Indian History - Important events
History of India . An overview : The people of India have had a continuous civilization since 2500 B.C., when the inhabitants of the Indus River valley developed an urban culture based on commerce and sustained by agricultural trade. This civilization declined around 1500 B.C., probably due to ecological changes.
During the second millennium B.C., pastoral, Aryan-speaking tribes migrated from the northwest into the subcontinent. As they settled in the middle Ganges River valley, they adapted to antecedent cultures.
The political map of ancient and medieval India was made up of myriad kingdoms with fluctuating boundaries. In the 4th and 5th centuries A.D., northern India was unified under the Gupta Dynasty. During this period, known as India's Golden Age, Hindu culture and political administration reached new heights.
Islam spread across the Indian subcontinent over a period of 500 years. In the 10th and 11th centuries, Turks and Afghans invaded India and established sultanates in Delhi. In the early 16th century, descendants of Genghis Khan swept across the Khyber Pass and established the Mughal (Mogul) Dynasty, which lasted for 200 years. From the 11th to the 15th centuries, southern India was dominated by Hindu Chola and Vijayanagar Dynasties. During this time, the two systems--the prevailing Hindu and Muslim--mingled, leaving lasting cultural influences on each other.
The first British outpost in South Asia was established in 1619 at Surat on the northwestern coast. Later in the century, the East India Company opened permanent trading stations at Madras, Bombay, and Calcutta, each under the protection of native rulers.
| | The British expanded their influence from these footholds until, by the 1850s, they controlled most of present-day India, Pakistan, and Bangladesh. In 1857, a rebellion in north India led by mutinous Indian soldiers caused the British Parliament to transfer all political power from the East India Company to the Crown. Great Britain began administering most of India directly while controlling the rest through treaties with local rulers. In the late 1800s, the first steps were taken toward self-government in British India with the appointment of Indian councilors to advise the British viceroy and the establishment of provincial councils with Indian members; the British subsequently widened participation in legislative councils. Beginning in 1920, Indian leader Mohandas K. Gandhi transformed the Indian National Congress political party into a mass movement to campaign against British colonial rule. The party used both parliamentary and nonviolent resistance and non-cooperation to achieve independence. |
On August 15, 1947, India became a dominion within the Commonwealth, with Jawaharlal Nehru as Prime Minister. Enmity between Hindus and Muslims led the British to partition British India, creating East and West Pakistan, where there were Muslim majorities. India became a republic within the Commonwealth after promulgating its constitution on January 26, 1950.
After independence, the Congress Party, the party of Mahatma Gandhi and Jawaharlal Nehru, ruled India under the influence first of Nehru and then his daughter and grandson, with the exception of two brief periods in the 1970s and 1980s.
Prime Minister Nehru governed India until his death in 1964. He was succeeded by Lal Bahadur Shastri, who also died in office. In 1966, power passed to Nehru's daughter, Indira Gandhi, Prime Minister from 1966 to 1977. In 1975, beset with deepening political and economic problems, Mrs. Gandhi declared a state of emergency and suspended many civil liberties. Seeking a mandate at the polls for her policies, she called for elections in 1977, only to be defeated by Moraji Desai, who headed the Janata Party, an amalgam of five opposition parties.
In 1979, Desai's Government crumbled. Charan Singh formed an interim government, which was followed by Mrs. Gandhi's return to power in January 1980. On October 31, 1984, Mrs. Gandhi was assassinated, and her son, Rajiv, was chosen by the Congress (I)--for "Indira"--Party to take her place. His government was brought down in 1989 by allegations of corruption and was followed by V.P. Singh and then Chandra Shekhar.
In the 1989 elections, although Rajiv Gandhi and Congress won more seats in the 1989 elections than any other single party, he was unable to form a government with a clear majority. The Janata Dal, a union of opposition parties, was able to form a government with the help of the Hindu-nationalist Bharatiya Janata Party (BJP) on the right and the communists on the left. This loose coalition collapsed in November 1990, and the government was controlled for a short period by a breakaway Janata Dal group supported by Congress (I), with Chandra Shekhar as Prime Minister. That alliance also collapsed, resulting in national elections in June 1991.
On May 27, 1991, while campaigning in Tamil Nadu on behalf of Congress (I), Rajiv Gandhi was assassinated, apparently by Tamil extremists from Sri Lanka. In the elections, Congress (I) won 213 parliamentary seats and put together a coalition, returning to power under the leadership of P.V. Narasimha Rao. This Congress-led government, which served a full 5-year term, initiated a gradual process of economic liberalization and reform, which has opened the Indian economy to global trade and investment. India's domestic politics also took new shape, as traditional alignments by caste, creed, and ethnicity gave way to a plethora of small, regionally based political parties.
The final months of the Rao-led government in the spring of 1996 were marred by several major political corruption scandals, which contributed to the worst electoral performance by the Congress Party in its history. The Hindu-nationalist Bharatiya Janata Party (BJP) emerged from the May 1996 national elections as the single-largest party in the Lok Sabha but without enough strength to prove a majority on the floor of that Parliament. Under Prime Minister Atal Bihari Vajpayee, the BJP coalition lasted in power 13 days. With all political parties wishing to avoid another round of elections, a 14-party coalition led by the Janata Dal emerged to form a government known as the United Front, under the former Chief Minister of Karnataka, H.D. Deve Gowda. His government lasted less than a year, as the leader of the Congress Party withdrew his support in March 1997. Inder Kumar Gujral replaced Deve Gowda as the consensus choice for Prime Minister of a 16-party United Front coalition.
In November 1997, the Congress Party in India again withdrew support for the United Front. New elections in February 1998 brought the BJP the largest number of seats in Parliament--182--but fell far short of a majority. On March 20, 1998, the President inaugurated a BJP-led coalition government with Vajpayee again serving as Prime Minister. On May 11 and 13, 1998, this government conducted a series of underground nuclear tests forcing U.S. President Clinton to impose economic sanctions on India pursuant to the 1994 Nuclear Proliferation Prevention Act.
In April 1999, the BJP-led coalition government fell apart, leading to fresh elections in September. The National Democratic Alliance-a new coalition led by the BJP-gained a majority to form the government with Vajpayee as Prime Minister in October 1999.
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India is home to one of the richest and the most ancient civilizations in the world, which existed over 5,000 years ago. This civilization originated in the Indus River Valley, hence the name given to it was Indus Valley civilization. It was the origin of many of the ideas, philosophies and movements which have shaped the destiny of mankind. Its people are thought to be Dravidians, whose descendants still inhabit the far south of India. |
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History of Globalization
The history of globalization is probably as old as the history of human civilization. The history of globalization can be traced back to the Harappan civilization era. During that period, farming was the main lively hood and these farmers mainly grew wheat, rice, and cotton. The people in coastal region of India produced salt. These farmers of India had transnational business relations with West Asian countries and the most prominent of them being Iraq (then Mesopotamia). They traded articles like gold, silver, metals, potteries, gems, cotton, silk, food grains, honey, and spices like cinnamon and pepper. The history of globalization also suggests that the economy of ancient India had a strong cross border trade and commerce relation with China and they mainly traded food grains, spices, cottons, gold, silver, and metals. Further, a more organized form of trans-world trade has been in force from the mid of 14th century and it started as a means to explore new business destination and opportunities. Furthermore, Chandragupta Maurya who reigned during the period 325 BC popularized expansive trade and economy.
