivity. This appears likely for three reasons.
First, the US-China agreement was to give the Americans the Chinese market, but this was never given. Instead, China gave Chinese spaces/efficient labour for American corporates producing and making huge profits. The Tiananmen agitation was hitting American firms’ productivity. Second, the US encouraged China to apply for WTO membership, which they did in 1998, and got accelerated membership in 2001. Thus, one billion Chinese workers joined the WTO fold. Countries like Russia also applied for membership at the same time and got membership in 2012, falling behind. China got a huge advantage. Also, as a member of WTO, China committed many IPR breaches but with US support never got punished. Further, Deng was encouraged to tour South China in 1992. This tour vastly increased the focus on the southern region including Shenzhen, Zhuhai, Guangzhou and Shanghai. Deng exhorted the community and resumed and reinforced the implementation of opening up. At this stage, China had intentionally appointed a weak President and Deng continued as the strongest man. All these steps indicate a strategy of cooperation but with deception, between the US and China, even for the Tiananmen massacre and later. Deng gradually faded away and died in 1997, but not before leaving a political/administrative structure which brought huge growth in China during 2005- 2015.
With its new found power, the Chinese are also loudly stating that they are very powerful and will shortly take over the world. Acquiring more power and land area has also been in the Chinese genes for thousands of years, with dynasties like Qing dynasty and Mao being revered even today. Maybe Xi Jinping, with his unhappy childhood, would want to get into the same league, but is finding it difficult. Let’s understand Xi’s ambition.
At the 19th Chinese Communist Party National Congress on Oct 18, 2017, Xi Jinping delivered a major speech in which he declared, “The Chinese nation has stood up, grown rich, and is becoming strong to…realize the Chinese Dream of national rejuvenation.”
Success of dynasties in China is judged by the expansion or shrinking of the territory of the country throughout history. Throughout China’s turbulent decades under Mao Zedong, he captured Tibet, Aksai Chin etc and spread the geography of China.
Under Xi Jinping’s “China Dream” it is imperative to increase the land grab to increase the geographical spread to the level of perhaps the Qing dynasty. They know better. Xi’s takeover of Hong Kong, his map making exercise in the neighborhood of Japan,
Nepal, Pakistan, Bhutan, India etc is the indicator of his Maoist instinct.
When China faces setbacks, her leaders have always retreated inward in focus and forces. China is facing enormous opposition from the global community on South China Sea and National Security Law in Hong Kong. The reconciliatory speech by Chinese
Foreign Minister Wang Yi on July 9 is an indication that if China faces substantial challenges internationally, they may become less aggressive.
China’s political and economic access and its rise on the global stage are astounding. China has bought elites and important people across the world. This precise strategy has paid them handsome results.
India didn’t figure in China’s grand scheme of things. China used to consider India an oversised irritant which needed to be bogged down as a regional power but after the Doklam/Ladakh crisis, the Chinese decision-makers are compelled to revisit their positions.
Chinese analysts wrote during the current crisis that India should be taught a lesson which it cannot forget for a long time through a swift and small-scale war and grabbing a large territory but they now know that this isn’t that simple. This was not the case earlier.
Ideas to tame China
Democracies should come together, as I suggested in my book. Some development is seen on this front. The US and UK plot to convert G-7 into a ‘D-10’ of democracies, including Asian powers India, Japan, South Korea and Australia, is a timely step to offer an alternative.
The development of strong trade, tech, and innovation linkages among democratic nations to prohibit the export of Chinese governance and economic models in the world.
China considers that times like these come once in a century and global order should be changed as per its imperial design. This has to be effectively challenged by India today.
Demographically younger India should come forward to do to China technologically what it did to the West: absorb, learn, copy, innovate, resist.
China understands that despite all its recent conflicts with the US and all other nations, the global capital flows aren’t stopping because of its large market, and decoupling with the US and the European Union isn’t happening right now so they assess that all the issues which generate conflict should be solved in this time period and at the same time they are keeping an eye on the global capital flows. Stopping global capital flows to China should be the primary task of the US and EU. Gradual decrease in buying Chinese products and services should be the future trend.
US multinationals have been active in direct investment in China, investing $14.1 billion in 2019, up from $12.9 billion in 2018. And while there has been much talk of US firms diversifying their supply chains, a March 2020 survey by the American Chamber of Commerce in China found that over 80 per cent of US companies are not considering relocating their manufacturing out of China. These trends need to be reversed by India offering better terms for investment to developed and technologically advanced countries.

(Pradip Baijal is former Secretary, Disinvestment and former Chairman, TRAI. He is the author of Containing the China Onslaught)

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