PRC Economy - New Reflections : Dec 15 2011

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Dhiman
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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Dhiman » 05 Feb 2012 08:22

heech wrote:Vikram is also right, on the other hand, that India has chosen a different path. I don't think there's any hope of, or reason to, convince India to adopt the Chinese development model. Our histories are just too different. India has been a unified polity for less than 100 out of the past 2000 years; China has been a unified polity for almost all of the past 2000 years. This means our societies are just fundamentally different. That's pretty much the bottom line.


The path that India has chosen is same as what China has chosen: economic liberalization. The difference is in the cultural context.

For whatever reason, Chinese like "power" and respect those who have power. The desire, for historical reasons, is to see a strong central government for stability and prosperity of China. As a result of this love of "power", the end goal is "Number 1 superpower of the world" which the Chinese perceive will bring them great respect+admiration+fear from the rest of the world (as to how realistic and achievable this goal is another topic).

Indians on the other hand like their culture. History has shown that any strong central government that messes with culture of people in India is bound to lead to a mass civil revolt and ultimate collapse of that strong central government. The Mughal Empire and East India Company rule essentially ended this way. India doesn't value democracy. Democracy is just a tool that fits into the cultural values of India. Other similar (democratic) arrangements have existed in India in past (Gupta Empire for example).

In the interest of brevity, I won't go into more detail, but this should give you a good starting picture. So CCP might be able to move 1.3 million people to build a dam and institute one child policy, but in India only a government that has a death wish would do such things. A brand new $3 billion nuclear power plant is sitting idle, because in the aftermath of Fukushima nuclear disaster, a few hundred villagers decided that they don't want the nuclear plant next to their village. Similarly, much of coal that lies under tribal lands is not being mined despite coal shortage. So obviously you are going to have better growth numbers, but then again our growth numbers aren't bad either.

The difference in growth numbers at max is around 2% of GDP per year. Frankly I don't think you would be able to convince even a small minority in India for adopting the Chinese model for that extra 2% growth - not unless the government has a death wish - at least that is what history has shown.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby VikramS » 05 Feb 2012 08:59

chola:

Since you know so much about the Chinese consumer economy, it would be really nice if you could articulate a roadmap or a plan about which Indian companies could succeed in the Chinese market.

The way I see I it I could broadly classify foreign companies who have been successful in China along the following lines.

A. A major global corporation, a recognized leader in the consumer field, which gets access to the Chinese market, and in return starts investing in Chinese factories initially for assembly, and over time for component production also. Using China as an export base is a long term goal, once they can produce enough to satisfy domestic consumption. The VWs of the world belong to this camp.

B. Capital good producers like Boeing, or earth-mover like Caterpillar or Deere. These companies have a worldwide reputation, distribution and support systems. Their products are unique, and while there is local Chinese competition, it still lags in terms of quality, support infrastructure etc. Further, these majors have helped drive the Chinese infrastructure investment.

Mahindra has exploited a niche which the majors neglected in their domestic market, and has become a global player in that niche. That global presence and brand recognition, has helped it venture successfully into the Chinese market. I am not sure they would have succeeded or accepted in China if they had not been successful in the US.

C. Fast Moving Consumer Goods and Services Companies like YUM brands (Pizza Hut, Taco Bell, KFC etc.), Pepsi Coke etc.; major multinational brands with worldwide operations. Their success in China primarily benefits their share holders, but does little for the average American. They do get in their best in class operational capabilities to the Chinese market.

D Luxury Goods like the Guccis/Pradas etc.

Which companies from India do you feel can do well in China?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby chola » 05 Feb 2012 11:19

Theo_Fidel wrote:
Who the hell said anything about poorer. Don't make assumptions that are not true. I said the Panda economy is distorted in certain ways. They are doing certain things that obscure the picture. For instance the way they have gone about bridge building in a Earthquake prone territory. Buying 7 times more washing machines does not make you a more efficient and sustainable economy. Not one of you lot is interested in where the money and growth is coming from. Indians agonize about what growth does their people all the time.


Buying 7 times more washing machines, 28 times more BMWs, etc. means they have a larger consumer market. Who cares if they are "sustainable" or "efficient"? I know they are not since they are communist. We should be damn glad they are communist and inefficient. But that doesn't change the fact that they run a massively larger consumer class which translates into greater profits for those in the business world.


And BTW your 'discovery' that the Panda economy in Renminbi is bigger than reported is no claim at all. The concept is PPP. By which measure India is even large and much closer to Panda economically.


Then that should be reflected in consumption patterns where the Indian markets are mere percentage points smaller than the chini ones not many multiples smaller. You still have no idea.


The USA sold 7.5 Million cars last year, while Panda sold 18 million does that make Panda 3 times the size of USA economically. Or India sold 3.6 Million cars does this make India 1/2 the size of USA. Of course not. Both statements are complete nonsense. The situation is a lot more complicated and misleading than the numbers indicate.


The US sold 12 million cars last year. China sold 18m. Might China be larger than the US economically? Very possible. For GM and VW it already is.

As far as the India, it sold exactly 1.95m cars as defined by the US automotive industry. What they sell in China and the US/Japan/Europe are an entirely different scale than what is sold in India. If you look at MNC figures -- BMW, Daimler Benz, GM, Ford, VW, Honda and Toyota -- the gap between China and the US is within percentage points. Those with India is many multiples.

And who the hell said India is perfect. If anything this thread is filled with Panda Jingo's and their claims of Panda paradise and those with starry eyes when they look at the dragon.


I could care less if the Panda jingos claim their land is paradise. I would be far more afraid if they know it is not. I want to them remain as communist and inefficient as long as possible. The last thing we need is an oversized Taiwan or Korea.

