Commentary

It’s Goodbye Chindia and Hello Chimerica

Some years ago, Jairam Ramesh coined the word Chindia, hyphenating China and India, to denote a great new geopolitical development. The earlier BRIC report had identified China and India as potentially the two fastest growing states that could one day rival the US in GDP. By 1990, China had emerged as the world’s manufacturing champion. Later, India emerged as a champion exporter of services, ranging from computer software to back office work, call centres, and R&D.

China had always been a UN Security Council member, and since 1990 was acknowledged as an economic powerhouse. But at the time the world bracketed India with Pakistan, because of their long history of aid and antagonism. In the 1990s, India and Pakistan required massive assistance from the IMF and World Bank.

That finally changed after the information technology revolution. In 2003-08 the Indian economy averaged almost 9% growth, second only to China’s. India’s economic feats catalysed former US president Bush’s decision to break existing nuclear rules and forge a nuclear deal with India. Indians hailed this as the definitive de-hyphenation of India from Pakistan, which was denied a similar deal. Instead, Chindia denoted a new hyphenation with China.

This was always a stretch. The Indian economy grew fast in the last five years, but remained far behind China’s. India’s big population makes its GDP look big, but also means it has the largest number of poor people, infant deaths, maternal deaths in childbirth, and highest child malnutrition in the world. India cannot end Maoist violence in 160 of its 600 districts or insurrections in Kashmir and the North-East. The Indian state looks weak and incompetent even as the Chinese state looks strong and competent.

The gap between China and India has become glaring in the current global financial crisis. China has become a major global player, second only to the US, while India is barely on the radar screen. Many blame the US for financial excesses that triggered the meltdown. But the US says the problem originated in the massive trade surpluses of China, which accumulated foreign exchange reserves of $2 trillion, eight times as big as India’s.

The US became dependent on China for selling its treasury bonds. China’s surplus dollar holdings were dumped back on the US market. This, says the US, was massive enough to depress US interest rates, encouraging an overborrowing and overconsumption spree.

Maybe this analysis is exaggerated. But unquestionably the macroeconomic imbalances causing the global meltdown arose in the US and China. Although the G-20 group of countries met to work out solutions, many commentators (including Martin Wolf of the Financial Times) spoke of the emergence of the US and China as the G-2, the only group that really mattered. Historian Niall Ferguson coined the term Chimerica to represent the great new geopolitical reality — that the 21st century will be dominated by China and America.

India scarcely matters. It is still a country that instinctively seeks aid and foreign concessions. On the international scene, it is a taker, not a giver. China, however is now a giver. In the proposed expansion of the IMF’s lending, China has offered to supply $40 billion, against $100 billion from Japan and possibly the US. India does not figure in this giver’s list — it would rather be a receiver.

Even as China gets hyphenated with the US, India is getting re-hyphenated with Pakistan via Islamic militancy. India looked clueless in dealing with a series of bomb explosions in 2008. Then 26/11 exposed its vulnerability to a suicide attack. The Indian media and political class sought to blame everything on Pakistan. Yet, India could not find and arrest all the local conspirators.

Pakistan is being eaten alive by the Islamic militants it once incubated. Islamists have ousted the state in the Federally Administered Tribal Areas and parts of the North West Frontier Province. The chief minister of NWFP has fled to London. Terrorists struck at the Sri Lanka cricket team in Lahore, leading other cricketing countries to cancel future engagements in Pakistan.

Indians smiled at Pakistan’s discomfiture. But then came the IPL cricket league fiasco. The Indian government declared it could not guarantee the safety of foreign cricketers if the league matches were held at election time. So, the IPL shifted to South Africa. That country is reputed to be the crime capital of the world. It is also having an election, but, unlike India, can handle that and the IPL simultaneously.

So, India is getting re-hyphenated with Pakistan as a place where international cricket faces grave security risks. South Africa, whom nobody has ever hyphenated with China, is streets ahead of India in this respect. So, let’s say farewell to the illusion of Chindia. The reality is Chimerica.

Swaminathan S. Anklesaria Aiyar is a research fellow at the Cato Institute’s Center for Global Liberty and Prosperity.