Thursday, June 07, 2012

India - the next cynosure of Japan by S Majumder

jun 7th, 2012 CE

i don't know if i believe this, but it would be good if it were true: an indo-japanese alliance would be very good for both, and for asia.

---------- Forwarded message ----------
From: sanjeev 

India and Japan must strengthen relations in all spheres irrespective of what China or the world thinks. We have lots in common.
India - the next cynosure of Japan

Guest Column by S. Majumder 5/6/2012

(The views expressed are author’s own) 

The 60th anniversary of India – Japan diplomatic relationship marks a milestone for strong political and economic relation.  It is one of the rarest foreign relations of India, where all throughout the friendship with Japan remained cordial and was harping on each other cooperation.  There are few occasions when the relation between the two countries turned sore with India engaging into nuclear testing. Interestingly, in the history of India’s foreign relation Japan is the only country, which acted always a true   economic partner of India notwithstanding it remained politically a passive ally to India. Some twitted that both India and Japan required minimum efforts to strengthen the political platform as a precursor to foster a strong economic relation between the two countries.     

In contrast, Japan had to buckle down to Chinese pressure on several occasion to keep floating its swelling economic relation. During the decade of 2000’s, China emerged the paragon for Japanese investors. Japanese investment in China surged from a paltry US $ 935 million in 2000 to US$ 7252 million in 2010. But, the pace of Japanese investment in China slowed after the Lehman shock. Japanese investment in China increased merely from US$ 6496 million in 2008 to US$ 7252 million in 2010. In contrast, Japanese investment in India spurred, defying the global Lehman crisis.  India attracted Japanese investment in between US$ 124 million to US$ 175 million a year during the period of 2000 to 2006. It spurted to US$ 5,551 million in 2008 – the year Lehman shock spiked the global investment. Thereafter, Japanese investment in India averaged between US$ 2 – 3 billion a year.       

India has always been compared with China by the Japanese investors. This is because both countries area complementary to each other in terms of huge workforce, low wage and a faster economic growth. But, China’s sustainability of super economic growth is now under global debate. So also India’s power to sustain spurring growth in the coming years after its debacle in 2011-12. But, the global economists and investors repose more hope on India for rebounding of the economy than in China

The factors which are forecasted to dampen  the China’s sustainability for  super growth in the economy are the pressure on exports due to global turmoil in the wake of Lehman shock, which will be  accelerated by Greece exit from Euro, slender  hope for  growth in domestic demand, growing aging society due to one child policy and its impact on the saving ratio of the country (currently 51 percent of GDP) and the imbalances in the investment between SOEs ( State Owned Enterprises) and the private sectors. These underline the long term problems of China which may damage the hope for   recovery. Accordingly, these may detract the foreign investors from the binge to invest in China.   

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