"Chindia: the Asian giant"

Padma Rao

Born in India, Padma Rao has been an international correspondent in the German, Indian and American media. She has worked in New York, Germany and India in mediums such as: ARD and ZDF TV, Radio Deutsche Welle, Deutsche Presse Agentur DPA, Indian news magazine Outlook, McClatchy USA, New York Times and the Herald Tribune, amongst others.

Since 1998 Padma Rao has been managing the Southern Aisian delegation of Der Spiegel, covering political, business, scientific, environmental and cultural news from India, Bangladesh, Nepal, Pakistan and Sri Lanka. Padma Rao is a regular lecturer on India and emerging countries in international forums on the future.

"Asia will be the complement of the United States"

Due to the celebration of the Forum of Reflection on the Future, organised by the OPTI Foundation, that will be held on 28th May, it has been performed the next interview with one of our speakers, Padma Rao

OPTI: From your privileged Asian markets observer position, how India and China are been affected by the world crisis?

P.R.: The growth rates of both countries have slipped, in China for the first in four years to single digit. Foreign investment is down in both, a liquidity crisis has led to a slump in real estate and, in India's case, to a standstill in infrastructure development. A slowdown in industrial production in China is leading to massive layoffs. Exports are down in both, China is especially affected by slump of its largest EU and US export markets. A positive in India: global crisis driving the return of Indian engineering and other talent back from recession-hit USA to India.

OPTI: It will ever happen that an Asiatic giant will be able to displace the actual number 1, the North American giant?

P.R.: In the coming years, globalization will undeniably have to reinvent and free itself from failed patterns. However, the US is one country. Asia is not, neither linguistically, nor politically or economically. There is some cultural convergence, but too many bilateral and other issues prevail between individual Asian states for there to be a pan-Asian entity that can displace the US. Lastly, the influence of European and US popular products and cultures will remain attractive for generations to come in emerging powers with young demographics India and China. Asia will complement, not replace the North American, or even the EU giant.

OPTI: How is the Indian situation in R&D? We have heard about the megacity Hyderabad, with more than 7.5 millions inhabitants, which are its successful clues?

P.R.: R&D in the scientific, technological and pharmaceutical sectors in India is flourishing and unaffected by the global meltdown as input costs remain low and there is easy availability of raw material. Return of intellectual talent (reverse 'brain drain') from recession-hit USA expected to benefit R&D further. The clues to Hyderabad's success are the aggressive promotion of the IT industry and development of infrastructure by successive state governments despite political differences. This is a sharp contrast to Bangalore, where giant infrastructure projects have been held up because of political infighting.

OPTI: Will the Asian countries be the activation engine to move the world economy thanks to the creation of new emerging markets of new consumers?

P.R.: Yes, but not as long as their growth rates remain in single digits, as projected for the coming years. Asian economies -especially those with protectionist policies already in place such as giant consumer markets India and China - did not crash, but were certainly affected -by the global meltdown. If US, Europe and Japan maintain 2% growth in 2009 and other non-BRIC countries register zero growth, then the BRICS would have to register 11% to act as engines. For now, the engines will have to remain the US, Europe and Japan - which is not foreseen to happen in 2009.