Feng Xingyuan

Although trade relations between India and China developed fast in recent years, trade protectionism and potential military strife constitute a threat to the peace and well-being of the two great nations. Free trade is a key to attain these two goals. And it starts with the inequality of the two nations which can be regarded the foundation of social cooperation and civilization.

Inequality as the Foundation of Social Cooperation and Civilization

India and China have many in common: both are mega-states in terms of population and economy; both are stars in out-performing other Nations in terms of speedy economic growth; both are proud of their own long lasting civilizations; both suffered from colonization or semi-colonization by Western Powers, and thus are very sensitive for preserving their "national dignity". Furthermore, both countries are still poor in terms of per capita GDP, the ranking of both in economic freedom is lagging behind. In the 2010 Index of Economic Freedom of the Heritage Foundation, India is ranked No. 123, while China No. 140, after India.

At the same time, India and China are also quite different: India is the largest democracy in the world, while China is an authoritarian regime; India is based mainly on common law, while China adopted continental law; India is advanced in elite education, while China emphasizes more on general education and education for all; most of the educated Indians speak fluent English, even more fluent than the British and American native speakers, while most of the Chinese don't have this advantage.
Although both Nations are quite different, the cultural connections have been a long history. For instances, during the 1st Century A. C., in the Han Dynasty, Buddhism was brought from India into China. It became popular after its adoption to Chinese culture and conditions later on, while it vanished in India, the very country of origin.

We can add up almost endless points to the list of similarities and differences between the two Nations. In summary, India and China are not equal in many fields. People might hate, discriminate or exclude each other just because they feel that they are equal, or unequal or different. Equal men regard easily each other as rivals. Unequal men might not accept each other because they might not identify each other as own fellows. However, just as Ludwig von Mises mentioned in his famous book “Human Action”, it is precisely the inequality of men that generates social cooperation and civilization. In relation to the relationship between India and China, we have to base our discussions upon this insight, especially in current period in which trade between two countries grows fast, but vulnerable to the protectionism which can be easily imposed upon each other.

Protectionism as Hindrance to Bilateral Trade and Investments

The economy of India is the eleventh largest economy in the world by nominal GDP and the fourth largest by purchasing power parity (PPP), while China is the world's second largest economy after the United States by both nominal GDP and purchasing power parity.