And the last thing we want in BR is to become like the paki fora where we spend time ignoring reality to the point where we do not even understand how the chinis cheat and lie. Where don't understand that they deliberately understate their economy and currency for advantage.

There is no India shining, even when we are a $15 Trillion economy there will be no India shining. Continent sized nations do not shine. This is true of Panda as well. Even when it is a $25 Trillion economy and the largest in the world its feet will remain clay. The Chinese people would be wise to remember that even if their Panda overlords can not.


There is no "China Shining" campaign unlike ours. It is the direct opposite. They play the pauper to gain advantage in real negotiations in trade regimes from the WTO on down. If we cannot even understand their strategy then we will be condemned to South Asia. Do you understand why the US, Europe and Japan continuously pressure China to raise its currency?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby chola » 05 Feb 2012 11:30

Dhiman wrote:
The difference in growth numbers at max is around 2% of GDP per year. Frankly I don't think you would be able to convince even a small minority in India for adopting the Chinese model for that extra 2% growth - not unless the government has a death wish - at least that is what history has shown.


There is no successful "China model." The model that the chinis adopted, I as already stated in this thread, is the one that was already adopted by Japan, Taiwan and South Korea. The PRC variant is actually the least productive one if one look at the per capita income levels.

Could India not have adopt Japan's, Taiwan's or South Korea's beginning in the 1960s or 70s? It could very have done so were not for Congress and the Nehrus. India would be the one today with the far larger economy if history had traveled down another path.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby chola » 05 Feb 2012 11:48

VikramS wrote:chola:

Since you know so much about the Chinese consumer economy, it would be really nice if you could articulate a roadmap or a plan about which Indian companies could succeed in the Chinese market.



I know only from American firms doing business in Asia as well as relatives in Hong Kong and Singapore. There is no single road map because every company and every industry is different. It would be presumptuous and stupid of me to create a "roadmap."

But if you look at the American experience in Pandaland:

1. Study the Chinese markets, we have very little research or even reporters there compared to the West or the Far East nations

2. You can always find a niche because it is large, diverse and most importantly unsophisticated (as opposed to Japan or Hong Kong); the Koreans cut their teeth in China while they were building up their reputation to take on the Japanese in the US market. GM which was practically a walking corpse across the developed world revived itself in China with the damned Buick! That brand is given up for the dead in the US.

3. Sell everything from noodles to airplanes. Starbucks and KFC (another brand that was practically dead in the US) struck gold in pandaland. Never settle on believing that only high tech or high end manufactures are worthwhile. Again, this an unsophisticated market.

C. Fast Moving Consumer Goods and Services Companies like YUM brands (Pizza Hut, Taco Bell, KFC etc.), Pepsi Coke etc.; major multinational brands with worldwide operations. Their success in China primarily benefits their share holders, but does little for the average American. They do get in their best in class operational capabilities to the Chinese market.


Their shareholders are the average Americans. Most Americans depend on 401K and pensions as well as their homes as their retirement investment.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 05 Feb 2012 12:20

Chola,

So are you saying that because Panda sells 3 times more cars than USA it is 3 times larger economically. Back up your statement with a number then. I'm the only one trying to put a number on this and get stinky flames from lazy a$$ed panga's for my troubles. Without numbers it all empty headed prattle. What is your Number, Saab?

Also there is such a thing as disposable income. There is world of difference between and income of $3500 and an income of $ 8500 per capita in PPP. Much more than the multiplier would indicate.

I suspect India will be at per capita $8500 by 2020. Right now the India car market doubles every 4-5 years or so. So say this continues our car sales will be 7 million in 2016 and 14 million in 2020. No that far from the Panda 18 million number. Lets go back in time, to say 2004. Panda economy was roughly the size of India and domestic car sales were, ding ding ding.... 2.4 million cars annually out o 5 million production.

I agree that present Panda market is quite large . But no one saw this coming including all the celebrated analysts. In the same way none will see or anticipate the Indian consumer market either. In fact all the car makers are here but no celebrated analysts. what can one say.

Also efficiency and sustainability matter to companies that borrow at 13%. Indian companies are forced to be in it for the long haul. How does an Indian company compete in a landscape where governments throw money at companies. GM for instance got $50 Billion interest free from GOTUS. Can GOI afford such support.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Dhiman » 05 Feb 2012 13:23

chola wrote:Could India not have adopt Japan's, Taiwan's or South Korea's beginning in the 1960s or 70s? It could very have done so were not for Congress and the Nehrus. India would be the one today with the far larger economy if history had traveled down another path.


Actually I am more worried about lack of comprehensive domestic reforms today. By comprehensive domestic reforms, I mainly mean 1) cleaning up governance in India, 2) getting rid of archaic laws, procedures etc that still inhibit development today, 3) proper water and electricity supply and management, 4) make police accountable to public rather than netas, 5) making municipalities do some real work instead of sitting on their asses all day long, 6) deal with corruption 7) putting stress on environmental issues such as cleaning up rivers, and so on ... The list is endless and these are the things that impede India's growth and development today.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby chola » 05 Feb 2012 13:45

Theo_Fidel wrote:Chola,

So are you saying that because Panda sells 3 times more cars than USA it is 3 times larger economically. Back up your statement with a number then. I'm the only one trying to put a number on this and get stinky flames from lazy a$$ed panga's for my troubles. Without numbers it all empty headed prattle. What is your Number, Saab?


Who is providing the numbers, sir? I showed you sales figure after sales figure. And I get it from the published sales figures of multinationals not from the lying mouths of the Panda commies or the babus of the GOI.

Now, panda sells nowhere near three times more cars than the US. But when it does it will come close to three times the US GDP. Correlation is not exactly one to one but for large ticket items an economy has to generate enough wealth for an equivalent amount of the population to afford it.

