NEW DELHI When China's prime minister, Wen Jiabao, arrives here on Saturday, his four-day visit will be filled with the usual handshakes and protocols that would ordinarily go little noticed beyond this region. This diplomatic mission, though, will have an altogether different feeling.

Perhaps for the first time, there is an expectation that both India and China, together representing a third of humanity, are coming into their own at the same moment, with the potential for a dynamic shift in the world's politics and economy.

The impact on the global balance of power, the competition for resources and the health of the planet is causing many analysts and political leaders to sit up and take notice.

For America and the rest of the world, this shift could be profound. In the years ahead, it may well mean more downward pressure on wages, the outsourcing of still more jobs, greater competition for investment, and higher prices for scarce resources.

The rise of China has already been felt far and wide, from the export of often unbeatably cheap manufactures to the thick plumes of its industrial pollution that spread eastward across the Pacific and the effect of its fast growing economy on rising oil prices.

The addition of India, already a major force in services, could pull the globe's economic and political center of gravity decidedly toward Asia, and away from an aging Europe and a United States already stretched by security threats and swelling deficits.

Indeed, Beijing's overtures toward India are being contemplated with a keen awareness of China's rivalry with the United States, which has also jealously courted New Delhi, lately promising to help make it a "major world power in the 21st century.

For that reason, Prime Minister Wen will come bearing a package of initiatives.

They are aimed at drawing India and China, the world's two most populous nations, closer than they have been at any time since the 1950s.

Both sides say they will push hard to resolve a decades-old border dispute. There is talk of a free trade agreement as well as joint oil exploration and purchases of commercial airliners.

China may even endorse India's bid to become a permanent member of the United Nations Security Council, or at least strongly hint at its support.

"If the measure is whether you consult them or take them into account, both countries will be major powers," said Stephen Cohen, a senior fellow at the Brookings Institution, a research institute in Washington.

Still, he noted, relations are not completely carefree. "As long as their relationship remains trade, economic ties, cultural, even kibitzing with the U.S., that is fine," Cohen said, "but as soon as you get some confrontation, on the border, Chinese goods flooding into India, or an incident at sea, or in Tibet or Nepal, then things quickly become much more nationalistic and complicated."

Indeed, competition is a byword as much as cooperation. The day after Wen arrives, work is set to begin on India's first indigenous aircraft carrier. The construction is clearly being undertaken with China's rising power in mind.

"Nonetheless," Cohen added, "I see them collaborating in a lot of areas: high technology, the auto industry and others."

China, already an economic powerhouse, is increasingly on people's minds in India, both as a model to be learned from and a cautionary tale. From boardrooms to research institutions and opinion pages, Indians speak often nowadays of matching their neighbor's success and power or, as some now dare suggest, surpassing it.

As long ago as 1959, John F. Kennedy spoke of the importance of what he saw as a contest between these two giants, casting their rivalry as one "for the leadership of the East, for the respect of all Asia, for the opportunity to demonstrate whose way of life is better."

Not least, the two nations pursued divergent paths: India, democracy and belated economic reforms since the 1990s; China, a Communist system that began reforms in 1979, unleashing rapid economic growth.

But for much of the last half century that contest was a dud. China nearly self-destructed during the Cultural Revolution of the 1960s, and India wasted decades on policies that left its economy closed and stagnant while hundreds of millions of its people were mired in poverty.

Today, their simultaneous emergence has few comparisons in modern history, economists say.

According to the World Bank, their combined growth can be credited with cutting the share of the world's population living in extreme poverty to 20 percent in 2001 from 40 percent two decades earlier.

By the reckoning of most experts, China's development enjoys a good 15-year head start on India. Today India has more illiterates - 480 million, by some estimates - than the country's entire population at independence in 1949, dire poverty on a much larger scale than in China and even persistent hunger.

"India still faces problems that China addressed 50 years ago, rural reforms that would allow us to create a minimally capitalist environment," said Jayati Ghosh, an economist at Delhi University. "It is obscene that we haven't provided education, but we also have 250 million educated people we can't employ."

Despite India's rapid growth, that gap shows no signs of narrowing, and Indians worry openly whether a consensus for growth can be sustained with the kind of single-mindedness that has helped propel China.

There is constant talk these days of turning Mumbai, the coastal commercial metropolis formerly known as Bombay, into a new Shanghai, mainland China's most glittering modern city. For now, that is little more than a pipe dream.

More to the point may be Bangalore, India's booming capital of telephone call centers and high-tech software. Even there, growth has been menaced by political delays that have stalled construction of a new airport for seven years. Shanghai, on the other hand, built one of the world's most spectacular airports in just three years.

Such contrasts have left some Indians to remark, sometimes despairingly, about a "democracy price" that slows their development. At the same time, almost invariably Indians say they would have it no other way.

"I'm often approached by friends returning impressed from China, saying how our airports in Bombay and Delhi can't compare," said G.P. Deshpande, a longtime China scholar at Jawaharal Nehru University in Delhi. "When I tell them that these things come in a package, that you don't just get the new airports, and I describe the package, though, they say 'no, thank you."'

The package Deshpande alludes to is strict authoritarianism, which allows the local and central governments in China to rezone entire districts without so much as a hearing, to pollute city and countryside without having to face public objections and to conduct large-scale social engineering, often disastrously, but with similarly little question.

Indians who follow events in China say proudly that no government of theirs could survive the kind of major mining disasters that are a regular occurrence in China.

"Both countries have waited 3,000 years for this moment of economic liberation, of solving age-old problems of want, and being 15 years behind doesn't matter to us," said Gurcharan Das, a former corporate executive and author of India Unbound, a bestselling account of his country's recent revival. "Indians will wait if that is the price of being able to talk, which Indians hold dear."

