Rich China, poor subcontinent

By C. Raja Mohan

THE CHINESE prosper by finessing political differences. South Asians stay poor rather than compromise on principles. The world of China has become rich by putting economics above politics. India and its cousins in the Subcontinent today more Maoist than the Chinese - politics is always in command. Any one travelling from South Asia to the Far East cannot avoid making a comparative assessment on how the two regions handle the tension between the imperatives for commercial cooperation among neighbours and the reality of massive political discord.

The conflict between India and Pakistan in the subcontinent and the tension between China and Taiwan are widely seen as two of the world's most dangerous flashpoints today. But see how differently the two adversaries handle their economic relations. China and Taiwan are pushing faster and faster towards economic integration. India and Pakistan seem to find it impossible to trade.

Last week, the Commerce Minister of Pakistan, Mr. Abdul Razzak Dawood, was in India for a meeting of the trade officials of the subcontinent. Mr. Dawood took no time to sign a joint statement with his Indian counterpart, Mr. Murasoli Maran, thundering against the ``evil machinations'' of the developed countries at the World Trade Organisation. But what about trading with each other, the two Commerce Ministers might have been asked. Should not India and Pakistan be exploring ways to expand trade among the billion-plus people in the subcontinent, before they tell the rest of the world how best to define the rules of commerce?

When asked about trading with India, Mr. Dawood suggested helplessness. He pointed to the political genius of Gen. Pervez Musharraf, who insists no two nations can trade before resolving their fundamental political differences. The maximum concession that Mr. Dawood could get himself to say was that ``let us move in tandem'' in dealing with Kashmir and trade. Mr. Dawood is from one of the old trading families of the Subcontinent with its roots in Kathiawad. But the genetic impulses of trading in the subcontinent appear to have been overwhelmed by a political environment dominated by fundamentalism of one kind or another. Pakistan thinks its very existence would be threatened if it opened its borders to commerce from India. One wants to believe India is a little smarter than Pakistan. That New Delhi might want to do everything in its power to put trade above politics in the subcontinent. But that might be asking the Indian to think like the Chinese.

Weeks before Gen. Musharraf came for talks at Agra last month, the Government of India announced with some fanfare, that it was offering unilateral tariff concessions on 50 lines to Pakistan. And we were told that the details would be announced before August 15. Independence Day has come and gone; but there is no word yet from the Government. The bureaucrats of the Commerce ministry would travel around the world arguing against the WTO. But they do not have one innovative idea to break the trade barriers in the subcontinent.

If India and Pakistan are ``dumb and dumber'' when it comes to trade and commerce, China and Taiwan are ``smart and smarter''. While New Delhi and Islamabad were finding excuses not to trade with each other last week, Taiwan announced this week far- reaching proposals to lift restrictions on trade and investment links with China. Newspapers in Taiwan sum up the essence of the policy recommendations from an advisory panel to the President, Mr. Chen Shui-bian, in the following words: Taipei must drop its ``no-haste, be patient' policy of curbing trade with China in favour of a new approach that advocates ``aggressive opening, effective management'' of risks involved in deeper economic links with China.

Now step back for a moment and consider the language. The injunction ``no-haste, be patient'' sounds like instructions from the Commerce Ministries of India and Pakistan. But China and the subcontinent have drifted so far apart on trade related issues that words do not have the same meaning any more. Under the ``no- haste, be patient'' policy of the last few years, annual bilateral trade between the two Chinese economies has grown rapidly to nearly $ 30 billions. The estimates of Taiwanese investment in China vary widely from $ 50 billions to $ 70 billions. By conservative assessments, there are at least 30,000 factories in China with Taiwanese investment. Taiwanese businesses have reportedly created at least three million jobs in mainland China.

All this under a policy in which Taipei has put ``restrictions'' on trade with China. Under the present regime, there is a cap of $ 50 millions on the individual investment projects in China. Direct trade, transport and postal links are prohibited by Taiwan. Visits by people between the two countries are also ``controlled''. Now the proposals under deliberation in Taiwan call for direct and expansive economic engagement between the two countries, allow China to invest in Taiwanese real estate (the holiest of the holies), promote tourism from mainland, and encourage collaborative projects.

All these ideas are from a regime in Taiwan that China suspects of harbouring sentiments of independence and separation! All this dense trade and investment links are between two entities that do not recgonise the political existence of the other. Both claim that they represent the real China. (Almost the entire world now supports the view that Beijing is the only representative of Chinese people.) If under restrictive arrangements the trade turnover every year is about $ 30 billions, one wonders where commercial relations between China and Taiwan will head in the coming years.

In comparison, formal and informal trade between India and Pakistan does not add up to more than a couple of billion dollars annually. If the jehadis in Pakistan and the bureaucrats in the Indian economic Ministries have their way, bilateral trade between the two countries is going nowhere. Is there anything India and Pakistan can learn from how China and Taiwan handle the relationship between the politics and economics of bilateral relations? The first and foremost lesson from the world of China is that the pursuit of prosperity must be must be put above everything else.

It is not possible to argue that the political and security problems between China and Taiwan are in any way less salient than those between India and Pakistan. In both the situations the issues are seen as going to the core of the nationhood. When the stakes are so high, there is little room for political compromise.

Yet the Chinese, in pursuit of economic pragmatism, have found a way to move forward. The Chinese leader, Mr. Jiang Zemin, commended a similar approach when he travelled through the subcontinent at the end of 1996. In his address to the Senate in Pakistan, Mr. Jiang shocked his hosts by suggesting that if India and Pakistan cannot solve the Kashmir dispute, why not just put it aside for the next generation?

It will be easy for the Indian side to blame Pakistan for the lack of trade and commerce between the two nations. But, as cousins, India and Pakistan have both failed to put trade and commerce at the heart of their national economic strategies. Much like Pakistan, India has allowed political ideologues, conservative foreign offices and security experts to drown out the voices of pragmatism.

This terrible pattern is not limited to India's relations with Pakistan. It extends to India's ties with most of its neighbours in the subcontinent. Citing security considerations or bogged down by ideological inertia, India has opposed or slowed down a whole range of innovative economic ideas - for quadrangular cooperation among India, Nepal, Bhutan and Bangladesh, or for an economic grouping involving India's eastern regions and the adjacent provinces in China to name just two.

The transition towards economic rejuvenation and political pragmatism in the subcontinent can only come from India. If New Delhi wants to lead the region to a new era of prosperity, it could begin by getting its political class to see how greater China does business and commerce among its different entities for the benefit of all.

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