I suspect India will be at per capita $8500 by 2020. Right now the India car market doubles every 4-5 years or so. So say this continues our car sales will be 7 million in 2016 and 14 million in 2020. No that far from the Panda 18 million number. Lets go back in time, to say 2004. Panda economy was roughly the size of India and domestic car sales were, ding ding ding.... 2.4 million cars annually out o 5 million production.


You do not have to prove to me that India can and will grow. Our growth doesn't necessitate turning this PRC thread into our cheering section. It is far more important to understand the chini economy. Otherwise, we would be like the Pakis.

That said, J.D. Power & Associates predicts 11M cars in the Indian market by 2020.

I agree that present Panda market is quite large . But no one saw this coming including all the celebrated analysts. In the same way none will see or anticipate the Indian consumer market either. In fact all the car makers are here but no celebrated analysts. what can one say.


Everyone in the US, the West, Japan, Taiwan and the rest of East Asia saw this coming. How the hell do you think the MNCs have the infrastructure in place to take advantage of it? Capital investment like factories take years to plan and build.

You have not seen it coming. But the global business community has. You have no idea the plans that the MNCs have in place for China. The scale you see in the NY Times article on Apple IPhone's operation is par for course. It is not something that Panda could plan for. It something the world's business community planned for.

Think about the following. Apple only entered the chini market one year ago. Today it is Apple's second largest market and all three of its top performing stores are in Pandaland. All within one year. Everyone saw it coming except us.

As for the Indian market. American firms have predicted India's growth and just as chiniland it is progressing as the pace the Fortune 500 (not the Indian government) have predicted.

You should know that desi analysts in the American business sector far outnumber chini/Chinese-American ones. It is the same with upper management and CEOs. So there is no shortage of us rooting for India. But you cannot ignore numbers generated by the very companies we work for.


Also efficiency and sustainability matter to companies that borrow at 13%. Indian companies are forced to be in it for the long haul. How does an Indian company compete in a landscape where governments throw money at companies. GM for instance got $50 Billion interest free from GOTUS. Can GOI afford such support.


Again, you are treating this as a pissing contest between India's economy and China's. When you do that, you will end up succumbing to the jingos. You will be unable to accept the numbers being generated because you will be unable to accept the disparity. Again, those are figures from firms who have no interest in this pissing contest. Their only interest is in what they can sell. As such those are the most accurate figures.

Can India throw money at companies? No. But it would be helpful to find out how the Americans and chinis got to the point where they can.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Abhijeet » 06 Feb 2012 00:16

I don't get the defensiveness. Yes, India is different culturally and historically, is building a different kind of society with different values, etc. But there's no need to bring all of those into a discussion of market size, unless you concede the point that that market sizes are very different and then try to console yourself with "but our society is much better/more sustainable/more spiritual etc." All of which may be true, but are irrelevant.

If you claim that India is less than 5 years behind China, it's a fair question to ask: by which metric?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 06 Feb 2012 07:52

Dhiman wrote:The difference in growth numbers at max is around 2% of GDP per year. Frankly I don't think you would be able to convince even a small minority in India for adopting the Chinese model for that extra 2% growth - not unless the government has a death wish - at least that is what history has shown.


Dhiman,

IMO the bold portion of your post above is the most important point of this thread. The rest just supports the main contention.

Market size, length of railways, car consumption and other metrices that are trotted out to show how far China has "arrived" is just a function of the fact that their economic reforms started in 1978 (more than a decade before Indian effort in 1992).

It is also a function of the fact that the Chinese have a central dictatorship which can stream roll all opposition and, like you mentioned elsewhere move 1.3 million people from the ancestral lands just because some Mandarins sitting in Beijing though up a grandiose scheme to build the world's biggest dam. It's useful to remember that this dictatorship has allowed Western firms to set up industries and use labor practices which would have got them banned in their native countries.

The net result has been the Chinese economy has growth at a very fast clip and so about a decade and a half after their reforms in 1978 they started to run at double digit growth rates which have propelled China to the No2 position.

All this has been achieved due to a development choice taken by the Chinese - or more accurately taken by a CCP dictatorship without ever consulting the larger population via a referendum or election.

On the other hand take India. Everybody has a say in which way policy will go. As you pointed out a $3 billion nuclear power plant lies idle because a few hundred villagers think their lives are in danger. Contrast that with some history of how the wonderful Pudong area of Shanghai was turned from a village/small town into a gleaming airport and built up area. Remember the dreaded "X" sign painted on the door at the middle of the night? I'm sure none of our Chinese guests/friends who post here had that happen to them or any of their family members.

[Incidentally in India such an "X" sign painted on doors as a mark for demolition would have resulted in a mid-term election and all those "X'es" would have been transferred to the opposition party symbol in the ballot paper! :rotfl: ]

The point to note, as you say, despite such "super-efficiency" on the part of the CCP (please note I deliberate refrain from using the term China/Chinese), a decade after the reforms started, Indian growth is just 2 per cent lower than Chinese growth on the average yearly. And India is far more judicious user of capital than the Chinese are as I pointed out in a previous post here.

What does the average 2 per cent lower growth vis a vis China mean? I reckon it means that if we take say $X per capita as being the marker which would indicate China has "arrived" and assumed its position as the "middle kingdom" then India would arrive at that $X per capita maybe a decade later or so, say one generation later.

However, arriving at the top is one thing. Remaining perched up there is another. Thanks to policy decisions taken by the CCP in its desperate the race to the top, it will become an ageing society with diminishing labor pool before it become really rich (one-child policy). It will have to deal with the consequences of the massive depredation of the environment. It will have to deal with a massive collection of NPAs for its financial system and finally it will have to deal with the social issue of having a population of well educated and rich people living under a dictatorship without recourse to choice. And finally it will have to deal with, thanks to its belligerent foreign policy massive geopolitical opposition.

