Britain and US real story on wars

For more than half a century Britain’s foriegn policy has been based on remaining as closly aligned as possible to US government policy.

For this very same reason former British Prime Minister, Tony Blair, led his country into US-led wars because the US government was set on going to war.

Within hours of the September 11th, 2001 attacks on the World Trade Center and the Pentagon, which killed over 3000 people in the US, the Bush government was blaming Osama bin Laden and his alleged Al-Qaeda network.

Thus began the so-called war on terror. Immediately the Pentagon put into effect its already-prepared plans for launching massive bombing raids against Afghanistan.

It has since come to light that implementation of American plans for an oil pipeline from Turkmenistan to Pakistan was the real goal of the war on terror.

At the time, no suggestion was made that Iraq was in any way connected with the September 11th attacks. But, a year later in September 2002, the US government and its media arms launched a disinformation campaign to persuade the American people and global public opinion that it was actually Iraq, which was behind the terror attacks on the US soil.

The then British government was part of “a coalition of the willing”, declared by Bush which joined hands in the so-called war on terrorism.

This is while long before those developments the US government had been pursuing plans similar to the UK’s colonial arrangements with countries in the Middle East and Central Asian regions. In fact, the invasions of Afghanistan and Iraq were all about oil as evidenced by released documents.

Afghanistan signed a major deal with the US in 1998 to launch a long-planned, 1680km-long pipeline project expected to cost $ 8billion. If completed, the Turkmenistan-Afghanistan-Pakistan-India pipeline (TAPI) would export gas and, later, oil from the Caspian Basin to Pakistan’s coast where tankers would transport it to the west. 

The Caspian Basin located under the Central Asian states of Turkmenistan, Uzbekistan and Kazakhstan, holds an estimated 300 trillion cubic feet of gas and 100-200 billion barrels of oil. Securing the world’s last remaining known energy ‘Eldorado’ is a strategic priority of vital importance for the western powers. China can only look on with envy.

But there are only two practical ways to get gas and oil out of landlocked Central Asia to the sea: through Iran, or through Afghanistan to Pakistan. For Washington, Iran is taboo. That leaves Pakistan, but to get there, the planned pipeline must cross western Afghanistan, including the cities of Herat and Kandahar.

In 1998, the Afghan anti-Communist movement ‘Taliban’ and a western oil consortium led by the US firm UNOCAL signed a major pipeline deal. UNOCAL lavished money and attention on the Taliban, flew a senior delegation to Texas, and even hired a minor Afghan official, Hamid Karzai.

However, Osama bin Laden advised the unworldly Taliban leaders to reject the US deal and got them to accept a better offer from an Argentine consortium, Bridas. Washington was furious and, according to some accounts, threatened the Taliban with war.

In early 2001, six or seven months before 9/11, Washington made the decision to invade Afghanistan, overthrow the Taliban, and install a client regime that would build the energy pipelines. But Washington kept on sending money to the Taliban until four months before 9/11 in an effort to keep it “on the side” for possible use in a war or strikes against Iran.

The 9/11 attacks, about which the Taliban knew nothing, supplied the pretext to invade Afghanistan. The initial US operation had the legitimate objective of wiping out Osama bin Laden’s al-Qaida. But after its 300 members fled to Pakistan, the US stayed on, built bases – which just happened to be adjacent to the planned pipeline route – and installed former UNOCAL “consultant” Hamid Karzai as leader.

Washington disguised its energy geopolitics by claiming the Afghan occupation was to fight terrorism, liberate women, build schools and promote democracy and the UK blindly followed suit.

Given the post 9/11 climate, Tony Blair claimed that it was his decision to join the US-led war on terror because he believed in it.

Blair said that given the same options he would still have made the same decision.

He said: “If there was any possibility that [Saddam Hussein] could develop weapons of mass destruction, we would stop him. It was my view then and that’s my view now.”

However, no weapons of mass destruction or even a trace of them was found in Iraq.

