1January 2011

2Over the past three decades, supporters and critics of globalisation considered it a synonym for Americanisation. America’s “Inc.”, indicative of this American globalisation, illustrated its dominance over the world, as shown by the omnipresent golden arches of McDonalds and the bright red billboards proclaiming that “Things go better with Coke”. While the arches and Coca-cola billboards with different slogans are still there, the fizz has gone out of Amercanised globalisation.

3Today the new champions of globalisation are yesterday’s poor developing countries, especially Asia–led by China and India. “Made in China” products fill the supermarket shelves of the West, reminding one that China is the world’s second largest exporter, the second biggest economy and the top creditor. Long known for its backwardness, Indian software companies now run the world’s back offices and Indian billionaires are on a shopping spree in the developed West. The rise of Asia as the new “globaliser” is nothing short of spectacular, yet in a historical perspective, it is not that surprising. The two most populous countries that dominated the world economy for over a millennium until the 18^th century are regaining ground after a brief moment away.

4China and India have long played a critical role in the interconnection process, known as “globalisation”. The riparian civilizations, endowed with rich agriculture, natural resources and large populations with manufacturing skills had supplied the world the means of a better life – from spices to silk and jewellery to porcelain. When, on the morning of 21^st May 1498 the Portuguese adventurer Vasco da Gama sailed into Calicut, India, he was dazzled. He described the port as “bursting with merchandise of every kind, because of its maritime traffic with other lands from China to the Nile”. Chinese port cities from Guangzhou to Huating (later renamed Shanghai) too were bustling places of commerce, as was the entrepot of Malacca where the Chinese and Indian worlds met. Large communities of foreign merchants flocked there, not so different from today’s modern businessmen and women, who have relocated to Shanghai and Beijing.

5On the subject of the Quanzhou or Zaitun port, Marco Polo wrote that, “It is the port where all ships from India come loaded with expensive goods and a multitude of extremely valuable precious stones and big rare pearls... in this port there is a constant movement of such vast amounts of goods and precious stones, which it is a marvelous thing to see”. Before the days of maritime trade, the final destination on the Silk Road terminus – the city of Changan (today’s Xian) – was the largest urban centre in the world with nearly two million inhabitants including traders of many faiths for example Muslims, Jews, Nestorian Christians and Buddhists.

6Asia’s luxury goods drew in European traders who often felt like children in a sweet shop without any money in their pockets. Asian traders were not interested in European trinkets and fur; they wanted precious metal in exchange of their products. It was only after Christopher Columbus’ incidental arrival in the New World that Europeans came to discover bountiful supplies of Inca gold and silver to be traded in Asia for these luxury goods. In order to work the mines and plantations in the New World, Europeans turned to Africa for slaves. In a triangular trade, Latin American silver bought tea, spices, porcelain and textiles from Asia, also it bought Indian clothes in exchange for African slaves who were made to work in the sugarcane and coffee plantations to supply those commodities to European consumers. Europe imported more than 1,700 tons of gold and 73,000 tons of silver from the New World, about a third of which found its way to China and India.

7India’s steel ingot was highly sought after for making the infamous Damascus swords. China’s modern foundries supplied goods that were then sent to Europe. Historian Robert Hartwell estimated that iron production in China in 1078 was approximately 150,000 tons (per year) more than the entire production of iron and steel in Europe in 1700. It is not surprising that according to the calculations of the historian, Angus Madison, in 1700, China and India together produced nearly half of the world’s gross domestic product.

8Asia’s reign over world commerce and cultural exchange gradually gave way to Europe’s resurgence, its industrial revolution and its military power. The British mills running on steam power broke India’s monopoly over the cotton textile trade. India grew weaker as British colonial rulers forced farmers to grow indigo and opium for exportation and swamped China with opium in exchange of Chinese exports. Wounded, an inward looking imperial China and colonial India retreated from the world’s gaze. Even after independence, brutal socialism in China and a socialistic-bureaucratic state in India prolonged their under-development.

9Asia’s revival began in the 1980s with Deng Xiaoping’s reforms in China and those of Manmohan Singh a decade later in India. The reforms removed the obstacles that held these countries back from using their millennia old skills for production. As doors opened to foreign capital and technology, and economy opened to private companies, China enjoyed a growth spurt–an annual GDP increase of 9.6% during two decades. Foreign businesses flocked to China to take advantage of its skilled cheap labour, which at the same time, turned the country into the world’s factory. Representing less than 2% of the world’s share of manufacturing, China rose to 8.3% in 2004, becoming the world’s biggest supplier of clothes, toys, shoes and consumer electronics. In 2010, China overtook Japan as the world’s second largest economy, after beating Germany to become the world’s leading exporter. China’s share of world export has risen from less than 1% in the 1970s to over 12% last year (2010). In the same period, the US share dropped nearly 14% to just over 8%.

10To fuel its export, China has scoured the world for energy, minerals and other natural resources and has become the largest aid donor to Africa. By 2035, China will be consuming a fifth of all global energy; it already buys 22% of Australian raw material exports, 12% of Brazil’s and 10% of South Africa’s exports. The impact of China’s export has been estimated to be a record reserve of 3 trillion dollars, 900 billion dollars of which includes US debt. A wealthy China has emerged as an aid in a financial crisis. The Chinese purchase of Greek government bonds helped to deflate the country’s recent crisis. If further proof was needed for China’s rise as a global economic superpower, it came in December 2010, when Portuguese officials travelled to China to seek its help in avoiding a Greek-styles crisis.

11Along with China’s impressive economic growth, its culture too, is enjoying a new lease of life. The Chinese government has helped set up some 500 Confucius Centres to teach Chinese in 80 countries. According to Beijing, 40 million people worldwide are learning Chinese.

12India’s recent rise stemmed from the 1991 crisis, which forced India to discard its “license raj” and open its door to the world. India’s longstanding lead in mathematics was an advantage as the Silicon Valley revolution opened up unprecedented business opportunities. The first of these opportunities arose from the Millennium “bug” scare and India’s programming help was sought by hundreds of foreign companies. Just as Western companies who flocked to China for efficient and low cost manufacturing and assembly, they found India’s skills in English, maths and engineering ideal for running back offices and supplying components and offering services from call centres to research centres. Cheap fibre optic connections across oceans provided the new highway for business in the services.

13Although India is far behind China, it is one of the fastest growing economies and is the 12^th largest in the world. Its steady economic growth has filled its coffers and encouraged rich companies to go hunting for assets abroad – totalling over 100 billion US dollars invested by Indian businesses outside India in just four years of the last decade. As it regains its industrial capacity, India’s demographic advantage of having a young population (while China’s greying population begins to retire) might help India to become another of the world’s factories.

14Although it has not caught on yet, soon globalisation could be called “Asianisation”.