As I told Wdros in a previous post, there's no delete button which can be pressed to make these problems go away.

India in contrast is/will grow in a more organic fashion - it will make mistakes and then correct them, govts will be voted to power with great expectations, then they will be booted out when they fail to live up to them. Politicians who deliver will be rewarded to another chance. Policy will be finally decided after many twists and turns and what comes out will be what a majority of Indians want. In short when India reaches $X it will be a nation at peace with itself. Moreover it will still be a young nation with majority of its population at working age level.

I think what the CCP and its drones are shit scared of is simple: It is scared of the ordinary Chinese finding out that there was another way to pull up the country by its bootstraps from the one that the CCP chose - one that was far more benign and took their POVs into consideration. In this day and age it's very hard to censor such information.

All the bluster, not only here on BRF but outside as well in places like People's Daily and other mouthpieces is precisely because of this.

I've come to realise that getting into these mine is bigger than yours contests with the Chinese here just plays into their game. And so even though I like to point out the gargantuan waste that projects like HSR represent (particularly since lower cost alternative which could prove just as efficient exist) on a more philosophical level, I'm happy that China has chose the path it has.

If it had been another India, then I think we should have really been worried due the fact that they started their liberalisation journey a decade before us and by nature the Chinese are such an industrious and intelligent race of people. I'm one with Chola on this limited point.

PS: One more thing: Heech's post about how India as a country/entity is just 100 years old while China is 2500 years old as a country should be archived and kept in the BRF hall of memorable posts! No point in saying anything more about it than just to mention that more one open's his/her mouth, the easier it is to understand the intelligence and depth of that person. :rotfl: :rotfl: :rotfl:

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 06 Feb 2012 08:08

chola wrote:Can India throw money at companies? No. But it would be helpful to find out how the Americans and chinis got to the point where they can.


Chola,

I think it's more interesting to try to find out what happens when good money is thrown to chase after "bad money". In economies where there is a self correcting mechanism, we saw what happens in 2008 with the Lehman incident. In China, we "apparently" don't see any bad effects, but all good things come to an end when the breaking point is reached. I don't buy the contention that there's no "cost" involved in all the NPAs being piled up by Chinese state owned or state linked companies because ultimately CCP owns everything.

The problem is we are looking for evidence in the wrong areas, assuming China to be a normal economy like say the US economy is. Since China is a Communist country with factors of production owned by the state and yet it uses Capitalist tools to do business, the NPAs may/will show up in unexpected areas and maybe after a time lag. To think otherwise is to miss the trees for the woods IMO.

Added later : IMO basic economic logic/law can't always be reduced to marketing strategy/gimmick. If it were that simple then the US of A which prints the world's reserve currency wouldn't have the housing crisis and the general economic doom and gloom which only now seems to be alleviating a bit.
Last edited by amit on 06 Feb 2012 12:54, edited 2 times in total.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Suraj » 06 Feb 2012 12:31

heech wrote:Vikram is also right, on the other hand, that India has chosen a different path. I don't think there's any hope of, or reason to, convince India to adopt the Chinese development model. Our histories are just too different. India has been a unified polity for less than 100 out of the past 2000 years; China has been a unified polity for almost all of the past 2000 years. This means our societies are just fundamentally different. That's pretty much the bottom line.

You need to put down your Jet Li movie collection and revise your knowledge. The 'Chinese' dynasties of 2000 years ago were a small sliver on the northeast. It was just - what - Shandong and Henan ? You call that politically unified entity ? Most of what constitutes the terrorial extent of present day greater India was already unified under the Mauryan dynasty a couple of hundred years before the Qin. Flamebait is only effective when you don't look laughably ignorant...

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Rahul M » 06 Feb 2012 13:06

heech, the only time a pre-modern administration unified china to anything close to its modern geography was the yuan mongol empire under kublai khan. correct me if I am wrong but weren't han chinese relegated to a 2nd class citizen status in that era ?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Dhiman » 06 Feb 2012 13:30

amit wrote:Market size, length of railways, car consumption and other metrices that are trotted out to show how far China has "arrived" is just a function of the fact that their economic reforms started in 1978 (more than a decade before Indian effort in 1992).


Correct Amit ji, that is pretty much the the only real difference between Chinese and Indian economic growth/consumption curves. Give it time and allow the natural laws of compound growth rate to work.

amit wrote:As I told Wdros in a previous post, there's no delete button which can be pressed to make these problems go away.


Trying to further push it is fighting against laws of nature and come with a cost attached that has to be paid somewhere somehow. If the CCP can absorb that cost then good for them, they deserve the extra 1% or 2% of economic growth beyond the natural curve. If not, be ready to pay. Laws of nature are unforgiving.

The best way to grow and develop is to unleash and work according to laws of nature, but not trying to push it in any direction either by imposing undue licenses (as in the case of India's economic past) or by financial mumbo jumbo which led to current western economic crisis.

Although I am probably starting to diverge from topic at hand now :)

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Hari Seldon » 06 Feb 2012 18:43

Has there ever been a year since 1991, or even 1978 when PRC's growth rate was smaller than India's? Then how come it seems that in 2010, India is where PRC was in 2002 - a mere 8 years of difference even though PRC had a 13 year head-start ('78-'91)?

Sure, sure, some may say its coz of the way GDP is measured etc etc, Chinese revaluations of their GDP is partly responsible etc etc. But the PRC rejigged their GDOP measurement basket and thereby raised rather than lowered their GDP estimates. So it is a wonder how the '10 and '02 stories come about.... Could it be that PRC numbers are later revised when the spotlight has moved on?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Rahul M » 07 Feb 2012 05:01

heech, your post has been moved to viewtopic.php?f=1&t=6283&start=160

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby chola » 07 Feb 2012 08:11

amit wrote:
chola wrote:Can India throw money at companies? No. But it would be helpful to find out how the Americans and chinis got to the point where they can.