Britain and the US invaded Iraq because they wanted to control its vast energy resources. Moreover, there were neo-conservative dreams in both countries of restructuring the Middle East with democracy. The British pro-Zionist authorities and Zionist lobbyists in the US also thought of furthering Israeli interests by removing the crestfallen former Iraqi dictator from power.

And, as the US neo-con strategist Paul Wolfowitz famously said, weapons of mass destruction were just the “one thing we could all agree on.”

Britain, since the Suez crisis of 1956, has seen its interests tied to America’s.

The British and US governments have been misusing the United Nation’s Security Council as a tool to serve their own interests. In the case of Iraq, both the imperialist states, which had launched a secret war against the country long before the March 2003 invasion, tried to justify their atrocities by claiming they had a UN mandate to police so-called “no-fly zones” which they declared following the Persian Gulf War.

The latest example of policing “no-fly zones” was in the North African country of Libya, where Britain and France drafted a resolution at the Security Council to introduce a ‘no-fly zone’ to protect the country’s civilians from being killed at the hands of its former dictator Muammar Gaddafi.

But, the UN mandate turned out to be a pre-planned plot to overthrow the regime of Gaddafi on the back of a popular uprising fuelled ny discontent inside the country.

Now that the Gaddafi regime has been toppled, Britain and other western powers unveiled bids to secure a slice of the oil prize in Libya with France saying it was “fair and logical” for preference to be given to those who first helped the revolutionaries.

Ford's New Style Revealed in Evos Concept

Ford's New Style - Evos Concept

Ford has revealed images and limited details about its stunning Evos concept car, which will debut later this month at the Frankfurt Motor Show in Germany. The concept represents the next generation of Ford’s Kinetic design language, which began showing up on non-U.S. models several years ago and in the United States with the 2011 Fiesta, and 2012 Focus models. The carmaker’s global design chief, J Mays, told Car and Driver that the new look will include a visual emphasis on “perceived efficiency.” In this case, perception and reality won’t be too far off.

The Evos features a plug-in hybrid drivetrain—and the car’s refined sleekness isn’t just there for the gawking. Ford designers sought to lower the drag coefficient of the Evos without sacrificing the distinctness of the car’s silhouette. Early followers of the Chevy Volt may remember that that plug-in started out looking like an electric Camaro but would eventually come to more closely resemble a Toyota Prius, as designers sought improve aerodynamics and increase its overall efficiency. Thus far, Ford’s new design language looks like it will spawn cars that retain a style all their own.

In addition to aerodynamics and a plug-in hybrid powertrain, the Evos concept also gets a technologically-derived fuel economy boost. The car’s computer system is designed to recognize driver behavior and adjust engine dynamics to get the most out of each driving situation. There is also a feature possibly designed to keep the car in compliance with emissions-free driving zones— which could begin showing up in European cities by 2050 if a recently-released EU white paper is any indication. The Evos is capable of switching into all-electric mode as directed in zones that may have such emissions restrictions.

So when can we expect the new generation of Ford’s design language to begin showing up on production models? According to Auto News, the first car to incorporate the Evos’s styling should be unveiled in roughly four months time, possibly at the North American International Auto Show in Detroit. Stay tuned.

China-Pakistan Relations

Pak and China

Abstract

The paper examines the evolution of what is now viewed as an ‘all-weather relationship’, the bilateral  linkages  between  China  and  Pakistan.  It  seeks  to  demonstrate  the  nature  of  this partnership that has withstood the  test of time and what is the impact on it of certain recent international developments like the death of Osama bin Laden, and the resultant strains between the United States (US) and Pakistan. It argues that these events have raised the implications of Sino-Pakistan relationship from a regional to a global level, with the likelihood that the matrix on which it will be played out will now be wider.