Alexander the Great forges eastward link with Chandragupta Maurya for overland routes between the Mediterranean, Persia, India, and Central Asia. During the 1st century CE the trans-world trade makes its first major appearance in China under the Han dynasty and successfully established trade relations with Asian and European countries. The period from 650-850 AD records the expansion of Islam and trade relations with the west Mediterranean region with the Indian sub-continent. The Rise of Genghis Khan during 1100 AD gave rise to the integration of overland routes across Eurasia. The 1650s marks the expansion of the slave trade and it sustained the expansion of Atlantic Economy, giving birth to integrated economic and industrial systems across the Ocean. The period from 1776 to 1789 AD marks the US and French Revolutions and the creation of modern state as a fall-out of military and business interests. These integrated empires expand during the industrial revolution. The eighteenth century marks the merging of the modernity with globalization and it also marks the foundation for the creation of international trade law.
The modern day Indian economy (1900) had taken cue from the history of globalization and structured its foreign trade policy accordingly. The liberalized economic policy adapted and implemented by the Government of India, finds its root back to the rich history of globalization.
The latest effects of globalization with respect to Indian markets are as follows -
- Industrial Growth - for the first time has exceeded 10%. Manufacturing growth rate has exceeded 12 % in 6 months (April-September 2006). The mining and quarrying sector has registered a growth of 4%. The electricity sector recorded a double-digit growth of 12% during September 2006 as compared to September 2005. Consumer durables and non-durables have also recorded upswings. The use-base economic sub-groups, intermediate goods have registered an impressive growth of almost 15% during September 2006 over September 2005. Consumer goods have recorded a high growth of 13%. The National Manufacturing Competitiveness Council has targeted 12 to 14% growth in the 11th Plan period
- Foreign Institutional Investors (FIIs) - net investments in equities crossed US$ 7 billion in calendar 2006. FII net investment till 6 November 2006 has been US$ 7.08 billion, according to the Securities and Exchange Board of India. 151 new FIIs have opened their offices in India during first 10 months of 2006. The total number of FIIs in India stands at 974 as on November 2006
- Foreign Direct Investment (FDI) - India envisage of attracting $10 billion of foreign direct investment (FDI) this year as inflows have nearly doubled to US$ 4.4 billion in April-September 2006. In September 2006, FDI inflows grew 225% to US$ 916 million as compared to US$ 282 million in the same month last year. Services attracted maximum investment of US$ 1.5 billion recording growth of 350%. Telecommunication sector with inflows of US$ 405 million has registered the maximum growth of 950%. Corporate India has recorded its highest rise in salaries at 22% in the first half of 2006-07 against increase of 17% in 2005-06
- India's Balance of Payments - is expected to remain comfortable
- Merchandise Exports - recorded strong growth
- The Invisibles Account - remained positive during last financial year and financed 2/3 of the trade deficit
- India's Foreign Exchange Reserves - were US$ 166.2 billion as on October 2006, showing increment of US$ 14.5 billion over end-March 2006
- India's economy grew at 9.3% in quarter April-June and it was driven by manufacturing, construction and services sector and agriculture sector
- GDP factor for the first quarter of 2007-08 was at Rs 7,23,132 crore, registering a growth rate of 9.3% over the corresponding quarter of previous year
- Manufacturing industry registered 11.9% growth
- The passenger vehicles sector grew by 11.61% during April-May 2007
- Electricity, gas & water supply performed well and recorded an impressive growth rate of 8.3%
- Construction growth rate rose to 10.7%
- Trade, hotels, transport and communication registered a growth rate of 12%
- Financing, insurance, real estate and business services recorded an impressive growth rate of at 11% during the 1st quarter of this fiscal
- Community, social and personal services maintained a decent growth rate of 7.6%
- The growth rate of agriculture, forestry & fishing' and 'mining & quarrying' are estimated at 3.8 per cent, and 3.2 %, respectively during the 1st quarter of 2007-2008
- Exports grew by 18.11% during the 1st quarter of 2007-2008 and the imports shoot up by 34.30% during the same period
- India's FOREX reserves (excluding Gold and SDRs) stood at $219.75 billion at the end of July ' 07
- The food sector is estimated to be of US$ 200 billion and it is expected to grow to $310 billion by 2015
- Stocks of food-grains grew by 13.1% to 17.73 million tons
- The annual inflation rate was 4.45% for the week ended July 28, 2007
- India's Balance of Payments is expected to remain comfortable
- Merchandise Exports recorded strong growth
China and India: Same Globalization Road, Different Destinies
Ambitions of Asia's two giant emerging economies could lead to rivalry
Scott B. MacDonald
YaleGlobal, 24 October 2007
STAMFORD: In late September 2007, a leading financial analyst opined that Chindia "stands for China plus India, rather than China versus India." That may be so for now, but over time the "plus" will evolve to "versus" on many levels. For all of the talk around the idea of Chindia - the merging of China and India into one great complex of dynamic economic development - the path of Asia's two giants is more likely to diverge.
Simply stated, China and India are different countries that happen to be on the same road of globalization. The contrasts will only sharpen as Asia's two most populous countries pursue national interests that are likely to collide over issues such as access to markets, natural resources and strategic partners.
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The core differences between China and India are political. China's political leadership confronts substantial challenges in the management of popular aspirations: It must maintain rapid economic growth based on investment and exports, at the expense of wages and consumption, while controlling most aspects of political expression. The downside is that demonstrations and riots have become the domain for discontent. In 1989, pro-democracy demonstrations at Tiananmen Square rocked the government until they were crushed by the military, an event that left its mark on the Chinese Communist Party.
In contrast, India's approach allows for more open debate over societal aspirations and goals. When Indians are discontent with government policies, they have the option to change leaders peacefully. The downside is often unwieldy coalition governments that make implementing policies difficult. All the same, India has avoided the regime-threatening upheaval of a Tiananmen Square and Indians retain confidence in using the ballot box.
Determining which approach has been more successful in improving people's lives and managing the process of globalization depends on the set of factors examined: economic growth, poverty reduction, political stability, business expansion, and conflict or compromise.
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In China, the high rates of economic growth have led to substantial decreases in poverty rates while, in India, poverty reduction has been more modest. According to the World Bank and International Monetary Fund, between 1981 and 2004, there was an estimated decline in the absolute number of extreme poor in China of more than 500 million people, while in India, the number of extreme poor remained roughly constant.
Indian democracy's embrace of globalization and more market-oriented policies have not reduced extreme poverty, while China's authoritarianism has delivered the economic goods. But India's open-door economic experiment has been in motion for a shorter period of time.
In addition, there have not been the extreme ranges of socioeconomic experimentation in India as in China. That experimentation included the infamous Great Leap Forward, the ill-fated Backyard Furnace Campaign and forced communalization, which resulted in famine and the death of an estimated 30 million people. Also, India's relative lack of achievement in many social areas is largely unrelated to globalization. Rather, the delivery of social services is complicated by domestic political problems, bloated bureaucracies and corruption, all of which predate globalization. If anything, globalization has made Indians aware of what can be achieved, especially when their nation is compared to China.
Although India's political life is complicated by corruption and religious/ethnic differences, the country's political system has managed to uphold an electoral system that provides the foundation for much of the give-and-take of parliamentary politics. The system allows an escape valve for public frustrations. Unlike its neighbors, India has not been subject to military coups or civil wars. Even when Indira Gandhi declared the Indian Emergency in 1975 and the country flirted with authoritarianism, India steered back to elective politics in 1977.