Chola,

I think it's more interesting to try to find out what happens when good money is thrown to chase after "bad money".



You cannot throw "good money" after bad if you have not made money in the first place. It is like us pointing to Japan or the US as examples of failed economic policy because of a "lost decade" or the "housing crisis." They are still the largest and wealthiest economies in the world.

It is far more important to worry about making the money first than to worry about mis-spending money you don't have.



Added later : IMO basic economic logic/law can't always be reduced to marketing strategy/gimmick. If it were that simple then the US of A which prints the world's reserve currency wouldn't have the housing crisis and the general economic doom and gloom which only now seems to be alleviating a bit.



Very true, economic laws can't be reduced to marketing strategy or gimmick which is why you can never assume that economies consuming on the scale of China, Japan or the US to be just "marketing" strategy.

No one will give you trillions of dollars in oil, minerals and produce based on a gimmick. At the end of the day the world does not work on promises. This is why Zimbabwe cannot build infrastructure even after printing a note worth litterally a "hundred trillion" dollars.

When it comes down to the final tally what's sold and bought is the ultimate reality. All economic activity boils down to the barter, the trade of goods. That is why sales figures trump everything else.

As such, it is far more important to understand how the United States became the world's reserve currency than to worry about the housing crisis. I would gladly accept a housing crisis for India if we can recreate the wealth and infrastructure of the US along the way.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby chola » 07 Feb 2012 08:24

amit wrote:Market size, length of railways, car consumption and other metrices that are trotted out to show how far China has "arrived" is just a function of the fact that their economic reforms started in 1978 (more than a decade before Indian effort in 1992).



Are the chini reforms actually equal-equal to India's reforms? Rao in the 1990s liberalized market forces in a free society that already encouraged entreneurship. Deng on the other hand opened a communist dictatorship to outside investment but not the private businessman. India as a democracy had far less distance to travel in its reforms than the PRC which is still a communist state, a system that had failed everywhere.

Pointing to dates when reforms started is meaningless when comparing systems as far apart as India and pandaland. The changes in chiniland were altogether different than those of India because they were different things applied in different environments. Using a catch-all term like "economic reforms" to describe what China did in 1978 and what India did in 1992 is inaccurate and allows people to be lazy about understanding what actually went on.

India has a 60-year lead in democracy. Though that we've avoided the catastrophic excesses like the Great Leap Forward and the Cultural Revolution when they were reduced to eating human flesh. That should be counted in India's favor though for whatever reason we never do it when talking about the economy. In fact, only among Indians do I hear that democracy and freedom is somehow detrimental to wealth creation. In the United States and every other developed nation, freedom and wealth goes hand in hand. There is a reason why the G-7 is top heavy with free nations while the Soviet Bloc collapsed.

In opinion any lead that Panda gained from reforms after Mao were more than balanced by the disasters that came during Mao. Much of the "reforms" that Panda granted to its citizens in 1978 such as allowing its farmers to earn money from selling their own produce or city dwellers to be able to own homes were already in place in India.

Any change to the chini system approximating the freedoms in Taiwan or South Korea had a far greater impact on Chinese growth than any change in India since India was already fundamentally free. Any future change in pandaland towards Taiwan or South Korea would have far greater impact as well since it is still a communist dictatorship.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Hari Seldon » 07 Feb 2012 09:22

chola,

Your point is well-taken. I agree that its far more important to create wealth, hopefully on a sustainable basis, than anything else.

As for the India-China comparison, it is what it is. Its no secret there's no India-China economic race anymore. PRC won it long ago. And no, try as we might we won't/can't/shouldn't do what they did. Might be jarring to some (including me) but except in population and perhaps in potential terms, India is not in the same league as PRC. Not anymore. They graduated to the major leagues and will stay there even if their GDP growth here on halves and stays there.

As for taking 'advantage of PRC opportunities', Indian firms will do so regardless of Dilli's indifference. Berating posters here as lazy or incompetent etc means zero in the real world.

All that free country talk is fine, ist like saying the sun rises in the east. Nobody disputes it. Those countries took decades of capital accumulation and evolution and compromises and styff to get where they are today (not to mention colonial and resource loot as well). We will also take a generation or two to get there. Can't hurry a child's growth. Can only facilitate it at best, try not to stunt it otherwise. Only.

Anyway, my 2 cents. Standard disclaimers apply. Etc etc. Jai hu, jai mao.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Dhiman » 07 Feb 2012 12:52

Hari Seldon wrote:As for the India-China comparison, it is what it is. Its no secret there's no India-China economic race anymore. PRC won it long ago.


Hari ji,

What do you say, I resurface this post in 3 and 5 years time? :D Please wait and let the magic of compound growth rate take place.

If we continue to grow at 8% per year like we have been, we will hit the exponential part of the s-curve in next 3 to 5 years. China has already hit this stage and India is still a few years away, hence the big gap in gdp. In the meantime, we desperately need domestic reforms.

From what I can see in the graph, China hit the exponential stage in 2006 and if past performance is indication of future performance, then we should hit it in another 3 to 5 years.

In 1987, Indian and Chinese GDP were around the same: $270 Billion, since then they have grown faster than us (especially during the initial years of Indian economic reforms); hence, they have hit the exponential part of the s-curve first. We have a few years to go. Let's hold tight and maintain that 8% growth rate for next 3 to 5 years.