Introduction

An enduring feature of international relations in contemporary times has been the high level of bilateral connections between China and Pakistan. Initially, they were strange bedfellows; one a socialist state and the  other  Muslim-majority, one a Western ally and the other a significant member of the Eastern Bloc. Yet, driven by perceived mutual common interests they managed to achieve such close proximity that the relationship now appears to have become deep-rooted, multi-dimensional  and sustainable. President Hu Jintao has described it as ‘higher than the mountains and deeper than the seas’. Prime Minister Yousaf Raza Gillani has matched the poetic parlance by describing China as ‘the most beloved of  all nations’. A recent Pew Survey of Pakistan’s public opinion showed that 84 per cent of those polled had a favourable view of China and 16 per cent of the US. That says it all! This rendered Pakistan the most pro-China country in the world. Unsurprisingly, both China and Pakistan describe their bilateral relationship as an ‘all- weather friendship’, in their political grammar, the highest in the pecking order of any type of bilateral linkages.

History of Evolution

In  1950,  Pakistan  became  the  first  Muslim  country  and  the  third  non-communist  state  to recognise the  People’s Republic of China. Throughout the 1950s, China’s relations with both India and Pakistan moved on an even keel and when Zhou en-Lai visited both countries in 1956, he tried his hands at balancing when he spoke with equal fervour of ‘Hindi-Chini bhai bhai’ and ‘Pak-Chin bhai bhai’. Though, when the relations with India soured by 1962 followed by the war, and ‘bhai  bhai’ became ‘bye-bye’, the relations with Pakistan, perhaps due to that very reason, grew and the borders were  quickly settled. The Pakistan International Airlines linked China to the outside world. Pakistan, technically a Western ally as a Central Treaty Organization (CENTO)  and  a  Southeast  Asia  Treaty  Organization  (SEATO)  member,  became  a  conduit connecting China with the US and facilitated, former US Secretary of State, Henry Kissinger’s and, former US President, Richard Nixon’s visits to Beijing in the early 1970s.

During the 1980s, Pakistan helped both the US and China to supply arms to the Afghan guerrillas fighting the Soviet Union, to  whom Pakistan had never felt close, partly for its ties with India, its stated position on Kashmir and for a sense of perceived betrayal in some Pakistani quarters during the Tashkent Agreement in 1966 (that concluded the 1965 Indo-Pakistan War). In 1986, Beijing and Islamabad signed a Comprehensive Nuclear Cooperation Agreement and  it is widely believed that China’s support was critical in Pakistan achieving nuclear weapon capabilities. Finally, in 2007, China became Pakistan’s biggest arms supplier with no strings attached and their true ‘strategic partnership’ began.

Some Ruffled Feathers

Occasionally, along the way there have been some ruffled feathers. Pakistan was not always satisfied with the reasons why China never militarised the strong verbal support during the Indo- Pakistani wars of 1965 or 1971. This was particularly true, during the Kargil conflict in 1999, when China appeared to take a neutral position between India and Pakistan, and had asked the visiting Pakistani Foreign Minister, Sartaj Aziz, to ‘settle disputes peacefully through dialogue and negotiations’. Indeed in 1996, Chinese President Jiang Zemin did cause some  ripples of surprise in Pakistan, when he asked that India and Pakistan build a cooperative relationship and set  aside  the ‘difficult issues’. The reference to Kashmir was not specifically mentioned but widely understood. In fact, China had always been a bit uncomfortable on the continued stress on Kashmir by Pakistan. As a principle,  ‘self-determination’ could have adverse ramification for, say,  Tibet  and  nationalism  based  on  religion  was  unpalatable,  due to  ramifications  for the Chinese Muslims of Xinjiang. Also, on the part of China, there was some unhappiness over, the former Pakistan President, Pervez Musharraf’s leanings towards the US. Over time, Pakistan, it seems, began to understand the subtlety and compulsions driving China’s postures. Eventually, Musharraf also turned to China and was able to get Beijing to criticise certain US actions in Pakistan. When  there was some opposition to holding the Olympics in China in 2008, the Pakistanis showered flower petals  on the procession carrying the torch through the country. China continued its generous economic and military backing to Pakistan and, in turn, Pakistan supported China on all issues of importance to China. These  included  questions of China’s sovereignty over, say, Taiwan, Tibet and Xinjiang, and other sensitive issues  such  as human rights, just as China has lauded Pakistan’s ‘counterterrorism’ role in the face of some negative vibes from the US.

