China and India: The Power of Two
November 28th, 2007
Submitted By: Catriona Banks-Orosco
In the coming election year one of the issues that will be hotly debated will be what to do with the border between the US and Mexico. Regardless of personal feelings, the US may want to look abroad at the world’s two fastest growing economies before making its decision.
Many people consider China and India to be business rivals. However, according to a recent article in the Harvard Business Review (Dec. 2007), China + India: The Power of Two, the countries are realizing that they have a lot to offer each other.
Instead of building barriers, a barbed wire fence was removed along Nathu La, a mountain pass that connects the two countries. Trade along this path was a significant factor in the growth of Chinese and Indian civilizations. While removing the fence may have been largely symbolic, the US would be wise to take notice.
In January 2006, the governments of China and India signed an agreement to work together on bids for energy resources. The oil companies in turn signed memorandums of understanding. The joint venture won a 50% stake in a Columbian oil company in 2006. Earlier this year, the two also agreed to work together to acquire oil assets in Venezuela and Angola.
After China and India cut themselves off from each other, the countries evolved in complimentary ways. This has reduced the competitiveness between them and strengthened their ability to work together. In China it makes sense to build manufacturing plants and take advantage of the infrastructure. India has a clear advantage in software development and trains tens of thousands of “technically sophisticated, English-speaking” graduates.
India and China have made it clear that they are ready to work together in some areas. Business leaders that embrace both countries will be able to tap into diverse strengths, just like China and India will do.
It’s interesting to me that many Americans are trying to close our borders to protect us at a time when so much of the world is opening up to the possibilities of technology, creativity and capitalism. India and China “put feeding their millions ahead of border disputes.” It’s estimated that by 2016 India and China will account for close to 40% of world trade, a position similar to where they were 200 years ago.
I can’t help but view the US as a teenager within the context of world history. Our country is still young, and perhaps too proud to consider the lessons that other nations have gone through.
Entry Filed under: Pre-Departure, China, India, Pre-Departure
14 Comments Add your own
1. Naomi Guy | November 28th, 2007 at 11:09 am
I did some quick research, and found a blurb relating opening our borders and economic success to help support my earlier comment…
“In the automotive industry, the industry comprising the most U.S. trade with Mexico, NAFTA provisions consisted of a phased elimination of tariffs, the gradual removal of many non-tariff barriers to trade including rules of origin provisions, enhanced protection of intellectual property rights, less restrictive government procurement practices, and the elimination of performance requirements on investors from other NAFTA countries. These provisions may have accelerated the on-going trade patterns between the United States and Mexico. Because the United States and
Canada were already highly integrated, most of the trade impacts on the U.S. automotive industry relate to trade liberalization with Mexico. Prior to NAFTA Mexico had a series of government decrees protecting the domestic auto sector by
reserving the domestic automobile market for domestically produced parts and vehicles. NAFTA established the removal of Mexico’s restrictive trade and investment policies and the elimination of U.S. tariffs on autos and auto parts. The
automotive industry has had the highest dollar increase ($31.6 billion) in total U.S. trade with Mexico since NAFTA passage.”
This quote shows that the US can gain 31.6 billion dollars by ’simply’ working together. It’s remarkable people are so hesitant to participate in more of these deals.
If anyone is curious to read where this quote came from, it’s a very long and in-depth article you can find here…
http://www.fas.org/sgp/crs/row/RL32934.pdf
2. Chris White | December 3rd, 2007 at 11:12 pm
The border crossing at Nathu La resembles more of a mountain trail than a major trade route between two countries with the first and third largest economies in the world. In fact, the article mentions that the only products allowed to pass through this post are things like raw silk, horses, and tea. These things are not exactly groundbreaking technologies. The point is that these countries are beginning to see the importance of working together by putting their political and historical conflicts aside. They still do not see eye to eye on a lot of issues, but they each realize that they have complementary strengths and weaknesses which can help both countries become more successful. In addition, China and India are the most populous countries in the world, so trading with each other makes sense.