Also keep in mind that this is an s-curve, Chinese exponential growth stage will not last forever unless the Chinese plan to start importing energy from mars.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 07 Feb 2012 14:19

Hari Seldon wrote:As for the India-China comparison, it is what it is. Its no secret there's no India-China economic race anymore. PRC won it long ago.


Unfortunately, I'm running a bit short on time right now and probably will be for the next few days and so I can't write more detailed response to the interesting points raised here.

However, one point: Hari ji this is one race that has no finishing line and so IMVHO saying PRC won is a bit premature. (Of course standard disclaimers apply).

Reaching the top is just one part of the equation and, if I may point out, the easy part. The more difficult one is staying on top on a sustained basis. The contention here is whether the short-cuts China has been taking (which has had an immense toll on its environment, finances, people etc) puts in a position to remain in pole position for a long time? The jury is still out on that.

In my humble opinion Dhiman has made a very astute observation in one of his posts:

The best way to grow and develop is to unleash and work according to laws of nature, but not trying to push it in any direction either by imposing undue licenses (as in the case of India's economic past) or by financial mumbo jumbo which led to current western economic crisis.


China has pushed the bar, let's see if it can sustain it.

I leave you with one more point. Much as we like to castigate the US of A, it's growth has been more natural (that is in Dhiman's terminology didn't go against the laws of nature). Which is why we have this interesting graph:

Image

This shows that despite world output growing three times between 1969 and 2009, the US share of global GDP remains remarkably consistent. Unfortunately the graph has not been extrapolated to 2011 but I suspect the trend line would be similar. That's what I mean by staying at the top on a sustained basis.

The question here is not whether China has won the race against India or not. The question is can China remain on the top for a long time after following the growth path that it has taken? I personally think not, which is why I'm confident that India will arrive at the top (by which I mean will become a wealthy country, not necessarily the top dog) about a decade after China becomes really rich. However, the India model is, again IMVHO, more sustainable.

For much of recorded human economic history India and China have been the top dogs (that is minus the last 500 years or so). We are now reverting back to a natural state of things. WTF does it matter if China arrives there a decade before we SDREs do? :-)

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Hari Seldon » 07 Feb 2012 19:04

Well, Dhiman ji and amit ji,

I hope you are right. what's a 10 year gap in the life of civilizations, one may ask?

Well, a lot, actually. Had Hemu driven out the Mughals, history might have turned differently.

While we may sanguinely believe economic growth and clout is not a zero sum game, we can't assume other powers think likewise. I fully expect determined meddling, sabotage, interference, conflict at a minimum from world powers. If things get nasty, and they likely will, even a putatively limited war, perhaps, use of WMD is not unthinkable. All under the cover of plausible deniability and proxytute use, of course.

GOI's 'strategy' of kow-towing to PRC, doing hajaar salaam-namastes etc is the only sane one. Keep the profile low but the powder dry. Energitically refute any suggestion or possibility of an Indo-PRC or (lawd forbid!) an Indo-US race. Much as we may want to stick it to them cheeni drones, its better to agree that India is way behind (which it is) and work quietly towards progress. No point calling attention to the things we are doing right and showcase them at a drone-camp. Chols is right in that the last thing we want is good sense prevailing among CPC leadership.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 07 Feb 2012 19:08

^^^^^^

Agree totally. There is going to be a lot of jhamela in the near term as Panda realizes that the sleepy elephant is catching up. Good to keep low profile and publicly quake in our dhotis.

However even if CCP achieves moksha there is fat chance of course correction without suicide.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 07 Feb 2012 23:43

Dhiman wrote:In 1987, Indian and Chinese GDP were around the same: $270 Billion, since then they have grown faster than us (especially during the initial years of Indian economic reforms); hence, they have hit the exponential part of the s-curve first. We have a few years to go. Let's hold tight and maintain that 8% growth rate for next 3 to 5 years.


This is essentially correct but there a couple of wrinkles to note.

First our demographic dividend comes slower. Panda policies got their dividend from 1980 or so to 2015. Very accelerated. Indias is more drawn out. From 1995, when our dependency first started reducing strongly to about 2040-50. Even now with similar population China has ~ 800 million working age population compared to India's 450 million workers. Due to past failures the Female population is not fully economically engaged and hence our actual working population is even lower.

Over the next 30-40 years this will correct itself and the working population will increase even as the dependent population declines. This is different from the past as even as working population increased the dependent population stayed high due to fertility and long life. BTW this is why countries such as TSP lag, because their dependent population is still rising due to fertility.

We should be able to hold 8% much longer.

Second our investment rate is lower as our consumption share is much much larger. We get 8% growth from an investment ratio about 20% points below China. This means that our improvement will be more incremental.

Still people underestimate the impact of jumping from per capita GDP of $1800 to $4000 even. Low middle income to high middle income. Poverty will essential disappear and investing $2 Trillion every year into the economy will cause a dramatic boom.

Theo_Fidel

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 08 Feb 2012 06:37

I though I'd post this excellent description of how one builds in 8.0 type earthquake territory. It has take 10 years and $6 Billion of testing and tweaking to build one bridge. Please check the annimation, which describes just 3 of the dozens of different systems and sensors involved. At 0:28 seconds Notice the sliding shear beam at the bridge expansion joints, the lack of which caused that failure in the Wenchuan earthquake. Notice the 3 feet of movement this design allows. The shameful part of the entire thing is that many of the components came from China. So Panda leadership knows what is needed to build in 8.0 earthquake zone. It appears leadership doesn't think the Chinese people are worth the effort. :evil: :x

http://www.nytimes.com/interactive/2012 ... ef=science

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Singha » 08 Feb 2012 07:56

Theo are these norms being followed in bridges in India along the sub himalayan region and some parts of the peninsula?
there are old british era bridges still in use like this one in my hometown (1950 built) which lies in a zone 5.
http://2.bp.blogspot.com/_qw6lO3BQpPQ/T ... aighat.jpg

1000s of similar railway bridges may be found all over IR system incl in UP, bihar, bengal....

where do we stand in terms of planning civil infra for big earthquakes?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby gakakkad » 08 Feb 2012 08:14

This is exactly what Chola is talking about -

Scrap China delegation visit: Centre to Gujarat



GANDHINAGAR: The Government of India has asked the Gujarat government to immediately cancel the proposed visit of a high-level Chinese delegation, scheduled some time in the middle of March.