Despite the sharp limits on free speech in their country, Chinese intellectuals talk, too, often enviously, of India's advantages in democratic governance. For all of China's apparent strengths today, they say, future success may depend on democratic reform.

"If China learns its lessons from India, it can succeed in democratizing in the future," said Pang Zhongying, a professor of international relations at Nankai University in Tianjin.

"India is a far more diverse country," he said, "a place with the second largest Muslim population in the world, and lots of ethnic minorities, and yet it organizes regular elections without conflict. China is 90 percent Han, so if India can conduct elections, so can China."

Chinese have also begun openly to question the kind of growth their authoritarianism has spawned.

"We are using too many raw materials to sustain this growth," said Pan Yue, China's environment minister, in a recent interview with the German magazine, Der Spiegel. "To produce goods worth $10,000, for example, we need seven times more resources than Japan, nearly six times more than the United States and, perhaps most embarrassing, nearly three times more than India. Things can't, nor should they, be allowed to go on like that."

Pan predicted bluntly that China's miracle "will end soon because the environment can no longer keep pace." Others worry about China's seeming addiction to massive investment, which leads to huge waste and steep cyclical downturns, a shaky financial system imperiled by a massive burden of non-performing loans, and rampant official corruption.

Pointing to those traps, where India is far less vulnerable, experts in both countries say that contest between China and India is far from decided.

Pressed for a prediction, Zhang Jun, director of the China Center for Economic Studies at Fudan University, in Shanghai, said he sees the two countries' positions converging within 15 or 20 years, by which time they may rank as the two largest economies in the world, if still far below the United States and other top economies in terms of per capita wealth.

How they get there, and the examples they set along the way, may hold important lessons for other developing nations, on global peace, human rights and democratization.

"If China continues to grow and grow, people will inevitably begin to think this is proof of the validity of their system, and that would be very bad for all of Asia," said Subramanian Swamy, president of India's Janata Party and former minister of law, commerce and justice.

"On the contrary, if India continues to emerge, taking a seat on the Security Council, it will have a tremendous impact for the good. As far as exporting democracy, it is only a matter of time before India gets the self-confidence to begin doing this."

The so-called rise of China
Asia's power game

Jonathan Power International Herald Tribune
Friday, April 8, 2005

LONDON When in 1964 China first tested a nuclear weapon, the West had every reason to be worried. Here was a country that had recently fought the United States in Korea, had threatened countries as far afield as India and Indonesia and had supported revolutionary movements all over the third world.

But today, the threat of Chinese military domination should worry the West very little. Its nuclear arsenal is rather small: a mere 24 intercontinental nuclear missiles that are able to reach the United States; no aircraft carrier battle groups for projecting its power; and very few destroyers. China is constructing no long-range bombers and has no military bases abroad. Its 70 submarines rarely venture outside Chinese territorial waters. Even vis-à-vis Taiwan, against which it has deployed 600 short-range missiles, China does not have the makings of an invasion force that could overwhelm Taiwan's defenses.

Nevertheless, both the White House and a majority in the U.S. Congress continue to act as if the United States must contain China militarily, even while professing engagement.

In Tokyo recently, Secretary of State Condoleezza Rice, when asked to defend the presence of such a large number of U.S. troops in Okinawa, replied that they were there to balance the rise of China. John Mearsheimer, professor of political science at the University of Chicago, argues, "China cannot rise peacefully," and there is "considerable potential for war."

The assumption seems to be that the economic juggernaut will in the long run turn into a military threat. But it does not follow that an increase in China's regional power and influence will translate into a reciprocal decrease in American power and influence. Neither power nor wealth is baked only in one size. The cake can grow for both. It is not a zero-sum game.

Why Washington feels that the United States' longtime presence in East Asia is threatened by China owes more to paranoia than good sense.

Often overlooked is what Foreign Minister Tang Jiaxuan of China told former Secretary of State Colin Powell, that China "welcomes the America's presence in the Asia-Pacific region as a stabilizing factor."

China's success has been grossly over-hyped. China still accounts for only a small proportion of world trade, and even in its region the latest figures show that China is a long way from dominating East Asian trade. Total regional imports from China are about 9 percent compared with Japan's 17 percent and America's 18 percent. Although Germany is Europe's biggest exporter to China, its exports there are only 7 percent of its total.

The apparent high flow of foreign investment into China is used to trumpet China as the wave of the future. But most of that flow comes from ethnic Chinese. And much of the so-called investment from East Asia originates in China and makes a trip via places like Hong Kong only to come back as foreign investment to attract tax concessions.

China, unlike India, still does not yet have enough ingredients for long-term success. It does not have any world-class companies of its own. Its legal framework is rickety, and there is no guarantee that a dictatorial political system will have the flexibility to contain the stresses and strains of economic expansion pursued at the current rate.

In terms of literature, films or the arts in general, China is overshadowed by much smaller Chinese communities - in Hong Kong, Taiwan and Singapore.

It is probably only a matter of time before the faddish fascination with China switches to booming India. Once it does, it is unlikely ever to switch back, as investors realize what it is like to have a haven where the law works, albeit too slowly, and democratically elected politicians are not just accountable, but persuadable and approachable.

When it comes to China, time is on Washington's side, and the time should be used to engage China further, not to fear it or aggressively seek to counter it.

That said, it will always be important to stand up for Taiwan's democracy and not to brush under the carpet the memories of Tiananmen Square.

Maintaining the arms embargo on China and pushing Europe to do the same sends the message that the United States is not setting aside any important principles. All the more strange, then, is the inexplicable contradiction to its otherwise too tough China policy: The United States has recently given notice that, unlike in recent years, it is dropping its policy of voting to criticize China at the UN Human Rights Commission.

(Jonathan Power is a commentator on foreign affairs.)