Current Bilateral Ties

Strategic

The father of the Pakistani nuclear bomb, Dr A.Q. Khan, was a great friend of China. Indeed, China has  always  been a source of support and inspiration to Pakistan’s nuclear programmes. When stringent export controls imposed by Western countries rendered procurement of uranium enrichment equipment difficult for Pakistan, the China National Nuclear Corporation reportedly provided 5,000 ring magnets, key components to  the bearings that facilitate the high-speed rotation of centrifuges. China also designed and supplied heavy water  for a Khushab reactor,

which aids production of plutonium, key for building smaller tactical theatre weapons. This is important for Pakistan to build a possible first strike war-fighting deterrent of miniature battle- field tactical weapons, to be mounted on the recently tested Hatf-IX missiles with only a 60 km range and with a radiation fallout restricted to the battlefield. It has been claimed that this has already been achieved. Of course, Pakistani scientists provided enormous intellectual backup in these endeavours. Today, Pakistan probably has the fastest growing nuclear armoury in the world – somewhere between 90 and 105 warheads, or 70 to 120 by another account – a source of satisfaction to Pakistanis and worry to many other nations.

China is the source that largely equips Pakistan’s military, a powerful element in Islamabad’s policymaking. For the Pakistani Army, apart from small arms purchases, a joint venture project produces the Al-Khalid MBT-2000 tanks. Since 2007, for the Pakistan Air Force (PAF), China has been producing the multirole fighter aircraft JF-17 Thunder Fierce Dragons, (known in China as FC-1 Xiaolong) of which Pakistan has probably already inducted 22, while testing eight more and eventually looking to procuring 150. The PAF already has a fleet of  Chinese aircrafts, including F-7 PGs and A 5s. When Gillani visited Beijing in May 2011, following the US incursion into Pakistan that led to the killing of Bin Laden, the fast delivery of 50 JF-17s to Pakistan was agreed upon. At the end of the visit the Pakistani Defence Minister announced that Islamabad was requesting  China  to build a naval base for Pakistan in Gwadar, where Tianjin Zhongbei Harbor Engineering is already working on a US$1.6 billion project. While a Chinese spokesman  has  denied  it,  it  is  significant  that  to  the  Pakistani  Minister  it  appeared  like  a cherished aspiration that he perhaps wanted fulfilled. Since 2009, China has also been supplying the Pakistan Navy with F-22 P frigates.

Economic and Trade

China is investing heavily in infrastructures within Pakistan. Apart from nuclear power projects, the Gwadar Port and the Karakoram Highway along the ancient silk route, which began in 1966, there  are  several  mega-projects  in  which  China  is  involved  –  particularly  in  the  sensitive province of Balochistan. Next to the port, the China Harbor Engineering Company is building an international airport. In the same region, China’s Great United Petroleum Holdings is developing a US$13 billion oil refinery. Though, the political turmoil in Pakistan and economic challenges have led to decrease in foreign direct investment, which in fiscal year (FY) 2010-11 shrank by 28 per cent to US$1.23 billion in the 10 months leading up to April 2011. The Asian Development Bank has predicted that the Pakistani economy will grow by a moderate 2.5 per cent in 2011 and 3.7 per cent in 2012. In the struggling economy of Pakistan the consumer prices are still high and the budget deficit is growing to 5.5 per cent of the gross domestic product above a 4.9 per cent target for FY2011-12. Wa Gang, China’s Minister for Science and Technology, has said, ‘should growth improve, so will investments’. In 2010,  bilateral trade grew 27.7 per cent over the previous year to US$8.67 billion, with China exporting US$6.94 billion, and importing US$1.73 billion. During the Gillani visit, there was talk of raising those figures to US$15 billion by 2015.

A soft power that China exerts is that there are 6,000 Pakistani students currently studying in China and additional visits are being organised in each other’s countries for young people. The cooperation between both civil and military officials has also been very strong. Indian authorities have noticed  this cooperation and have  raised  a  point about the People’s Liberation Army engineers operating in Gilgit-Baltistan.