The two nations loom large in the geopolitics of Asia. China has a close relationship with Pakistan, assisting in the development of that country's nuclear program, and building influence in Burma. This is not to argue that India and China sit on the edge of a new conflict; if anything, relations are probably the warmest they have been in a long time.
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Sino-Indian relations started to thaw in 2000, gaining greater momentum with the visits of top officials from both countries, including Prime Minister Atal Bihari Vajpaypee's 2003 travel to Beijing. In 2004, trade between the two countries topped $10 billion for the first time, and in 2006, Nathula, an ancient trade route that was part of the historic Silk Road, reopened for the first time since the 1962 Sino-Indian War.
The Chindia theme was underscored in 2006, when China's Premier Wen Jiabao declared that China and India will be a source of economic power in the 21st century: "Cooperation is just like two pagodas - one hardware and one software."
Chinese and Indian businesses are likely to become rivals. Currently China easily dominates in manufacturing, while India dominates the service sector. However, China seeks to move further into services and India into manufacturing. Indeed, India has been consistently criticized for not further developing its industrial sector to make a more balanced economy. That process is beginning to gain momentum as reflected by the globalization of such firms as Tata Motors (automotives), Vedanta Resources (metals and mining), Hindalco (metals) and Dr. Reddy Laboratories (pharmaceuticals). From oil exploration to revitalizing Africa's mining industry, Indian and Chinese companies increasingly bump into each other on faraway points of the map, such as Zambia, West Africa and Latin America.
While the two-pagoda theme, where China runs the industrial pagoda and India the service one, serves as a cordial veneer to Sino-Indian relations, there remains considerable cause for rivalry. China started the processes of globalization and economic development earlier and has a more broadly diversified export base. India is catching up, driven by its service sector, and is also making headway on the industrial side. Furthermore, Indian takeovers of Western assets occur with much less opposition than China's as the South Asian country is a more comfortable fit - politically, as a fellow democracy; linguistically, with English; and socially, as a member state of the Commonwealth. China has little desire to strictly remain the hardware pagoda, and India has little intention to remain the software pagoda. Both countries have competent companies moving into both sectors.sense, China seems to desire that India remain a regional power that can be contained. For its part, India has greater aspirations, especially as its companies enjoy a period of global expansion. The aspirations of the two nations portend a future of growing rivalry, in which both countries will seek to advance their national interests generally by offering market and capital, and through the projection of soft power, but with military power in the background.
Considering the old pull of border issues and the competition over natural resources as well as a still-fluid international system, the looming issue for Asia and the rest of the world is how New Delhi and Beijing will manage the ups and downs of tectonic economic shifts and the potential for their competing world views.
We do know that India's democracy will result in a change of government in a relatively orderly fashion; changes of government in China are much more of a Byzantine affair, and discontent with market-Leninism opens the door to decisions being made in the street rather than in the voting booth, the ramifications of which will impact everyone in Asia and put to rest any notion of Chindia condominium.
Scott B. MacDonald is a senior partner and head of research at Aladdin Capital Management, LLC, in Stamford, Connecticut, and currently writing a book on Asia and globalization.
The Origin of Ancient Oriental Civilization
China, along with ancient Egypt, Babylon, and India, is known as one of the four great ancient civilizations of the world. The distinctive culture that arose in China was both far-reaching and highly refined.
In approximately the 21st century BC, a primitive agricultural society first appeared in the areas around China's Yellow and Yangtze rivers, and animal husbandry joined hunting and fishing as a means of human sustenance. Approximately two millennia later, the Xia Dynasty (21st-16th century BC) emerged as China's first dynastic government, followed by the Shang Dynasty (16th-11th century BC) and the Western Zhou Dynasty (11th century-771BC), which further refined the national system. The subsequent Spring and Autumn (770-476BC) and Warring States periods (475-221BC) were a time of constant struggle for supremacy among numerous small states.
China's Spring and Autumn and Warring States periods saw a great upsurge in science and technology, as well as in ideology and culture. Much as ancient Greece gave rise to Socrates, Plato, and Aristotle, China produced a number of great scholars who possessed abundant ideas and extensive knowledge, including Kongzi (Confucius), Laozi, Mozi, Xunzi, and Mengzi (Mencius). The atmosphere of free debate among the different schools of philosophy founded by these Chinese thinkers was characterized by the saying, "Let a hundred flowers blossom and a hundred schools of thought contend."
Like their contemporaries in ancient Greece, the Chinese philosophers established schools and took on pupils, brilliantly discoursed and debated, pondered military and governmental affairs, and served as strategists and advisors to their country's leaders. They left future generations a valuable legacy in philosophy, politics, education, and the military, and had a profound influence on the culture of China and the entire world. One of these illustrious figures was the military strategist Sun Wu (Sunzi), whose renowned work, Sunzi's Art of War, is still used extensively in the areas of military and economic affairs.
In 221BC, at approximately the same time that the Roman Empire was establishing hegemony in the Mediterranean, Qin Shihuang, the first Qin Emperor, conquered the warring states and founded the Qin Dynasty (221-207BC) -- the first united, centralized, multi-ethnic nation in Chinese history. The Qin Dynasty was followed by many dynasties, which have left a legacy of fascinating stories, and have provided a wealth of inspiration for modern Chinese art, literature, film, and television.
Traditional Chinese culture -- drawing from philosophy, religion, and ethics; art and literature; science and technology; and even ecology and the environment -- embodies the development and wisdom of the Chinese people. It is not only the priceless inheritance of the people of China, but also a great treasure belonging to all humanity.
China's many inventions (especially its Four Great Inventions of paper, printing, the compass, and gunpowder) and wide range of knowledge have had a far-reaching effect on human development.. When Christopher Columbus embarked on his great voyages to the New World, the Chinese compass provided him with vital assistance. Floating pontoon bridges were in use in China before 1100BC, and the world's earliest astronomical treatise, Gan Shi Xing Jing (The Classic of the Stars), was written in China during the Warring States Period.
Zhang Heng invented the celestial globe, used to study star-related phenomena, and the seismograph, used to measure seismic activity, during the Han Dynasty (206BC-220AD). During the Northern and Southern Dynasties (420-589), Zu Chongzi calculated the value of pi (π) to be between 3.1415926 and 3.1415927, becoming the first person in the world to accurately determine the value of pi (π) to seven decimal places. Li Shizhen's famous Compendium of Materia Medica, written in the 16th century, lists over 1,800 different medical remedies and over 10,000 prescriptions.
Traditional Chinese culture is recorded not only in historical books and documents, but also in architectural records, such as ancient city walls, palaces, temples, pagodas, and grottos; artifacts, such as bronze objects, weapons, bronze mirrors, coins, clocks, jade and pottery objects, and curios; and folk culture, including song and dance, embroidery, cuisine, clothing, tea ceremonies, drinking games, lanterns, riddles, martial arts, chess, and kites.
Imbued with the distinctive romance and charm of the East, Chinese art has garnered acclaim all over the world. Chinese calligraphy and painting, which appeared and evolved in tandem, are the guiding force of China's fine arts. They embody China's humanist spirit, and are unparalleled in the arts of the world.
The number of cultures that have produced the art of calligraphy can be counted on the fingers of one hand. of them, China has the most ancient calligraphic tradition. Calligraphy has its source in writing. The earliest known form of Chinese writing, consisting of primitive pictographs, has been found engraved on 5000-year-old Neolithic pottery shards.