On one hand India has a visionary like Narendra Modi , and on the other hand we have these con party baboons who ll ruin potential business , just because it is going to benefit Gujarat .

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 08 Feb 2012 09:45

gakakkad wrote:On one hand India has a visionary like Narendra Modi , and on the other hand we have these con party baboons who ll ruin potential business , just because it is going to benefit Gujarat .



Gakakkad ji,

Sometimes I wonder. Folks like you lament the fact that the "baboons" (wonderful use of phrase, by the way, shows great taste) who are in charge in Delhi are weak kneed and allow everybody, including China to bully India. The narrative goes that if someone "strong and nationalist" (Narendra Modi perhaps?) was in charge in Delhi then China and others wouldn't be able to take panga with India. That's a fair enough narrative, however... have you read the link you have posted in full? Or did the image of a grinning baboon, showing off its grand posterior, jump up in your mind the moment you read the headline and you rushed to post it here and do some old fashioned venting?

The report says:

The note quotes joint secretary, MEA, Gautam Bambwale, as saying that Zhejiang is the "same province where two Indian businessmen were not allowed to leave the hotel and our mission officials had to face a very difficult situation in facilitating the release and safe exit of these businessmen."

It added, "At the time of crisis, initial help from the provincial government was far from satisfactory." Hence, the delegation from the province should not visit India "as of now". The note suggests that the Gujarat government should not send a formal invitation, as the MEA is "peeved at the handling of the situation by the local authorities."


As far as I can recall the two Indians who were harassed in Zhejiang were Gujarati businessmen.

So I wonder why, when the "baboons" in Delhi do a rare display of having a pair you are so upset and have your chaddis in a twist?

Is it because:

The Chinese communication said that the delegation would pay a "courtesy visit" to Modi, who visited China in November 2011, receiving the treatment befitting the head of an independent country.


I wonder if you realise what a self goal you've just scored.

PS: FWIW, let me also add that Chola ji has been saying a lot of interesting things on this thread and is presenting a different perspective. But from what I've understood from reading his posts, his gripe (as opposed to your gripe) is not about baboons and other assorted animals who are part of the CON party. Rather it's about, IMVHO, policy decisions that have been taken by India over the years.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby gakakkad » 08 Feb 2012 17:40

Amit , it was not a self goal .

It was Modi who secured the release of the traders. Not the central baboons .

Modi hints he talked tough with China on Gujarati traders issue

Narendra Modi plays key role in release of traders


Tell me , what purpose would cancellation of the visit by the delegate serve ? why did a government that allows hurri-rat to make seditious statements freely, become so concerned about the chinese ?

You gave the answer yourself .


The Chinese communication said that the delegation would pay a "courtesy visit" to Modi, who visited China in November 2011, receiving the treatment befitting the head of an independent country.



Thats what irked the con party wallas .


In spite of these issues it makes sense to carry out business.

The amreekis had a spy plane collide with the chinese a decade ago. (hainan island) .Did they stop doing business ? American businessmen too have been detained by the chinese .

Now I am not saying that we should grin and bear it all . There are better ways of sending tough message to the chinese. Like detaining their people .

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 08 Feb 2012 19:36

^^^^
Sigh!

I don't have the energy for this. I just hope you will read your post and realise how silly it sounds. You are jumping through a hoop just because the Chinese treated your herrow just they would the head of an independent country. Last I checked Gujarat was part of India. Maybe I was wrong.

Mao once talked about useful idiots in reference to Indians. I guess his words ring true even today.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby gakakkad » 08 Feb 2012 20:10

I can assure you that there is no 'separatist movement' brewing in Gujarat . If someone draws such idiotic conclusions simly on the basis of the protocol given to the CM on his China visit , than that is a figment of his obnoxious imagination .

>>You are jumping through a hoop just because the Chinese treated your herrow just they would the head of an independent country

How does the protocol of a provincial head differ from that of the head of the nation ? The head of the nation is given more flowers in his bouquet perhaps ? The bouquet is presented by prettier women probably ? Served more expensive wine ? Showed around the town in swankier limos ?

Why make a big deal if Modi is served more expensive wine , or given the presidential suite to stay in ? If someone's nasty mind comes to alternate conclusions , I don't care .

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 08 Feb 2012 23:59

Singha,

There are two approaches to bridge building. Build short stout rigid boxes that can resist any flexure or build light flexible and beautiful structures that flex with the shock waves.

India has tended to go with short and stout and is a reason our bridges look ugly as sin. They often have factor of safeties of 6 times design loads. The fact that the British bridges still stand through the numerous NE earthquakes say some thing. The recent Bogibeel bridge in Assam is delayed to 2015 because of the seismic testing and construction issues. The Chenab bridge in the J&K has gone through extensive siesmic analysis and a small scale model has been through about 5 years of testing. One reason for the delays and cost escalation.

Panda is building bridges with the flexible (read pretty) approach with out going through the painful process of seismic testing and customizing design. This was the reason for the numerous collapses in the Wenchuan earthquake. It says something for their approach that they picked up the span that collapsed, set it it back in place and called it a day. No change in approach, no response to failure and no change in design or retrofitting. No lessons learned. You can see how much effort is involved in building flexible from the NYTimes presentation.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Hari Seldon » 09 Feb 2012 06:37

^^^ Have seen too much of Dilli's self-goal-ishness when it comes to gujarat to believe that UPA2 had honest intentions on this one.

