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| Edited By: |Source: DNA |Updated: Sep 25, 2015, 08:16 AM IST
Asian giants, China and India, are bending over backwards to woo an America that has not yet recovered from the debilitating and deleterious effects of the 2008 financial meltdown. This was indeed the theme that dominated the itinerary of Prime Minister Narendra Modi and Chinese President Xi Jinping. Both leaders are currently in the US.
China, the second biggest economy in the world, seems to need American investments, and is willing to allay the apprehensions of American investors and businesses in this regard. This seems to have been the objective that Xi had in mind as he assured American businesses at Seattle on Tuesday that China will make it much easier for foreigners to invest in his country. China also signed a deal with the US to buy 300 Boeing aircrafts.
India, the “shining star”, with the fastest growth rate in a global economy that is struggling to get back to its normal rates of growth, was anxious to address American misgivings as well. In Washington on Monday, the Union Commerce Minister Nirmala Sitharaman held out assurances saying that the Indian IT industry is not taking away American jobs, but rather creating jobs for them. Her words were aimed at facilitating Indian IT giants to grow their businesses in the US and earn those precious dollars to boost India’s foreign exchange earnings. It is significant that before Modi left for the US, the cabinet had cleared a US$3 billion (Rs20,000 crore approximately) deal to buy Chinook and Apache helicopters for the Indian armed forces.
It might be the case that China and India would have made these commercial transactions anyway, but the timing of the decisions was not merely fortuitous. Perhaps there is nothing strange or anomalous about China and India looking to the US for funds and technology. In terms of sheer size of their economies, the US (US$17 trillion) is quite ahead of China (US$10 trillion). India (US$2 trillion) is lagging far behind both the US and China.
There is a general perception that the American economy — at present — is like a burnt-out star. It might still have a lot of energy left in it, but the economy as a whole, some argue, remains sluggish and far from recovering its earlier buoyancy. The bets are largely placed on China, and some on India. But the immediate reality tells a different story. It seems that the US economy is recovering — though at a slow pace — China is wobbling, and India retains the promise of an economic powerhouse though it is nowhere closer to realising its potential.
It is now a certainty that the economic and financial developments unravelling in China will impact the global market sentiment. With China holding huge amounts of American securities, last month’s fluctuations in the Chinese currency, yuan, sent the world markets into a spin. So much so that Xi had to tell American businesses in Seattle that China does not indulge in currency manipulation. But China is known to put on the humble act of a developing country in spite of being the second largest economy in the world. On the other hand, Indian political and business leaders strut around with swagger, seemingly ready to take over the world. It reflects national attitudes but do not reflect ground realities.
Americans might be expected to prefer democratic India over semi-communist China in prioritising their business destinations. That, however, would be a wrong assumption to make. The experience of the last two decades has shown that ideology does not dictate American business decisions. China is still the top investment destination. India will get its share of American investments, but in proportion to its economic size. India’s economy has to grow further to assume that it can compete with China for the same investments. Meanwhile, American politicians and business leaders must surely find it gratifying to be courted by both China and India. Never mind that the US economy has lost the position of supremacy that it used to enjoy in the past.