The Chinese system of writing, which employs pictographs rather than alphabets, has been in existence for several thousand years. Chinese writing is not only an expression of Chinese culture, but also one of the great achievements of early human civilization. Pictographic Chinese characters resemble an ancient fossil record in that they vividly capture the natural, social, and spiritual face of the ancient world, and reflect the evolution of both the Chinese people and human society. Chinese language and writing are inseparable from the achievements of Chinese culture, maturing alongside society to become steadily more expressive and refined.
China's painting tradition is extremely ancient as well. When tracing the origins of Chinese painting, what first comes to mind are the elegantly engraved prehistoric pots produced by China's "painted pottery" culture, dating from 5,000 to 6,000 years ago. By the time of the Warring States Period, Chinese painting had developed into a distinctive and mature art form. Colored drawings on silk from this period, unearthed from the tomb of the King of Chu in Changsha (Central China's Hunan Province), are the oldest existing drawings in China and the world. Chinese painting continued to develop during the Eastern and Western Jin Dynasties (265-420), and flourished during the Sui (581-618), Tang (618-907), Song (960-1279), Yuan (1271-1368), Ming (1368-1644) and Qing (1644-1911) Dynasties.
Chinese sculpture has its origins in the Xia Dynasty (21st-16th century BC). During the Qin Dynasty, lifelike terracotta burial figures of soldiers and horses were created for the tomb of Qin Shihuang, the First Qin Emperor. The discovery and excavation of thousands of these figures from the Emperor's tomb in Xi'an shook the world, and they were hailed as the "Eighth Wonder of the World" by foreign archeologists.
China's Four Great Grottos -- the Mogao and Maijishan Grottos at Dunt1uang in Northwest China's Gansu Province, the Yungang Grottos at Datong in North China's Shanxi Province, and the Longmen Grottos at Luoyang in Central China's Henan Province -- are storehouses of ancient Chinese art, and treasures belonging to the entire world. of these sites, the Mogao Grottos are the most ancient and contain the most magnificent cliff paintings and sculptures.
The ancestors of the Chinese people were gifted in both song and dance. Musical instruments have existed in China since remote antiquity. Ancient historical documents generally trace the history of Chinese music back to the time of the legendary Yellow Emperor, 4,000 to 5,000 years ago.
A set of sixty-four cast bronze bells, made in the State of Chu during the Warring States Period, has been discovered in Central China's Hubei Province. Each bell produces two notes, with the set covering a range of over five octaves. A wide range of classical and modem music, including symphonic works by Beethoven, can be performed on the set, which is tuned to a diatonic scale in the key of C major. The bells have a beautiful tone, harmonious and pleasing to the ear. The fact that such a musical instrument was created in China 2,400 years ago is truly a miracle in the history of world music.
China has numerous exquisite traditional arts and crafts. Among the most famous are carving and metalwork, embroidery and painting, ceramics and porcelain, and cloisonné (a kind of finish) enamel inlay. Bamboo furniture, woven bamboo and grass objects, paper cuts, lanterns, kites, and toys are popular traditional craft items, while Chinese jade and ivory ornaments, cloisonné, and embroidery are treasured by people all over the world.
Ceramics and porcelain are among the most well known inventions of ancient China. The most outstanding porcelain is made in China's porcelain capital, Jingdezhen in East China's Jiangxi Province. A famous saying describes Jingdezhen porcelain as "white as jade, bright as a mirror; thin as paper, tone like a chime." China's ceramics capital, Yixing in Jiangsu Province (East China), is the home of purple sand pottery. Produced using the area's unique purple sand clay and special firing techniques, Yixing pottery is both beautiful and distinctive.
Embroidery is a traditional craft that has flourished over the ages. China's four main styles of embroidery developed in Suzhou (Jiangsu), Hunan Province (Central China), Sichuan Province (Southwestern China), and Guangdong Province (South China). An embroidery artist may use several dozen different stitches to portray flowers, people, animals, scenery, or any number of meticulously designed patterns.
Traditional Chinese philosophy is both profound and simple, intimately linked to both society and the individual. It propounds the theory of "as above, so below," and replies to the vexations of the "ten thousand things" -- that is, the material world -- with the concept of Harmony ("he" in Chinese). Harmony appears weak but is actually strong. There is nothing it cannot absorb and nothing it cannot penetrate. The Chinese character "he," or Harmony, appears in the Chinese words for peace, compromise, concord, and unison, and may be interpreted to include all of these meanings.
The philosophic concept of Harmony is expressed in both the Confucian ideal of Benevolence and the Daoist idea of Non-Action. The taijitu, or Yin-Yang symbol, offers a visual representation of this concept. It depicts two opposing forces, each of which includes elements of the other and may transform into its opposite under certain conditions. The balanced interaction of these opposing forces creates a unified and harmonious whole. The ancient philosophy of balancing opposition to create a harmonious whole has fostered an individual and collective love of peace in the Chinese people.
Chinese civilization has its source far in the distant past. With a continuous history of 5,000 years, it has undergone frequent transformations to produce a rich and vital cultural heritage.
History of China
China, representing one of the earliest civilizations in the world, has a recorded history of about 3,600 years. It possesses rich historical documents as well as ancient relics. Like other nations, China, in its development, passed through the stages of primitive society, slave society, and feudal society. During the middle decades of the 19th century, capitalist forces of foreign countries invaded China, and China was slowly transformed into a semi-colonial and semi-feudal society. The founding of the People's Republic in 1949 marked China's entry into the socialist stage. During the long period of historical development, the industrious, courageous, and intelligent Chinese people of all nationalities collectively created a great civilization. They made great contributions to all of mankind.
The following is a list of the dynasties:
| -- | 1.7 million years - 21st century BC | ||
| -- | About 2100-1600 BC | ||
| -- | About 1600-1100 BC | ||
| About 1100-771 BC | |||
| 770-256 BC | |||
| 770-476 BC | |||
| 475-221 BC | |||
| -- | 221-207 BC | ||
| 206BC-AD 24 | |||
| 25-220 | |||
| 220-265 | |||
| 221-263 | |||
| 222-280 | |||
| 265-316 | |||
| 317-420 | |||
| 420-479 | |||
| 479-502 | |||
| 502-557 | |||
| 557-589 | |||
| 386-534 | |||
| 534-550 | |||
| 550-577 | |||
| 535-556 | |||
| 557-581 | |||
| 581-618 | |||
| 618-907 | |||
| 907-923 | |||
| 923-936 | |||
| 936-946 | |||
| 947-950 | |||
| 951-960 | |||
| 960-1127 | |||
| 1127-1279 | |||
| 916-1125 | |||
| 1115-1234 | |||
| 1271-1368 | |||
| 1368-1644 | |||
| 1644-1911 | |||
| 1912-1949 | |||
| 1949- | |||
The History of China, as documented in ancient writings, dates back some 3,300 years. Modern archaeological studies provide evidence of still more ancient origins in a culture that flourished between 2500 and 2000 B.C. in what is now central China and the lower Huang He ( orYellow River) Valley of north China. Centuries of migration, amalgamation, and development brought about a distinctive system of writing, philosophy, art, and political organization that came to be recognizable as Chinese civilization. What makes the civilization unique in world history is its continuity through over 4,000 years to the present century.
The Chinese have developed a strong sense of their real and mythological origins and have kept voluminous records since very early times. It is largely as a result of these records that knowledge concerning the ancient past, not only of China but also of its neighbors, has survived.