Drivers of Foreign Trade

While China is definitely a nation that has ‘stood up’ (as Chairman Mao Zedong reportedly said) and is on the  ‘rise’, Beijing sees this as a non-threatening and a ‘peaceful development’ or heping jueji, an expression  attributed to the scholar Zheng Bijian. There are certain ‘original roots’ in China’s behaviour pattern, dating back to Mao’s three-fold classification of the world, which view the ‘first world’ as the source of all instability. It is well known that there are red- lines that China will not allow to be crossed, such as an attack on its territory. But do current economic  interests,  such  as  the  US$3  billion  investment  in  Aynak  mines  in  Afghanistan, constitute as ‘core’ of an interest as ‘territory’ does? This remains the key question. Deng Xiaoping’s sobering advice ‘Tao Guang Yang Hui’ remains valid. It is difficult to translate, but roughly states, not to ‘hide brightness, bide time and build capabilities’ as Western translators have suggested. Though, it could also mean to ‘keep a low profile, be modest and prudent, and seek neither hegemony nor confrontation’ as many Chinese scholars insist.

Still, an increasing assertiveness is palpable, made apparent by the current US$91.7 billion Chinese defence budget, the second largest in the world. The manufacturing of J-20 Stealth Jets and DongFeng 21 D aircraft carrier killing missiles added to its ambitious blue-water naval plans reflect a burgeoning capability that would logically  find an expression in policy. Empirical evidence shows the river of Chinese policy meanders, but does not  suddenly change course. While China will be anxious to be seen as a constructive player in the global scene, its growing economic and military strength will find fruition in endeavours to slowly place itself in a pivotal position  of  international  affairs.  While  detailing  China’s  potentials,  Stephen  Roch,  former Chairman of Morgan Stanley, has said, ‘This is not a time to bet against China.’

For Pakistan there are constants and variables that drive its external behaviour. Pakistan has always sought extra regional linkages to narrow its power gap with its larger neighbour, India. This is its constant. The variables are the partners it turns to, initially to Western alliances and later to China. The length of its  relationship with China, however, is rendering this into a constant. Pakistan’s perception of India as an existential threat left it with no time or patience for idealism  in  foreign  policy  such  as  hobnobbing  with   non-alignment  or  Panchshila.  H.S. Suhrawardy,  a  Prime  Minister  in  mid-1950s,  acidly  remarked  on  this  non-alignment  in  a mathematical metaphor, ‘zero plus zero equals zero’. Pakistan’s recent bitter experiences  with the West and the North Atlantic Treaty Organization may have brought to the fore another significant  potential  adversary from  the West.  Indeed,  there  are those  Pakistanis,  including fundamentalist Islamicists,  who may be beginning to feel India is the lesser adversary. The answer to this may also lie in turning to China, as the Gillani visit in May shows. A US$5.95 billion defence budget, as the current Pakistani one is, is clearly insufficient for these objectives. This also means China for Pakistan is not just a counterpoise to the regional preeminent power but also to other pre-eminent global actors. This implies the graduation of this  relationship to another level.

Conclusion

The relationship between Pakistan and China cannot just be measured in statistics. It is far greater than the sum of its parts. A practical test of how this relationship will impact on global politics will lie in the post-US withdrawal from Afghanistan. Pakistan will possibly want to see a government in Kabul that it is comfortable  with.  This may include elements of the Taliban. China will want its assets protected, and will appreciate a Pakistani role in this. Gillani, during a recent visit to Afghanistan, has reportedly already advised on the need for  Kabul, even under Karzai to be wise and connect with Beijing. While it is too sensitive to bring Russia into this

‘Great Game’ yet, President Asif Ali Zardari had visited Moscow before Gillani travelled to Beijing. This was for the second meeting of the quadrilateral discussions – comprising of Russia, Pakistan, Afghanistan and  Tajikistan  – on the Afghan issue, the first took place in the Tajik capital of Dushanbe in July 2010. So can  Pakistan also play the role of a conduit, at least in Afghanistan, between Beijing and Moscow as it once did  between Beijing and Washington?