While I am sure the United States could gain some insight from the economic collaboration between China and India, the reality is that the U.S. and Mexico are much different neighbors than China and India. Mexico and the United States offer each other complementary services like China and India, but the difference between these two cooperatives is that Mexico is unable to keep pace with the U.S. from an economic and technical standpoint. On the other hand, China and India both have similar populations and booming economies.
In regards to border security in the United States, the main concern is over protecting and enforcing legal trade and legal immigration. Illegal immigration costs taxpayers millions of dollars each year in unpaid taxes, hospital bills, education and many other areas. I think most people tend to neglect how much legal trade actually occurs between Mexico and the United States. Most people just seem to take notice of the negative issues. In response to one of the comments above: the reason why the U.S. does not import more goods directly from Mexico rather than China is because the Chinese imports are much cheaper despite the effort it takes to get them here. Although Mexican produced products are cheap and relatively close in proximity, their prices still cannot compare to those from China.
3. Mark Fairman | December 6th, 2007 at 4:55 pm
Although China and India are currently in a state harmony, can it really be suggested that this will remain? Both countries are developing at a breakneck pace; mainly due to the fact the economic expansion is their number one priority. This doesn’t mean that either country is void of military strife within the region. India and Pakistan have had three wars in the past half-century—over land ownership (Kashmir). China keeps enough missiles pointed at Taiwan to disable to state in a matter of days—because Taiwan desires independence, but nationalism in mainland China can’t allow the loss of land.
So, as natural recourses in the area continue to diminish, will these two fuel-consuming powerhouses play nicely over accessibility to reserves? Just today, the geographic buffer country of Myanmar just awarded China the rights to their natural gas reserves, beating out India for the contract. Both countries have nuclear technology, and are increasingly developing nuclear reactor plants to create energy, which poses many more problems.
Then next 50 years will be interesting in the relationship between China and India. Will they work together to achieve global success, or will they need to flex their economic muscle in order to get what they need to sustain?
4. Lindsay Leaver | January 9th, 2010 at 4:55 pm
I agree with the posting, but I also think there are some other things to consider. First of all the Kashmir dispute. It was mentioned in the comment above, but he didn’t mention that China is involved in that dispute as well. It is not just India and Pakistan that feud, China is involved. So while India and China may be “working together” in some areas, they certainly are not best friends.
Also,I think China and India have no choice but to work together. Combined they make up almost half of the world’s population, who else are they going to work with!
That being said, I do think the US should be mindful of what other countries are doing with their boarders and look at some examples. Regardless of political views, we can probably all agree that our relationship with Mexico is problematic. Trying to work together to resolve some issues would and use the relationship to our advantage seems much smarter to me than a building a wall, literally.
5. Phil Hamer | January 24th, 2010 at 10:38 am
It is not hard to control a border when you have an enormous mountain range and poverty on both sides of that border. Almost all the wealth in China lies on the Eastern side. If Shanghai were bordering India rather than Tibet, it would be a much different story.
The fact that Tibet is the bordering land is another thing to take into consideration. India has much sympathy for the plight of the Tibetans. They have granted land to thousands and thousands of Tibetan refugees and have given the Dalai Lama a place to live and rule. This has been a strain on India and China relations.
Since this article was posted there have also been other border disputes with China and India. In fact, just a couple months ago there was an article in the Wall Street Journal that told of Chinese soldiers bullying Indian Nomads in disputed territories. Who’s being juvenile now? Both countries are 5,000 years old and they don’t even know where their borders are! Along the borders are lands claimed by China and controlled by India and vise-versa.
China makes it difficult for their own people to immigrate from one province to another even within their own country borders. I’m sure if they were faced with the same illegal immigration problems that our country is, things would be much different.
6. Jason Silver | February 10th, 2010 at 9:39 pm
The border dispute between China and India can be compared only in terms of geographic proximity. The intensity of this border dispute could only be helped by the fact that both countries are experiencing economic growth above 7% annually. Therefore there is no massive effort of one countries population to move to its neighboring country in search of prospective economic advantages.