Chinese history, until the twentieth century, was written mostly by members of the ruling scholar-official class and was meant to provide the ruler with precedents to guide or justify his policies. These accounts focused on dynastic politics and colorful court histories and included developments among the commoners only as backdrops. The historians described a Chinese political pattern of dynasties, one following another in a cycle of ascent, achievement, decay, and rebirth under a new family.
of the consistent traits identified by independent historians, a salient one has been the capacity of the Chinese to absorb the people of surrounding areas into their own civilization. Their success can be attributed to the superiority of their ideographic written language, their technology, and their political institutions; the refinement of their artistic and intellectual creativity; and the sheer weight of their numbers. The process of assimilation continued over the centuries through conquest and colonization until what is now known as China Proper was brought under unified rule. The Chinese also left an enduring mark on people beyond their borders, especially the Koreans, Japanese, and Vietnamese.
Another recurrent historical theme has been the unceasing struggle of the sedentary Chinese against the threat posed to their safety and way of life by non-Chinese peoples on the margins of their territory in the north, northeast, and northwest. In the thirteenth century, the Mongols from the northern steppes became the first alien people to conquer all China. Although not as culturally developed as the Chinese, they left some imprint on Chinese civilization while heightening Chinese perceptions of threat from the north. China came under alien rule for the second time in the mid-seventeenth century; the conquerors--the Manchus--came again from the north and northeast.
For centuries virtually all the foreigners that Chinese rulers saw came from the less developed societies along their land borders. This circumstance conditioned the Chinese view of the outside world. The Chinese saw their domain as the self-sufficient center of the universe and derived from this image the traditional (and still used) Chinese name for their country--Zhongguo () , literally, Middle Kingdom or Central Nation. China saw itself surrounded on all sides by so-called barbarian peoples whose cultures were demonstrably inferior by Chinese standards. This China-centered ("sinocentric") view of the world was still undisturbed in the nineteenth century, at the time of the first serious confrontation with the West. China had taken it for granted that its relations with Europeans would be conducted according to the tributary system that had evolved over the centuries between the emperor and representatives of the lesser states on China's borders as well as between the emperor and some earlier European visitors. But by the mid-nineteenth century, humiliated militarily by superior Western weaponry and technology and faced with imminent territorial dismemberment, China began to reassess its position with respect to Western civilization. By 1911 the two-millennia-old dynastic system of imperial government was brought down by its inability to make this adjustment successfully.
Because of its length and complexity, the history of the Middle Kingdom lends itself to varied interpretation. After the communist takeover in 1949, historians in mainland China wrote their own version of the past--a history of China built on a Marxist model of progression from primitive communism to slavery, feudalism, capitalism, and finally socialism. The events of history came to be presented as a function of the class struggle. Historiography became subordinated to proletarian politics fashioned and directed by the Chinese Communist Party. A series of thought-reform and antirightist campaigns were directed against intellectuals in the arts, sciences, and academic community. The Cultural Revolution (1966-76) further altered the objectivity of historians. In the years after the death of Mao Zedong in 1976, however, interest grew within the party, and outside it as well, in restoring the integrity of historical inquiry. This trend was consistent with the party's commitment to "seeking truth from facts." As a result, historians and social scientists raised probing questions concerning the state of historiography in China. Their investigations included not only historical study of traditional China but penetrating inquiries into modern Chinese history and the history of the Chinese Communist Party.
In post-Mao China, the discipline of historiography has not been separated from politics, although a much greater range of historical topics has been discussed. Figures from Confucius--who was bitterly excoriated for his "feudal" outlook by Cultural Revolution-era historians--to Mao himself have been evaluated with increasing flexibility. Among the criticisms made by Chinese social scientists is that Maoist-era historiography distorted Marxist and Leninist interpretations. This meant that considerable revision of historical texts was in order in the 1980s, although no substantive change away from the conventional Marxist approach was likely. Historical institutes were restored within the Chinese Academy of Social Sciences, and a growing corps of trained historians, in institutes and academia alike, returned to their work with the blessing of the Chinese Communist Party. This in itself was a potentially significant development.
Introduction of Chinese Philosophy
The specific social and historical conditions that nurtured the birth of Chinese philosophers have not only contributed to the features of Chinese philosophy, but also influenced the characters of Chinese people.
The Development and Features of Chinese Philosophy
"Misfortunes of a nation may turn out to be fortunes of a philosopher," noted Qian Mu, a renowned expert in Chinese cultural studies.
The sentence vividly summarizes ancient Chinese philosophers and their work, with Chinese history providing verification through the passage of time. In the majestic periods of Chinese history like the Han (206BC-220AD) and Tang (618-907) dynasties, major achievements in the humanities occurred in the field of literature, but at times of social unrest, philosophical accomplishments were even more prominent.
Ancient Chinese philosophers were born out of sorcery. After a series of incidents, ancient belief systems in destiny were gradually shaken and finally collapsed. The symbolic events that indicated the birth of Chinese philosophy were all developed by historiographers and senior officials in the government of the Zhou Dynasty (about 11th Century-221BC) helping to explain natural and social phenomena. The old-type sorcerers, who were most used to providing theological explanations, discarded their most familiar habits of resorting to augury, and emerged anew as philosophers, trying to give logical explanations by employing reason. Chinese philosophy, as a new form of culture, was born.
Features
However, because of their unique identity as sorcerers, Chinese philosophers were not merely pursuing knowledge out of a pure "love of wisdom" as did their western counterparts. While they also tried their best to explain naturally occurring phenomena, what concerned them most were social issues. The purpose of learning the "orders of things" was to provide a better and more complete systematic explanation to human matters, rather than solving the problem of the absence of spiritual dependence after the collapse of primitive religious beliefs in ancient China.
The specific social and historical conditions that nurtured the birth of Chinese philosophers have not only contributed to the features of Chinese philosophy, but also influenced the characters of Chinese people. "To examine heavenly order to learn human affairs," -- perhaps considered the prime task by ancient Chinese philosophers -- characterized Chinese philosophy with the distinct feature of giving great attention to societal needs. The focal point on people led to Chinese philosophers' suffering and worries about society, especially at the times of social chaos.
On the other hand, ancient Chinese had a good tradition of theoretical thinking. Though the focus was always on human affairs, Chinese philosophers were always looking for a reason to develop thought that explained ordinary or mundane affairs of the day-to-day world.
These characteristics of Chinese philosophy and various philosophers contributed greatly to the historical development of the nation, with some believing that the "misfortunes of a nation may turn out to be the fortune of its philosophers."
Development stages
Before the Qin Dynasty (221-207BC), traditional values from the Zhou Dynasty gradually collapsed, with different regimes and different thoughts flourishing throughout China. According to official records of the Han Dynasty, there are as many as 189 different schools of thoughts at the time, making that period the pinnacle of Chinese philosophy. Scholars in the Han Dynasty summed up the pre-Qin philosophy in "nine genres and 10 schools."
At the end of the Eastern Han Dynasty (25-220), the notion that "heaven is dead" prevailed; Confucian moral concepts and values waned; and, society experienced major turbulence. Philosophers at the time used r metaphysical discussions on the interrelation between Confucianism and Taoism to explain a number of important topics like the relationship between Confucianism and nature. Theoretical hypotheses were unprecedented during this time.