With the Iranian Foreign Minister recently visiting China , can  Pakistan persuade Iran, a fellow Muslim country though with whom bilateral relations have blown hot and cold, into this set of understandings?

These  are  challenges  that  confront  the  diplomacy  of  both  Pakistan  and  China.  Next  year, Pakistan will sit in the United Nations Security Council, as India is sitting now and China is a permanent member. Obviously,  the  two friends will have a chance to coordinate their global policies, providing a wider matrix to play out their bilateral relations. It will be important to do so because Pakistan and China have now emerged as each other’s closest allies. They will also need to work through one perceptional difference. Pakistan is often in a hurry,  because of exigencies. For China, on the other hand, time is not of the essence. When asked about the impact on history of the French Revolution of 1789, Zhou en-Lai famously remarked, ‘It is too soon to tell!’

China and India: Competitors or Collaborators?

Manmohan Singh

Shahid Javed Burki

Introduction

It has now become a cliché to talk about China and India as the rising giants in the global economy. As  President Barack Obama famously observed during his state visit to India in November 2010, ‘India was not rising; it had already risen.’ A similar statement was made of China a decade ago. Combined, the two countries carry close to 40 per cent of the world’s population.  They  account  for  almost  10  per  cent  of  global  production.  This  year,  both countries  saw  their  GDP  grow  nearly  10  per  cent;  this  rise  accounts  for  the  greatest contribution to global output.

What is interesting is that the two countries have taken very different routes to attain their present state of development. The result of the different paths taken by China and India are two very different economic  structures and possibly two very different economic futures. Given  these  differences,  will  the  countries  become  competitors  or  collaborators  in  the evolving global economic and political systems? A historical  comparison to today’s China and India could be made with France and England of the late eighteenth and early nineteenth century – two sets of countries both rising in economic prosperity and linked by geographical proximity. The question remains of whether China and India create a bond or take the route of France and England, creating decades of hostility.

One complication for China and India may be that they share a long border, parts of which are still contested. That said, it is more than likely that the two Asian giants will work with each  other  to  their  mutual  advantage  rather  than  become  hostile  neighbours.  It  seems extremely unlikely that the border disputes will not be resolved diplomatically and, therefore, not re-enacting the military actions of 1962.

Economic Transformations of China and India

China began its journey towards rapid economic growth and modernisation in 1976 when the mantle of  leadership moved from the shoulders of Mao Zedong, the founder of modern China, to Deng Xiaoping, the country’s builder. India’s rise started a decade and half later in

1991, under the stewardship of Dr Manmohan Singh, the country’s current Prime Minister and then Finance Minister.

The process of economic change began in both countries during periods of great crises. In China the crisis was political. An ailing Mao became erratic in his tactics for establishing his successor.  He  had  attempted  to  influence  his  succession  by  sending  a  number  of  his competitors, including Deng Xiaoping, into domestic exile. Deng bided his time and after a struggle with the group that came to be called the ‘gang of four’ which included Mao’s wife. Deng later  emerged as the undisputed leader of post-Mao China. For India the crisis was economic as the country faced a severe BoP crisis that led to the pledging of gold to obtain finance which would keep its international payments current. It was clear to the managers of the Indian economy that the old model of excessive control by the state over the processes of production had not worked. It had established what had come to be called the ‘license raj’ which  kept  a  tight  control  over  private  investments,  permitting  only  those  that  were considered to be socially desirable. The result was what Indian economists themselves had called the ‘Hindu rate of growth’ – increase in the rate of GDP of about 3 to 3.5 per cent – not enough to deal with the growing problem of poverty. The slight opening in the market that was allowed in the mid-1980s by the Congress Party government headed by Narashima Rao had put an enormous amount of pressure on external accounts.  With the opening, imports picked up while exports remained stagnant.

There are a number of other similarities between the two countries in addition to the origin of periods  of  development  in  deep  crises.  Both  countries  are  modernising  rapidly,  India somewhat more narrowly than China where the process of change is much broader in scope. Both are seeing enormous growth in the sizes of their urban populations. Both are becoming integrated in the global economy, again China more rapidly and more thoroughly than India.