IMO, gkakkad is right on the money in his interpretation on this one.

And as for independent country etc goes, so some journo writes some stuff using colorful phrasing and that becomes gospel? Last I checked mnarchist references are routinely made in the popular press when referring to scion(s) of the Nehru-Gandhi dynasty and last I checked we were still a republic...so what? Folks are reading too much into nothing, IMO.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 09 Feb 2012 08:03

^^^^^^

Hari ji,

You of all people should understand.

The news and the poster's reaction was not the reason for my objection. I know its par for the course on BRF to use terms like baboons to describe senior civil servants and politicians of a particular persuasion when they apparently don't toe a certain political line. One needs to either accept this popular brand of the moral compass or move on.

So like I said no objection to the contents of the bile in that post as such. It's just the positioning on this thread which serves IMVHO a particular purpose of trying to deconstruct the Chinese economy so that we can learn from both its achievements as well as failures. There are plenty of places/threads on BRF for that news and the reaction, posting here is a self goal IMO.

I'm hoping you'd probably get the drift of what I'm trying to say.

If not, Oh well... Jai Ho &

JMT and all that.

PS: And yes there are strict and well established protocols on how a visiting dignitary from another country is treated. I don't know if the reporter is right about the treatment meted out to Modi ji being "befitting that of a leader of an independent country".

However, if it was then one needs to remember that he's not the first CM of India to visit China nor will he be the last. If the diplomatic protocol that was accorded to Modi was special and not something that is given to all CMs of India then my nasty little brain tends to file away this piece of information along with the stapled passports issue of Arunachal as just another insidious attempt by the Chinese to use the well explored British tactic of divide and conquer that seems to work wonders in India.

What to do I'm like that onlee... I keep on wondering what kind of reception Nabam Tuki would get if he were to announce that he would like to pay a visit to China to improve border trade which would be very beneficial for his state as it would open up old and historic trading routes? Would he have to travel with a stapled visa? And if he did what kind of reception would he get? However, I do understand that it does not really matter all that much because the CM of Arunachal belongs to the Papio genus (part of the subfamily Cercopithecinae) of Indian politicians who provoke much haack thooos in these parts.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby ArmenT » 09 Feb 2012 12:30


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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Hari Seldon » 09 Feb 2012 18:20

^^^ Aah. I see. Fair enough, amit ji.
However, I'd ask myself what's the likelyhood a *major* diplomatic protocol-breach like what you conjecture happens with NModi and our sensationalist media sharks here will just let it go by when even ToI makes headline noises about stapled visa and no-visa-required for Arunachalis, eh?

That said, this indeed ain;t the best of threads to continue this line of idle speculation. jai hu and all that.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 09 Feb 2012 18:35

Actually the protocol breach or otherwise is not the important part of the story. I found it a bit rich the speculation that its all a part of a grand conspiracy to somehow undercut Modi ji. And why? Some MEA babu (or should that be baboon) sent a note to "postpone" the visit as a mark of protest.

I guess as long as Modi ji is given bhau by the Chinese we should all shout Jai Hu and Jai Mao!

Anyway seriously OT. My last post.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby gakakkad » 09 Feb 2012 19:21

^^ Well saar , I never put it as a grand kaanspiracy . IMHO it is hypocrisy. On one hand Sree Magoo goes to China and blurts all this -



External Affairs Minister S.M. Krishna, who on Wednesday evening inaugurated India's new $10-million embassy, which he described as turning “a new page” in ties, underscored India's willingness to calm sources of tension. He particularly stressed in unusually strong terms New Delhi's support to Beijing on the Tibetan issue, amid ongoing unrest in Sichuan province that has seen at least 16 self-immolation protests by Tibetans in the past year and clashes last month with police forces that have left at least two killed and dozens injured.

This week, Beijing blamed overseas Tibetan groups, some based in Dharamsala, and exiled religious leader the Dalai Lama for fanning flames of unrest. While India reiterated that the Dalai Lama was “an honoured guest” of India and his activities were not political, Mr. Krishna reaffirmed India's support to the ‘One China' policy, officials said.

“It is the government of India's position that the Tibet Autonomous Region is part of the People's Republic of China, and as a result of that we are dealing with the internal affairs of China,” Mr. Krishna told journalists.




When our forin mantri ji magoo maharaj is making such a mess in China , why cancel a business trip from Zhejiang to Gujarat? The provincial chief will not settle boundary issue's will he ? Nor TSP related stuff. It ll be just bijness.
Since guj businessmen are continuing to do business there it makes sense to have cordial working relations .

See the hypocrisy saar ? On on hand foreign minister is going jai china , jai Beijing and all that and on the other hand , MEA baboons are cancelling business trips in the name of "tough taaking "


Anyway my last post on this taapic.

Jai DIE-nasty jai IAS baboons and all that .


PS - Modi is no necessary fool . If you think that a he is susceptible to sycophancy , good luck trying . Unlike other netas he is never surrounded by chamchas . He does not tolerate them . He is alone , most of the time . Impossible to flatter the chap. He ll probably give aspirations of independence to Zhejiang people than other way round .

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 09 Feb 2012 19:39

I certainly agree to the point that Modi ji is not a fool, having met him in person. He comes across as highly intelligent, articulate and able leader - probably the best India has. So bottomline is he's certainly no idiot, like many of our politicians. Unfortunately the same can't always be said about his many admirers.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Hari Seldon » 09 Feb 2012 19:51

gakakkad wrote: Impossible to flatter the chap. He ll probably give aspirations of independence to Zhejiang people than other way round .


:rotfl:


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