From the Tang to the Song Dynasty (960-1279), traditional values suffered from disorder as the Han people blended with other ethnic groups. The contradictions between foreign and indigenous cultures, and official and folk cultures, were more glaring than ever. Facing the contradictions, Han Yu and Li Ao made their voices heard, followed by the "three doctors at the Beginning of Song Dynasty," Sun Fu, Shi Jie, and Hu Yuan, as well as "five scholars in the Northern Song Dynasty," Zhou Dunyi, Shao Yong, Zhang Zai, Cheng Hao, and Cheng Yi. The Confucian school of idealist philosophers endeavored to re-establish a spiritual world for the people in the Song Dynasty, with their efforts to integrate Confucianism, Buddhism and Taoism.
At the juncture of the Ming and Qing dynasties (1368-1644), a generation of scholars chose secluded lives in the mountains and temples after the Manchu Ethnic Group seized power. They sorted out a traditional system and rules, and profoundly criticized and meditated on traditional culture. A galaxy of philosophers with noticeable achievements like Wang Fuzhi, Gu Yanwu, Huang Zongxi, and Fang Yizhi brought Chinese philosophy to a profound new theoretical height.
In modern times, the "Middle Kingdom" was repeatedly defeated by the imperial countries, and the nation's confidence was at its lowest point ever. The task of the time was to "save the nation from subjugation and ensure its survival." Chinese philosophers researched a wide range of subjects on ancient, modern, eastern, and western philosophies, striving to improve China's own philosophy. The trend is still continuing today, forming a new mixed cultural philosophy.
As a result of its features, Chinese philosophy has always had a close relationship with society in its development process. The "misfortunes" the nation has suffered from time to time presented major philosophical challenges, and the "fortunes" of philosophers were vital creations as responses to philosophical subjects of the time.
Whenever Chinese philosophy experienced a thriving period, a number of different schools, abundant talented people, the extent of freedoms, and scope of studies tended to surpass the previous period. The rise and decline of Chinese philosophy has much to do with the rise and decline of society, shaping characteristics and connotations of the nation's ethos.
Chinese Agriculture
Boasting one of the world's most glaring agricultural civilizations, China's agriculture began in the remote antiquity when there was still no written history.
In one of the ancient Chinese legends, there is a story of Shen Nong Shi (also known as the Red Emperor or Yan Emperor) concerning the origin of agriculture. Before Shen Nong Shi, people ate reptiles, little animals, mussels, and wild vegetables. As the population gradually increased, food gradually became more insufficient, thereby creating a desperate need to explore new means of food.
Shen Nong Shi tasted all kinds of herbals, even poison, to finally select the grains that could be eaten by people. Later, he also studied the climate and invented some farm tools, which resulted the appearance of husbandry in China.
While the legend leaves behind some clues about when agriculture originated in China, modern archeology has provided more abundant and reliable materials about the origin and the condition of Chinese agriculture. So far, there have been thousands of discoveries of agricultural sites during the Neolithic age all across China, especially along the Yellow River (Huanghe) and Yangtze River. Chinese agriculture can be traced back to about 10,000 years ago, and the primitive agriculture was very advanced about seven or eight thousand years ago.
There are three major centers where agriculture first appeared worldwide: West Asia, Central and South America, and East Asia (mainly referring to China). With its own characteristics, Chinese agriculture also established its own system. Of all the advantages China had for centuries over the rest of the world, one of the greatest may have been the ability to sustain its large and growing population through agricultural technology. With only about 10 percent of China's land is suitable for agriculture, so farming efficiency has been a concern as population increases.
The development of Chinese agriculture can be generally divided into six stages:
The first is the rudimentary stage, which ranged from about 4,000 to 10,000 years ago in the Neolithic age. During this time, Chinese agriculture was developed on the basis of plucking and picking as well as hunting and fishing. The emergence of agriculture laid a solid foundation for the development of human civilization.
The second is the primary stage, covering the Xia, Shang, and Zhou dynasties (about 2100 BC to 771 BC), during which China invented metal smelting technology (process in which metal is separated from ore by melting). Bronze farm tools began to be used, irrigation projects began to be built, and in general, agricultural technology had some burgeoning development.
The third stage spans the time during the Spring and Autumn and the Warring State periods (770-221BC), when intensive and meticulous farming appeared. Highlighted by the invention of smelting iron, Chinese society, politics, technology, and culture experienced substantial improvements during this era. The mass use of iron farming tools and animal power also propelled the development of agriculture.
The fourth stage is the period from the Qin and Han dynasties to the Northern and Southern dynasties (221BC-589AD), when intensive and meticulous farming technology became mature in the dry land in North China. A set of agricultural technologies, including furrowing, harrowing, and leveling land, was established, while a multiple of large-scale and sophisticated farming tools were also invented. An agricultural encyclopedia titled Qi Min Yao Shu (Important Arts for People's Welfare) by famous agronomist Jia Sixie, summarizing previous agricultural experiences, also appeared in this period.
The fifth stage spans through dynasties from the Sui, Tang, and Song to the Yuan (581-1368), when paddy field intensive cultivation appeared. During this period, China's economic center shifted from the North to the South, and various paddy field farming tools were invented and distributed. Cotton was gradually more widespread. A lot of agricultural books appeared, while ways of using land also increased. Agriculture experienced substantive improvements both in North and South China.
The sixth stage is the advanced phase of the intensive cultivation from the Ming Dynasty to the mid-Qing Dynasty (1368-1840). At this time, the gap between the growing population and relatively scarcer land became increasingly prominent. As a result, the intensive and meticulous farming was even more sophisticated. The new crops from America were also introduced to China, greatly affecting China's crop structure. The diversified kinds of crops and multiple-harvest mode became popular across most of the country.
After the founding of the People's Republic of China (1949), Chinese agriculture has achieved even more significant progress, characterized by utilizing more modern technologies. With only seven percent of the world's cultivated land, China has to feed one-fifth of the world's population. In the agricultural sci-tech sphere, China has been constantly narrowing its gap with the advanced countries. The contribution rate of scientific and technological progress to China's agriculture has increased from 20 percent in 1949 to 42 percent. The agricultural sci-tech departments have made much progress in bio-technology, new and high technology and basic research, and the cultivation of plant cells and tissues, anther culture, haploid breeding and the research on its application have reached the world's advanced level. Bilinear hybrid rice, hybrid corn breeding and multi-crop planting technologies featuring intensive cultivation have reached or approached the world's advanced level. In addition, an important breakthrough has been made in the research of making use of the advantages of hybrid beans.
A New World Economy
The balance of power will shift to the East as China and India evolve
It may not top the must-see list of many tourists. But to appreciate Shanghai's ambitious view of its future, there is no better place than the Urban Planning Exhibition Hall, a glass-and-metal structure across from People's Square. The highlight is a scale model bigger than a basketball court of the entire metropolis -- every skyscraper, house, lane, factory, dock, and patch of green space -- in the year 2020. There are white plastic showpiece towers designed by architects such as I.M. Pei and Sir Norman Foster. There are immense new industrial parks for autos and petrochemicals, along with new subway lines, airport runways, ribbons of expressway, and an elaborate riverfront development, site of the 2010 World Expo. Nine futuristic planned communities for 800,000 residents each, with generous parks, retail districts, man-made lakes, and nearby college campuses, rise in the suburbs. The message is clear. Shanghai already is looking well past its industrial age to its expected emergence as a global mecca of knowledge workers. "In an information economy, it is very important to have urban space with a better natural and social environment," explains Architectural Society of Shanghai President Zheng Shiling, a key city adviser.