Differences between China and India

Apart from the similarities noted above, there are a number of differences in the way the two countries are being managed. India is a well functioning democracy that over the years has been able to give voice to its diverse citizenry and provided enough space within the political system not to have those with grievances to  adopt approaches outside the constitutions to express their frustration. The political system in China is centrally managed with little space allotted to those who are aggrieved and would like to express their views. This is certainly the case if these views markedly differ from those held by the ruling Communist Party. A vibrant print and electronic media in India is fully representative of its boisterous democracy. In the decentralised  Indian  political  system,  a  variety  of  political  parties  hold  power  in  the constituent states. In China, the centre and the provinces are governed by the same party – the Communist Party.

The structures of the two economies differ. In spite of rapid development of the economy and the modernisation of a number of sectors, India remains a largely rural and agrarian-based economy. On the other hand, manufacturing is a large sector for China. China relies much more on external trade to find  markets for its rapidly developing industrial base. In India, output of the economy is much more oriented towards meeting domestic demand. There is no international  pressure  on  India  to  stimulate  its  domestic  demand  for  feeding  economic growth.  Such  a pressure has  been  exerted  on  China for  years. Many in  the West  –  in particular in the US – believe that the global economic imbalances can only be corrected if China moves its growth strategy from export expansion to domestic demand promotion, and in the process appreciates its currency.

The Process of Development in the Two Countries

How did the two countries reach their present economic situations? For both it happened in two phases.

In China, there was emphasis on human resource development and achieving food self- sufficiency during the Mao period from 1949 to 1976. During this time the country was able to achieve universal primary education and universal primary health coverage. It also brought out its women from near-servitude. The second phase from 1979 to 2011 saw China become the  workshop  for  the  global  economy  moving  from  the  production  of  labour-intensive manufacturing to technologically sophisticated goods.

India’s two phases were from 1947 to 1991 and from 1991 to the present. In the first phase, it put the state on the commanding heights of the economy in order to invest in heavy industries for the public sector. In the second phase, it pulled the state back and allowed more freedom to the private sector. India now gives the state a much less significant role than it did during the period of the ‘license raj’. That is not to say that the state has pulled back entirely. For instance, foreign direct investment is still allowed in a limited extent in some sectors. In retail trade,  for instance, multi-brand stores  are not  allowed to be established.  Investments in finance and insurance are also subject to strict state scrutiny and control.

On the external side, China has a policy of working with its neighbours to develop a regional economic  system,  making them less reliant on the markets in the West. It is correct in assuming that those markets, given the serious demographic transitions they are experiencing, have only a very limited capacity for expansion. The expansion that will take place will be in non-tradables such as healthcare. India, on the other hand, remains indifferent towards much of its immediate neighbourhood, preferring to leap-frog over them  and reach out to the rapidly  transforming  economies  of  East  Asia.  China  has  used  the  large  programme  of domestic demand stimulation to deal with the Great Recession of 2008-09 by connecting

itself with its neighbours by building a modern transport infrastructure.

Devising a more China-India-Centric System of Global Economic Management

With these differences in history and endowments, the two countries will have to work hard to work together.  One way of doing this will be to create a G2 between them based on developing common positions on international economic issues. During his first official visit to  Asia  in  November  2009,  US  President  Barack  Obama  indicated  his  support  for  the establishment of a new political order for the management of  the global economy. A G2 made up of the US and China would be at the apex of the system followed by the G20 that is made up of seven industrial countries, 12 large emerging economies and the European Union. Most of the large policy initiatives would be the responsibility of the US and China, while India would be relegated to the second tier. The Chinese did not show much enthusiasm for the proposal. It was for this reason that President Obama began to court India a year later when he visited that country.

On the other hand, a G2 arrangement involving China and India may better serve their separate and mutual interests. They could also begin to gather under one umbrella the various regional economic and trading arrangements that have proliferated in the last few decades. They should develop a common approach in gaining access to the global resources that both are deficient in. In other words, the idea should be to stress the commonality rather than allow other large global powers to put an accent on the perceived differences  between the Asian powers.