Mexico is experiencing economic growth of 1.3% annually and shows no real sign of increasing that number. American GDP decreased in 2009 by 2.4%, suffering a hangover from the worst economic depression in decades, yet the allure of “The American Dream” remains strong.
It will interesting to see how China and India’s relationship persists. As for America and Mexico, I do not think the two neighbors will be opening up the borders any time soon.
7. Erika Bylund | February 17th, 2010 at 3:01 pm
Jason brings up a good point in his comment. When there is a huge asymmetry in the immigration trends between neighboring countries, there is a cause for concern. The pros and cons of Mexican-American immigration policy are well-known and hotly debated. But for the first time (between 2008 and 2009), California has actually seen an outflow of immigrants from the state back to Mexico.
To be clear, the U.S. has not closed its borders to Mexico. And I think it’s easy to lose sight of that fact. The U.S. has become more stringent in its immigration policies and procedures and has reduced the number of visas and green cards it issues annually, but the borders are still open, freely, to those who follow procedure and meet the requirements. I’ve heard many complain about how stringent American immigration requirements are, but the U.S. is not alone. Many European countries, like Holland, also have “impossible” entrance requirements. It is important to share opportunity with those who want it, but not to the detriment of the current citizens.
Also, the blog author insinuates that there are more pressing disputes to deal with than the border issues, pointing to the fact that China and India spend a lot of energy making sure their constituents can eat and have jobs. Well, what happens after you make it to that point? The U.S. is at a totally different point in its development than China and India. Rather than make the analogy that the U.S. is like a “teenager within the context of world history” I would argue that a better analogy is that the U.S. is like a mature company in the industry- large in size, producing stable returns, and relatively rigid in terms of innovation. India and China would be in the growth stage- volatile and uncertain with the potential for huge growth and the ability to become the new industry leader if it can make it past this first critical stage.
8. John Barry | February 21st, 2010 at 8:38 pm
While China and India may have found a mutually beneficial relationship from working with each other does not mean that the same could be said of other nations in completely different circumstances. Furthermore, the article cited speaks of international trade, something the United States does conduct a fair amount of with Mexico.
The closing of the border has to do with keeping illegal immigration down. Unfortunately for the American economy and Americans alike, it is not the most highly educated and innovative members of Mexican society who enter the country illegally though Texas, Arizona, and California. Instead it is those whose qualifications keep them from thriving in their own nation. While they may in fact contribute a fair amount to their employers here in America, the fact that they are willing to work for wages far lower than those expected by their American counterparts has dessimated the American middle class, while increasing the number of poverty level Americans, and also increasing the net worth of those illegally hiring these unregistered workers.
9. Catherine Kristensen | February 22nd, 2010 at 8:57 pm
It is very interesting to contrast these two sets of neighbors (Mexico/US & China/India). Collaboration, trade and resources are the first few factors that come to mind when I think of how neighboring countries can be analyzed.
When countries are more like peers and on level-playing fields, it seems that there is more potential for collaboration. I see this as the possibility for China and India. They are both in a phase of major growth and that commonality lends itself well to developing policies designed for the collective.
Mexico and the US, on the other hand, are not likely to be viewed as peers. We’ve got the Pacific Ocean in common, but that is about where the threads of similarity end. When one government is providing resources, especially education or health care, to their citizens, outsiders are willing to take major risks, however illegal, including human smuggling, to take part in those activities.
What a different situation this would be if the Mexicans that wanted to be in the US had similarity to the “tens of thousands of technically sophisticated, English-speaking graduates” of India. I think the emphasis on a wall dividing Mexico and the US would change drastically if that was the case…
10. Michael Minasian | March 6th, 2010 at 2:50 am
Echoing on what many have said above, I think that it is both unfair and unwise to compare the US/Mexico border with the India / China border. The reason for building a wall between the US and mexico may have symbolic implications economically, but the point of it is for security reasons. The economic implications for massive immigration come in the form of social services. The problem that our border faces are just different from the other border situation. As far as I can tell there aren’t masses of Indian’s who want to immigrate to China or vice versa. I also find it funny as someone pointed out above that many of the elitist European nations who condemn every move the US makes, have much stricter rules in place of their own. They certainly wouldn’t put up with millions of undocumented additional people in their countries. Some do, many don’t.
