Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

No zero-sum games

Oct 21 2013, 10:59 IST
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SummaryBoth India and China would be better off learning to cooperate while competing.

Participating in a China-India-United States trilateral discussion at a leading thinktank in Beijing, a young scholar had a question that many around the world increasingly ask. “Today, the US is the number one power and China is the number two power,” said the young man. “By 2025, China will be the number one power and the US will be the number two power. A dialogue between us is necessary to manage the transition.” He then wondered aloud, “But why is India here? What is India’s rank? Where will it be in 2025?”

There is no use telling today’s young Chinese that for centuries, and till not long ago, the gap between China and India was never wide enough for anyone to view them as unequal. Linear projections that show China becoming the world’s biggest economy by 2025 also show India becoming the third biggest. But linear projections are statistical short-cuts and history takes its twists and turns. China has, for centuries, been ahead of India in terms of income and manufacturing capability. But in the last two decades, the gap has widened sharply in terms of economic performance, military capability and global influence.

Even so, an Indian political leader who would have no problem complaining to a domestic audience about being bullied by a developed Western power, even earning public sympathy for it, would only be inviting derision and mockery if she were to make similar complaints about China. Ordinary people understand that the rich and powerful bully the poor and meek. But no Indian political leader can afford to so complain about China, since China is still viewed by the general Indian public as more of an equal than a mightier unequal.

Therein lies the challenge for India’s political leadership in managing the transition phase in the medium term, when China remains more powerful but cannot be treated as such. To be sure, China is nowhere as powerful as the US, but it has acquired the ability to impose its will on individual nations around the world. From Australia to Germany, South Africa to South Korea, political leaders are careful not to rub China the wrong way. When the odd one like Japan’s Prime Minister Shinzo Abe tries to do so, the Chinese make their displeasure known to all, and the Western media lecture Abe to be careful. Indeed, even US President Barack Obama had to postpone a meeting with the

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