[Pixabay]
(This article was contributed by Kim Sang- chul, former supervisor of KOTRA in Beijing / Shanghai.)
The BRICS (Brazil, Russia, India, China, South Africa) summit is under way in Xiamen in Fujian province from September 3 to 5. BRICS, which emerged as a counterpart of G7, is another G5 involving top emerging countries. Although there are some ups and downs, the five countries have a common characteristic that since 2000, their economic power has rapidly increased and their growth potential is very high. Their rise in the 21st century has shifted the field of global economic order from G7 to G20. Despite an invisible competition between them, everybody admits China, based on its strong financial power, is playing a leading role. China has an intention to use the BRICS conference as an opportunity to declare its leadership to the outside world as it comes ahead of the launch of the second Xi Jinping administration that will be decided at the 18th National Congress of the Communist Party of China. From the opening day, however, North Korea's 6th nuclear test impaired the face value of China as well as the news value of the event. It proved that there is not only good news for busy China, but the bad news is also everywhere.
Before the BRICS summit, there was a crisis between China and India. In the border area, troops from the two countries armies went to the brink of an armed conflict in a military confrontation for about two months. The two sides managed to avoid a conflict on Aug. 28, just five days before the summit, but it could come back at any time. The dispute is attributable to the McMahon line, which was established about 100 years ago by Britain to unfairly defined the border between China and India. Split by the Himalayas, the border between China and India stretches about 3,500 km. Tibet, which lies between these two great powers, was occupied by China, while India exercises greater influence over Nepal and Bhutan, which have tried to attract China without leaning too far. There has been fierce competition between China and India to win them over. It has been 67 years since the establishment of diplomatic relations, but there has been a spate of small disputes, and in fact, several local conflicts have ended with the victory of China with superior military power.
China, which has promoted reform and opening more than 30 years before India, is overwhelming in terms of economic power. On the surface, the two countries are growling at each other, but the Indian market is flooded with Chinese goods due to the economic gap. In recent years, Chinese IT companies have invested heavily in India due to recession in the Chinese domestic market, and some of India's leading companies have been sold to China funds. However, since Prime Minister Narendra Modi took power in 2014, India has not eased its vigil on China, clarifying a leap forward called 'Make in India' by benchmarking China's growth model. In addition to the border dispute, India is showing an extremely sensitive response including imposing anti-dumping duties on 93 Chinese commodities to the point of 'trade war' with China. India seems to act that there is no future for its economy if it cannot overcome China. Indeed, since Modi took power, India's economic growth has been about seven percent, compared to China's six percent, and it is attracting foreign investment rapidly.
China has often been compared to a dragon. However, its economy is also compared to the 'gray rhino' because potential risks are widespread everywhere, showing the signs of red light. It refers to shadow financing, the real estate bubble, the insolvency of state-owned enterprises, the debt of local governments, illegal loans and financing that are not noticeable until the crisis reaches an extreme level. It is also a feature of rhinos, but it's hard to predict when such risk factors will affect the Chinese economy. It is the biggest problem of China's planned economy and also a time bomb, with its crisis management ability on the board. The external situation before the start of the second phase of Xi Jinping is also not good for China, and its attempt to create a new economic relationship with the United States is not successful. It is dragging its feet on the North Korean nuclear issue on the ground that it needs to spread the US front so that US attention will not move to an artificial island in the South China Sea where the interests of many countries including Japan, the Philippines, Vietnam, Malaysia and Australia are at stake.
It is reminiscent of elephants when comparing India to animals. As a sleeping elephant, there has been a negative evaluation in general that the Indian economy could not wake up forever, but India is rising up under the excellent leadership of Modi. In contrast to unpredictable Chinese rhinos, 'Gray Elephant' has made a stable march. The 'Start-up India' program is in full swing to raise the potential of the IT industry while India is pushing for a major manufacturing base. The Indian nationals who are leading start-ups in US Silicon Valley are linked and there is a visible increase in the number of global IT companies entering the Indian market. India now has a population of 1.3 billion, but it is expected to surpass China within the next three years. With that in mind, the United States and China are trying to attract India to their side. The Indian government weighs their approach, based on thorough calculation, but it is relatively close to the US due to uncomfortable border and trade disputes. India, on the other hand, feels uncomfortable with China's 'One Belt and One Road' project that covers areas around it. In principle, two big countries sharing the border can not be close to each other.
Copyright ⓒ Aju Press All rights reserved.