11. Yuxiang Gao | March 8th, 2010 at 11:10 am
The simultaneous emergence into the global economy of two countries containing nearly two-fifths of the world’s people is after all an unprecedented phenomenon. Moreover, China’s dominance of global manufacturing seems matched by India’s arrival as an important provider of information-technology and other services.
Zhu Rongji, a former Chinese prime minister said: “You are number one in software. We are number one in hardware…Together we are the world’s number one.” That is India’s misfortune. Hundreds of thousands of Indians work in IT services whereas manufacturing for export provides China with tens of millions of jobs.
It is interesting to see that the history always repeat the same story. Hundreds years ago, China was the biggest economy in the world. Then the government tried to close our borders to protect us at a time when so much of the world is opening up to the possibilities of technology and that’s the begging of the decomposing.
Now as what mentioned in the article, some Americans are trying to do the same thing.
But in my opinion, though the situation in the USA is similar but also different, the main concern is over protecting and enforcing legal trade and legal immigration. Illegal immigration costs taxpayers millions of dollars each year in unpaid taxes, hospital bills, education and many other areas.
12. Frederick Peemoeller | March 12th, 2010 at 4:06 pm
Rather than show our closed border with Mexico, I think in this context you should show our open border with Canada. This makes more sense since both the USA and Canada are at the same level of economic and government stability. Mexico, on the other hand, is a country with so many resources but a horrible infrastructure. It is most definitely a step below its neighboring northern countries.
China and India both are emerging at the same time. They compliment each other well and their cohesiveness has definitely helped their growth. I will say that our cohesiveness with Canada has also provided similar benefits. We send thousands of senior citizens up there to get cheap drugs, and we reap the benefits of their large oil reserves. This shows that we do have more similarities between our neighbor than one may think.
13. Jordan Wente | March 14th, 2010 at 6:03 pm
China and India may be cooperating with each other now but will this really last? The reason for this cooperation is due to the two different paths of development that currently complement each other. As both countries continue to develop, I see the relationship between the two becoming increasingly tense. Right now India is not able to be as competitive in manufacturing due to restrictions created as a result of lack of infrastructure. Once infrastructure is in place that will enable India to compete with China’s manufacturing capabilities, I can’t imagine that the two will be as cooperative.
There are many other factors that could cause friction between the two countries. They might be working together now on acquiring energy resources but as these resources become more scarce and demand for them in each country continues to grow I would imagine that will place a major strain on the relationship. Additionally, political differences between the two countries have the possibility to create tension. We also have to consider that at the moment border relations are not a main priority for India and China. The focus for both is economic development not border control. Thus, as long as they are cooperating with each other and not creating problems that might halt either ones plans for economic growth, this issue is on the back burner. It will be interesting to see how their relationships evolve over time.
It’s great that the two countries are collaborating and utilizing each other’s strengths to further their goals for expansion. This is defiantly something the US should learn from. However, I think the situation between Mexico and the United States is quite different from that of India and China. I agree with many of you that they are just in different stages and shouldn’t be compared to India and China.
14. Chris Phippen | March 19th, 2010 at 2:42 pm
I’m in agreement with many others above. The U.S. should indeed take note and learn from the border policies of other countries. However, the two situations could not be more different. India and China have complimentary traits. How exactly do the U.S. and Mexico compliment each other? In the India-China situation, there are scores of educated, English-speaking, technically literate workers being shared. Is the population of Mexican immigrants largely comprised of such workers? I do see the value in a certain amount of workers coming from Mexico, coming from an agricultural background, but we are also dealing with a population/illegal immigration issue here in the U.S. The border issue in the U.S. also raises the sensitive issue of national security. I’m not well-read on the security concerns of India or China, but I know we have some legitimate concerns on the subject here in the U.S.
Also, in what ways can the U.S. contribute to Mexico if such symbiosis was to take place? Any thoughts?
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