It is easy to dismiss such dreams as bubble-economy hubris -- until you take into account the audacious goals Shanghai already has achieved. Since 1990, when the city still seemed caught in a socialist time warp, Shanghai has erected enough high-rises to fill Manhattan. The once-rundown Pudong district boasts a space-age skyline, some of the world's biggest industrial zones, dozens of research centers, and a bullet train. This is the story of China, where an extraordinary ability to mobilize workers and capital has tripled per capita income in a generation, and has eased 300 million out of poverty. Leaders now are frenetically laying the groundwork for decades of new growth.
INVALUABLE ROLE
Now hop a plane to India. It is hard to tell this is the world's other emerging superpower. Jolting sights of extreme poverty abound even in the business capitals. A lack of subways and a dearth of expressways result in nightmarish traffic.
But visit the office towers and research and development centers sprouting everywhere, and you see the miracle. Here, Indians are playing invaluable roles in the global innovation chain. Motorola, (MOT ) Hewlett-Packard (HPQ ), Cisco Systems (CSCO ), and other tech giants now rely on their Indian teams to devise software platforms and dazzling multimedia features for next-generation devices. Google (GOOG ) principal scientist Krishna Bharat is setting up a Bangalore lab complete with colorful furniture, exercise balls, and a Yamaha organ -- like Google's Mountain View (Calif.) headquarters -- to work on core search-engine technology. Indian engineering houses use 3-D computer simulations to tweak designs of everything from car engines and forklifts to aircraft wings for such clients as General Motors Corp. (GM ) and Boeing Co (BA ). Financial and market-research experts at outfits like B2K, OfficeTiger, and Iris crunch the latest disclosures of blue-chip companies for Wall Street. By 2010 such outsourcing work is expected to quadruple, to $56 billion a year.
Even more exhilarating is the pace of innovation, as tech hubs like Bangalore spawn companies producing their own chip designs, software, and pharmaceuticals. "I find Bangalore to be one of the most exciting places in the world," says Dan Scheinman, Cisco Systems Inc.'s senior vice-president for corporate development. "It is Silicon Valley in 1999." Beyond Bangalore, Indian companies are showing a flair for producing high-quality goods and services at ridiculously low prices, from $50 air flights and crystal-clear 2 cents-a-minute cell-phone service to $2,200 cars and cardiac operations by top surgeons at a fraction of U.S. costs. Some analysts see the beginnings of hypercompetitive multinationals. "Once they learn to sell at Indian prices with world quality, they can compete anywhere," predicts University of Michigan management guru C.K. Prahalad. Adds A. T. Kearney high-tech consultant John Ciacchella: "I don't think U.S. companies realize India is building next-generation service companies."
SIMULTANEOUS TAKEOFFS
China and India. Rarely has the economic ascent of two still relatively poor nations been watched with such a mixture of awe, opportunism, and trepidation. The postwar era witnessed economic miracles in Japan and South Korea. But neither was populous enough to power worldwide growth or change the game in a complete spectrum of industries. China and India, by contrast, possess the weight and dynamism to transform the 21st-century global economy. The closest parallel to their emergence is the saga of 19th-century America, a huge continental economy with a young, driven workforce that grabbed the lead in agriculture, apparel, and the high technologies of the era, such as steam engines, the telegraph, and electric lights.
But in a way, even America's rise falls short in comparison to what's happening now. Never has the world seen the simultaneous, sustained takeoffs of two nations that together account for one-third of the planet's population. For the past two decades, China has been growing at an astounding 9.5% a year, and India by 6%. Given their young populations, high savings, and the sheer amount of catching up they still have to do, most economists figure China and India possess the fundamentals to keep growing in the 7%-to-8% range for decades.
Barring cataclysm, within three decades India should have vaulted over Germany as the world's third-biggest economy. By mid-century, China should have overtaken the U.S. as No. 1. By then, China and India could account for half of global output. Indeed, the troika of China, India, and the U.S. -- the only industrialized nation with significant population growth -- by most projections will dwarf every other economy.
What makes the two giants especially powerful is that they complement each other's strengths. An accelerating trend is that technical and managerial skills in both China and India are becoming more important than cheap assembly labor. China will stay dominant in mass manufacturing, and is one of the few nations building multibillion-dollar electronics and heavy industrial plants. India is a rising power in software, design, services, and precision industry. This raises a provocative question: What if the two nations merge into one giant "Chindia?" Rival political and economic ambitions make that unlikely. But if their industries truly collaborate, "they would take over the world tech industry," predicts Forrester Research Inc (FORR ). analyst Navi Radjou.
In a practical sense, the yin and yang of these immense workforces already are converging. True, annual trade between the two economies is just $14 billion. But thanks to the Internet and plunging telecom costs, multinationals are having their goods built in China with software and circuitry designed in India. As interactive design technology makes it easier to perfect virtual 3-D prototypes of everything from telecom routers to turbine generators on PCs, the distance between India's low-cost laboratories and China's low-cost factories shrinks by the month. Managers in the vanguard of globalization's new wave say the impact will be nothing less than explosive. "In a few years you'll see most companies unleashing this massive productivity surge," predicts Infosys Technologies (INFY ) CEO Nandan M. Nilekani.
To globalization's skeptics, however, what's good for Corporate America translates into layoffs and lower pay for workers. Little wonder the West is suffering from future shock. Each new Chinese corporate takeover bid or revelation of a major Indian outsourcing deal elicits howls of protest by U.S. politicians. Washington think tanks are publishing thick white papers charting China's rapid progress in microelectronics, nanotech, and aerospace -- and painting dark scenarios about what it means for America's global leadership.
Such alarmism is understandable. But the U.S. and other established powers will have to learn to make room for China and India. For in almost every dimension -- as consumer markets, investors, producers, and users of energy and commodities -- they will be 21st-century heavyweights. The growing economic might will carry into geopolitics as well. China and India are more assertively pressing their interests in the Middle East and Africa, and China's military will likely challenge U.S. dominance in the Pacific.
One implication is that the balance of power in many technologies will likely move from West to East. An obvious reason is that China and India graduate a combined half a million engineers and scientists a year, vs. 60,000 in the U.S. In life sciences, projects the McKinsey Global Institute, the total number of young researchers in both nations will rise by 35%, to 1.6 million by 2008. The U.S. supply will drop by 11%, to 760,000. As most Western scientists will tell you, China and India already are making important contributions in medicine and materials that will help everyone. Because these nations can throw more brains at technical problems at a fraction of the cost, their contributions to innovation will grow.
CONSUMERS RISING
American business isn't just shifting research work because Indian and Chinese brains are young, cheap, and plentiful. In many cases, these engineers combine skills -- mastery of the latest software tools, a knack for complex mathematical algorithms, and fluency in new multimedia technologies -- that often surpass those of their American counterparts. As Cisco's Scheinman puts it: "We came to India for the costs, we stayed for the quality, and we're now investing for the innovation."
A rising consumer class also will drive innovation. This year, China's passenger car market is expected to reach 3 million, No. 3 in the world. China already has the world's biggest base of cell-phone subscribers -- 350 million -- and that is expected to near 600 million by 2009. In two years, China should overtake the U.S. in homes connected to broadband. Less noticed is that India's consumer market is on the same explosive trajectory as China five years ago. Since 2000, the number of cellular subscribers has rocketed from 5.6 million to 55 million.
