China’s rising economic might and its implications for India

China’s offer to invest $300 billion — 30% of the 12th Five Year Plan target of $1 trillion — for India’s infrastructure development in the next three years is at once an opportunity and a challenge.

It is an opportunity that has never come India’s way from any other country. Economic engagement with China on such a scale with access to its investible surplus, expertise, technology, products and, perhaps, labour, too, would transform not only the Indian economy and the pace of its development but also India-China relations to a formidable global partnership.

The challenge is whether India has the political and diplomatic courage to seize this opportunity. Coming as the offer does at the fag end of the UPA’s term, the challenge – of taking up China’s offer and of engaging China at an altogether different level of trust – would be the first and biggest test of foreign policy in 2014. This opportunity is a challenge to India to overcome not only its trade but also its trust deficit in its relations with China.

Rising China’s sole aim is to prevail on the strength of its awesome economic might. With over $ 3.8 trillion in reserves, China is the biggest holder of US treasury bonds, and Washington remains “deeply indebted” to Beijing. While the US-led developed world, bled by the economic crisis, is yet to recover from the funk it found itself in, China marches on. As the world’s second-largest economy, stable and prosperous enough to feed its 1.4 billion people, the global crisis saw China buying the debt of European countries, which would hitherto have shunned the Asian giant.

In many countries, including the US, China is the ‘angel’ investor aiding economic revival.

The US approach to China, at all times, has been to get the most out of China’s economy but keep down its military and strategic influence. Even Japan, despite its troubled ties with China does not put bilateral business at risk. India should follow the example of Japan and the US without being snared into their strategic games, which are calculated to keep India and China apart. Japan and the US want India as a strategic sidekick, but are unwilling to invest in India as much as they do in China.

Also, as China races ahead with economic reforms at home and increased investments across South Asia, India’s smaller neighbours may look more towards Beijing than New Delhi.

In Central Asia, too, India lags far behind China, which has emerged as the dominant power -- ahead of both Russia and the US -- enjoying the support of Iran as well as Pakistan.

India is also losing out to China in Africa and the Gulf. China’s win-win strategy, always a challenge to India, is now also an opportunity to shed fear and suspicion. India needs to look at China as the US, Japan, Australia, New Zealand, Europe, East Asia and others do; deal with China as they do to advance mutual interest; and, create conditions for this through a paradigm shift that brings forth new perceptions, possibilities and prospects.

India has much to gain by partnering a process where the $300-billion assistance is the first step of a deep and abiding engagement toward ending poverty in Asia. It can be also turned into a win-win situation for India and Indians.

India should shun the 1962 mindset and, like the US and other “advanced” countries, benefits from China’s economic success.

The author, an independent political and foreign affairs commentator, worked as Senior Editor with China Daily and the Global Times in Beijing.