My inbox is always full of chain mail exulting the great China success story. They come to me largely from young Indians who see in modern China a model of growth worth emulating. India ranks way down in the list of nations easy to do business in. (The World Bank ranks us at 134.) Not that China is much better. (It ranks 96.) But it certainly looks better placed than us for the future, and I think much of the admiration for Narendra Modi comes the fact that he is seen as a guy who can bring about a similar Indian miracle. At least Nomura thinks so. So do CLSA, UBS, Merrill Lynch, Goldman Sachs, HSBC. In short, pretty much the rest of the world.
Last week I received an article about how millions of American workers and thousands of small communities all over the US are already dominated by China who acquired a record number of businesses in the US last year, and looks all set to better that this year. Take Smithfield, the world’s largest pork producer with facilities in 26 US states, employing 46,000 Americans with sales of $13 billion. It owns 460 farms, has contracts with another 2,100, Shuanghui, a Chinese company has bought it for $4.7 billion, to become one of the biggest employers in rural communities across America.
This is easy for China because of the US’ huge trade deficit. It leaves China with trillions of dollars to invest. As we all know, there’s little difference between the Chinese Government and the companies. Almost 50% of profits generated in China come from companies in which the State has controlling stake. (It used to be the same here till Manmohan Singh started his famous reforms and the public sector, already sick, went comatose.)
Last year China’s richest man spent $2.6 billion to buy AMC Entertainment, one of the biggest US theatre chains. Now Wanda is the world’s largest seller of movie tickets. Chinese companies are putting down roots in cities like Detroit and taking over traditional all-American businesses like making cars and auto parts. It’s impossible to say today how much of a GM car is American. But what makes Americans worry most is China’s acquisition of US energy resources. It mines vast quantities of coal in Tennessee. So much so that locals are now up in arms.
China is the world’s No 1 trading nation, if you add imports and exports. It has the highest foreign currency reserves. It has the biggest car market. It also produces twice the cars the US does, twice as much beer, thrice as much coal and 11 times as much steel. It’s the No 1 gold producer. It consumes more energy than the US. It’s the world’s largest manufacturer of goods. It consumes more cement than the rest of the world put together. It produces 90% of the global supply of rare earth elements. It’s the No 1 supplier of defence parts. And hey, it seems all set to take over more. So when we cosy up to the US, as we are doing today, we could well be cuddling China who is eyeing vast tracts of Indian territory in the North East.
No wonder, in such a complex world, where your friend could well be owned by your enemy, young Indians want a leader who can take India where China is today. They think Modi is that man. He has a track record of inspiring change. Unlike the Congress which has always enshrined the status quo. And young Indians believe, it’s the status quo that hurts India most.
But does it? Just shift focus a bit from economics to politics; you will be surprised. There’s no way Chinese politics could have ever thrown up the kind of results our Delhi elections did. The arrogant ruling Congress was booted out. The BJP won but barely. The unquestionable victor was a totally new party which had never fought an election, had no money, no muscle power. Its winning candidates are people no one has even heard of. Its hugely under-estimated leader, Arvind Kejriwal felled the two biggest giants with one tiny slingshot.
Could this have happened in China? Not by a long shot.
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