What's more, Chinese and Indian consumers and companies now demand the latest technologies and features. Studies show the attitudes and aspirations of today's young Chinese and Indians resemble those of Americans a few decades ago. Surveys of thousands of young adults in both nations by marketing firm Grey Global Group found they are overwhelmingly optimistic about the future, believe success is in their hands, and view products as status symbols. In China, it's fashionable for the upwardly mobile to switch high-end cell phones every three months, says Josh Li, managing director of Grey's Beijing office, because an old model suggests "you are not getting ahead and updated." That means these nations will be huge proving grounds for next-generation multimedia gizmos, networking equipment, and wireless Web services, and will play a greater role in setting global standards. In consumer electronics, "we will see China in a few years going from being a follower to a leader in defining consumer-electronics trends," predicts Philips Semiconductors (PHG ) Executive Vice-President Leon Husson.
For all the huge advantages they now enjoy, India and China cannot assume their role as new superpowers is assured. Today, China and India account for a mere 6% of global gross domestic product -- half that of Japan. They must keep growing rapidly just to provide jobs for tens of millions entering the workforce annually, and to keep many millions more from crashing back into poverty. Both nations must confront ecological degradation that's as obvious as the smog shrouding Shanghai and Bombay, and face real risks of social strife, war, and financial crisis.
Increasingly, such problems will be the world's problems. Also, with wages rising fast, especially in many skilled areas, the cheap labor edge won't last forever. Both nations will go through many boom and harrowing bust cycles. And neither country is yet producing companies like Samsung, Nokia (NOK ), or Toyota (TM ) that put it all together, developing, making, and marketing world-beating products.
Both countries, however, have survived earlier crises and possess immense untapped potential. In China, serious development only now is reaching the 800 million people in rural areas, where per capita annual income is just $354. In areas outside major cities, wages are as little as 45 cents an hour. "This is why China can have another 20 years of high-speed growth," contends Beijing University economist Hai Wen.
Very impressive. But India's long-term potential may be even higher. Due to its one-child policy, China's working-age population will peak at 1 billion in 2015 and then shrink steadily. China then will have to provide for a graying population that has limited retirement benefits. India has nearly 500 million people under age 19 and higher fertility rates. By mid-century, India is expected to have 1.6 billion people -- and 220 million more workers than China. That could be a source for instability, but a great advantage for growth if the government can provide education and opportunity for India's masses. New Delhi just now is pushing to open its power, telecom, commercial real estate and retail sectors to foreigners. These industries could lure big capital inflows. "The pace of institutional changes and industries being liberalized is phenomenal," says Chief Economist William T. Wilson of consultancy Keystone Business Intelligence India. "I believe India has a better model than China, and over time will surpass it in growth."
For its part, China has yet to prove it can go beyond forced-march industrialization. China directs massive investment into public works and factories, a wildly successful formula for rapid growth and job creation. But considering its massive manufacturing output, China is surprisingly weak in innovation. A full 57% of exports are from foreign-invested factories, and China underachieves in software, even with 35 software colleges and plans to graduate 200,000 software engineers a year. It's not for lack of genius. Microsoft Corp.'s (MSFT ) 180-engineer R&D lab in Beijing, for example, is one of the world's most productive sources of innovation in computer graphics and language simulation.
While China's big state-run R&D institutes are close to the cutting edge at the theoretical level, they have yet to yield many commercial breakthroughs. "China has a lot of capability," says Microsoft Chief Technology Officer Craig Mundie. "But when you look under the covers, there is not a lot of collaboration with industry." The lack of intellectual property protection, and Beijing's heavy role in building up its own tech companies, make many other multinationals leery of doing serious R&D in China.
China also is hugely wasteful. Its 9.5% growth rate in 2004 is less impressive when you consider that $850 billion -- half of GDP -- was plowed into already-glutted sectors like crude steel, vehicles, and office buildings. Its factories burn fuel five times less efficiently than in the West, and more than 20% of bank loans are bad. Two-thirds of China's 1,300 listed companies don't earn back their true cost of capital, estimates Beijing National Accounting Institute President Chen Xiaoyue. "We build the roads and industrial parks, but we sacrifice a lot," Chen says.
India, by contrast, has had to develop with scarcity. It gets scant foreign investment, and has no room to waste fuel and materials like China. India also has Western legal institutions, a modern stock market, and private banks and corporations. As a result, it is far more capital-efficient. A BusinessWeek analysis of Standard & Poor's (MHP ) Compustat data on 346 top listed companies in both nations shows Indian corporations have achieved higher returns on equity and invested capital in the past five years in industries from autos to food products. The average Indian company posted a 16.7% return on capital in 2004, vs. 12.8% in China.
SMALL-BATCH EXPERTISE
The burning question is whether India can replicate China's mass manufacturing achievement. India's info-tech services industry, successful as it is, employs fewer than 1 million people. But 200 million Indians subsist on $1 a day or less. Export manufacturing is one of India's best hopes of generating millions of new jobs.
India has sophisticated manufacturing knowhow. Tata Steel is among the world's most-efficient producers. The country boasts several top precision auto parts companies, such as Bharat Forge Ltd. The world's biggest supplier of chassis parts to major auto makers, it employs 1,200 engineers at its heavily automated Pune plant. India's forte is small-batch production of high-value goods requiring lots of engineering, such as power generators for Cummins Inc. (CMI ) and core components for General Electric Co. (GE ) CAT scanners.
What holds India back are bureaucratic red tape, rigid labor laws, and its inability to build infrastructure fast enough. There are hopeful signs. Nokia Corp. is building a major campus to make cell phones in Madras, and South Korea's Pohang Iron & Steel Co. plans a $12 billion complex by 2016 in Orissa state. But it will take India many years to build the highways, power plants, and airports needed to rival China in mass manufacturing. With Beijing now pushing software and pledging intellectual property rights protection, some Indians fret design work will shift to China to be closer to factories. "The question is whether China can move from manufacturing to services faster than we can solve our infrastructure bottlenecks," says President Aravind Melligeri of Bangalore-based QuEST, whose 700 engineers design gas turbines, aircraft engines, and medical gear for GE and other clients.
However the race plays out, Corporate America has little choice but to be engaged -- heavily. Motorola illustrates the value of leveraging both nations to lower costs and speed up development. Most of its hardware is assembled and partly designed in China. Its R&D center in Bangalore devises about 40% of the software in its new phones. The Bangalore team developed the multimedia software and user interfaces in the hot Razr cell phone. Now, they are working on phones that display and send live video, stream movies from the Web, or route incoming calls to voicemail when you are shifting gears in a car. "This is a very, very critical, state-of-the-art resource for Motorola," says Motorola South Asia President Amit Sharma.
Companies like Motorola realize they must succeed in China and India at many levels simultaneously to stay competitive. That requires strategies for winning consumers, recruiting and managing R&D and professional talent, and skillfully sourcing from factories. "Over the next few years, you will see a dramatic gap opening between companies," predicts Jim Hemerling, who runs Boston Consulting Group's Shanghai practice. "It will be between those who get it and are fully mobilized in China and India, and those that are still pondering."
In the coming decades, China and India will disrupt workforces, industries, companies, and markets in ways that we can barely begin to imagine. The upheaval will test America's commitment to the global trade system, and shake its confidence. In the 19th century, Europe went through a similar trauma when it realized a new giant -- the U.S. -- had arrived. "It is up to America to manage its own expectation of China and India as either a threat or opportunity," says corporate strategist Kenichi Ohmae. "America should be as open-minded as Europe was 100 years ago." How these Asian giants integrate with the rest of the world will largely shape the 21st-century global economy.
