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S.K.

SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE


ACADEMIC YEAR-2015-16
ROLL NO-17
T.Y BANKING AND INSURANCE
SEMESTER-VI
SUBJECT-IMPORT FINANCING-WHAT INDIA SHOULD LEARN FROM
CHINA
NAME OF THE FACULTY-

IMPORT FINANCING-WHAT INDIA SHOULD LEARN FROM CHINA


China is the largest, and probably the smartest neighboring country of India. Besides being a
neighboring country, China is also the largest competitor of India in every aspect of
development. While India stays ahead of China in sectors like Space Technology, it is a fact that
India can learn a lot of good things from China. This article attempts to capture some points that
India can possibly learn from China.
The diplomatic and the international relationship angle:
For one, China is adept in conducting the international relationships with its neighboring
countries with an authority that is far better than India. A typical stratagem of China happens to
be a confinement of the latitude of their admissible answers, in case of which the other end has to
take an extra effort to make room for the bloated demands of China. This action inevitably
portrays Chinas compromising attitude but the reality remains that, it had given in very little.
An ideal example would be the recent Chinese incursions into our country. The Chinese proved
that, they are the true descendants of Sun Tzu in the art of war and it is a fact that, they are
masters in disguising an act of offence as that of defense. The Chinese cited the incursions as a
direct consequence of the increase in the border capacities and infrastructure along the Indo
China border expecting India to take a conciliatory stance and acceding to their quid pro quo
demands of dismantling the said structures. It needs to be mentioned here the numerous Chinese
border capacity enhancement programs, including the reconstruction of the Xingjian Tibetan
Highway which cuts across the highly controversial Aksai Chin area in July 2012. Added to
this were the persistent aerial and ground military exercises that China undertook in the Tibetan
Autonomous Region in 2012. The reaction of India to the said flexing of muscles by the Chinese
in an autonomous region was only of mere concern. China claims the state of Arunachal
Pradesh as a part of their country (dubbed South Tibet by the Chinese) and had even showed
the atrocity of allocating Chinese visas to the people coming from the said state.
India definitely took a strong stand pertaining to the recent border encroachments issues by the
Chinese, but the Indian message conveyed to the Chinese regarding the uncompromising attitude
of our country about the border issues perhaps had not been spelt out strongly to China.

China on the other hand is diplomatically two faced and its international relations are governed
by an effective use of speech technique with expedient implementation of intimidation and
advocacy. China is very coherent and strong when it comes to countering encroachment issues
within its territory. An example of this would be the strong disagreement of the Chinese to the
joint India Vietnam oil exploration program in the South China Sea, which is considered by
China as a part of its territory. While China strongly berated India for indicating South China Sea
as a global property, it also voiced its vehement opposition by expressing its zero tolerance
towards any joint venture in Chinese maritime sectors. The joint venture was eventually
abandoned in April 2012.
It therefore seems that, India needs to learn a trick or two from China when it comes to
diplomatic negotiations and extracting the best possible results in such cases. However, it is to be
kept in view that, the leaders of the two nations function under completely different
circumstances. While power changes hand once in every 10 years in China the political scenario
in India is quite different. So, a lesson in statecraft is also due for India from China.
The financial angle:
Presently China is enjoying an economic growth of 8% contrary to Indias 5%. China has a GDP
of USD 8.3 trillion whereas India has a GDP of USD 2 trillion. While China has a CAD of below
3% of the GDP, India has a CAD of about 5% of the GDP. Inflation in India is recorded at 7.5%
while China has an inflation of 2.6%. It is evident from the statistics that, when a widening CAD
and inflation is pulling down Indias economic growth, China is doing significantly well
economically, keeping the deterrent factors like CAD and inflation well under control.
However, the Chinese economy wasnt as smooth sailing as it appears to be now, even a few
years back. The economic crisis of 2008 has devastated Chinese economy with extremely high
inflation and CAD. While China has a majorly export oriented economy, 659 anti Chinese
export measures had been imposed on China in 2008, by countries like Germany, France, UK,
Spain, Italy and Russia. Through the implementation of prudent economic reforms, China had
turned around in just about three years time. By 2011 Chinese exports were once again
registering a growth of 14% and imports 5%. Most analysts are of the opinion that, higher

investitures of China amounting to 48% of the GDP in contrast to Indias 36% of the GDP puts
China in a financially much more stable position than India. Added to these are the Chinese zero
tariff and free market policies in sectors like agriculture in the South East Asian countries. China
has also made considerable investments in constructing international class roadways and ports to
promote both domestic and foreign trade. Through smart economic collaborations and prudent
investments, China had earned the financial edge that it presently has over India.
A recent OECD report predicted that by 2016, China will even overtake the US to become the
largest economy in the world. Given the fact that, the economy of China is more or less four
times that of India, it is evident that China has set enough precedents for India to learn from and
become a financially superior country from what it is today.
Some miscellaneous angles:
Given below are some miscellaneous angles where China is ahead of India and our country can
definitely take some lessons from China regarding the points mentioned below:

While India has become majorly dependent on external sources to meet its technological
requirements, China had taken an assertive policy of emulating technologies also known
as reverse engineering. So good the country has become in copying of technologies that
big brands starting from Samsung in electronics to fashion footwear like Crocs outsource
a major mass manufacturing to China. Low cost technology and cheap labor charges
make it possible. The international market is being flooded with cheap Chinese products
which are effective and functional, and in todays global technological battlefield,
definitely gives China, a significant edge over India. Such precedents had been followed
by many developed countries and it is advisable for India to follow such policies, which
will further pave the way for enhanced domestic innovations.

China had been instrumental in developing both its hard and soft skills that is
imperative for domestic vicissitude.

The Chinese leaders, who are essentially hardcore proponents of technocracy, have
steadfastly emphasized and driven the technological advancements of the country. The

Chinese Army, now a force to be reckoned with, is essentially a product of such


endeavors.

China has framed strict guidelines to promote indigenous innovations, one point that
India should immediately adopt.

China had been consistently restructuring its governance so as to achieve the best
possible governance which will further bolster technological advancements.

China has consistently advocated reforms in its leadership of organization to effect


changes like ascent from state to market based undertakings.

China is well aware of the fact that, for the proper existence of a high technology defense
mechanism, it cannot be insulated from the civilian sectors. So China follows a policy of
coalition between its economically solvent civilian sector and a tech savvy defense
sector. As per Chinas 16 point policy, such integrations have proved to be immensely
fruitful for the technological upgradation of its defense mechanism.

China had introduced numerous market based reforms in its scientific research and
development sectors as well as its scientific institutions. Such actions have propagated a
thoroughly market oriented indigenous innovations sector effectively contained within
the realms of the government.

China is far ahead of India as far as educational reforms are concerned. Unlike India,
China had addressed its illiteracy problems aggressively and had introduced proper
reforms for the development of its educational infrastructure, in both quality and quantity.