No struggle in the world today deserves more of our time and attention than that which now grips the attention of all Asia. I am not referring to the unhappy tide of events in Tibet, where the world is being shown once again that man's eternal desire to be free can never be suppressed. Nor am I referring to the intermittent hostilities that endanger the Formosan Strait, or the truce lines in Korea and Indochina. I am referring to another struggle equally fierce but less obvious – less in the headlines but far more significant in the long run.
And that is the struggle between India and China for leadership of the East, for the respect of all Asia, for the opportunity to demonstrate whose way of life is the better.
The battle may be more subtle than loud – it may not even be admitted by either side – but it is a very real battle nonetheless. For it is these two countries that have the greatest magnetic attraction to the uncommitted and underdeveloped world. It is these two countries which offer a potential route of transition from economic stagnation to economic growth. India follows a route in keeping with human dignity and individual freedom, with only haphazard assistance from this country. Red China represents the route of regimented controls and ruthless denial of human rights, with considerable aid from the U.S.S.R.
It should be obvious that the outcome of this competition will vitally effect the security and standing of this nation. But do we fully realize how it is coming out? Both China and India began their development efforts at about the same time – 1950. They started with similar economic structures, similar standards of living and similar problems of skilled labor and natural resources. Actually India had some advantages – in transportation and trained personnel, for example.
But the harsh facts of the matter are that in the last decade China has surged ahead of India in most sectors of its economy. Its gross national output has expanded about three times as fast. In terms of industrial capacity, investment, education and even household consumption China has slowly pulled up and now moved ahead. Its food production has nearly doubled, while India's has increased by less than 50%. By the most authoritative estimates, at present levels of agricultural growth, India will have by 1965 a food production deficit of over 25 million tons – a gap which cannot be filled by any foreign aid or domestic rationing program.
In steel production, China has moved from a position of inferiority to marked superiority. In 1950 China produced as much steel as Great Britain did in 1880. By 1958 China had moved to a point of productive superiority in steel to modern Great Britain today – and is making equal growth in coal and other major ingredients of national strength. Chou En-lai declared at the Party Congress this month: "It took us only six years to achieve in steel production what took Britain more than 50 years."
Since 1952 China has tripled the number of engineers and technicians in its industries and added four million workers to its skilled labor force.
Last year, China's rate of economic growth was at least three times as high as India's. Perhaps her official figures which claim to have doubled both agricultural and steel production may be discounted – but the fact remains that they are based on a hard record of fact compared to the sagging performance in India – and this is the record which has great appeal to those nations uncertain of which route they should follow.
Within the last year the Chinese have produced their first automobile. Within the next year they may have launched their first earth satellite. Even more seriously, they may well begin to take their place among the select company of nuclear powers. And perhaps equally significant for the future is the fact that China has become a major trading nation – not only in Southeast Asia, where she is gradually supplanting Japan, but also in the growing trade movements to Europe and Africa. Indian primary products such as manganese ore and oil seed, for example, now suffer heavily as a result of China's price competition. Red China is now able to repay its loans from the communist bloc – while India is not only in need of considerable further assistance, but has been forced to drastically reduce its foreign exchange reserves to meet its investment gap.
For the first time in modern history a Government appears to have found a way – however brutal its human defects – which appears to solve the problems of large peasant under-employment and labor surplus. The mobilization of the unemployed mass of Chinese rural workers through economic communes, cottage industry, small pig-iron schemes, and all the rest is an achievement whose political and intellectual impact in less developed areas is bound to be immense.
For the ambitious goals and growth of both the Russians and the Chinese are major political influences throughout the newly awakened world. The sturdy confidence of the Red Chinese is measured against the uncertainties of the Indian Government. The Chinese leader, moreover, boasts that within the next year China will make still further leaps into the future. He promises that the total value of agricultural and industrial output will rise by as much as 40% in one year. He hopes, for example, to raise coal output by 110 million tons in 1959 alone.
Even if these hopes cannot be fulfilled, in India – by contrast – targets are wavering. Hopes are set upon maintaining a real rate of growth of only 2 to 3 per cent. This year the Indian population will rise. Increased agricultural output may not even feed the nearly 8 million new mouths of India's exploding population this year. It is in this setting that we consider this challenge – not by playing down and depreciating the very real physical achievements of China, but rather by determining to match these achievements in India by a real record of performance consistent with our ideals and democratic methods.
For the struggle is not over – and the potentialities for gain in India are still great. In the Chinese language, the word "crisis" is composed of two characters – one representing danger, and one representing opportunity. The danger now is clear. But let us also make the most of our opportunities. For if they are lost now, they may never come again.
India's population represents 40% of the uncommitted world. It is larger than the total populations of the continents of Africa and South America combined. Unless India is able to demonstrate an ability at least equal to that of China to make the transition from economic stagnation to growth, so that it can get ahead of its exploding population, the entire Free World will suffer a serious reverse. India herself will be gripped by frustration and political instability – its role as a counter to the Red Chinese would be lost – and Communism would have won its greatest bloodless victory.
So let there be no mistake about the nature of the crisis – both the danger and the opportunity. And let there be no mistake about the urgency of our participation in this struggle. It is not enough that we participate on a crash basis, for temporary relief. We must be willing to join with other Western nations in a serious long-range program of long-term loans, backed up by technical and agricultural assistance – designed to enable India to overtake the challenge of Communist China. The tool for this program can well be the Development Loan Fund.
I have joined with Senator Fulbright in proposing that the operations of the Development Loan Fund be stabilized and its scale increased by placing it on a 5-year basis with authority to loan up to $1.5 billion a year. If by next year we can build up the resources of the Development Loan Fund to this level with assurance of continuity, then the United States will be in a position to exercise real leverage on the economic growth of the less developed countries and to give international leadership in the common efforts of the Free World. We should embark on these reforms not at some indeterminate date in the future, but this year when there are real opportunities to seize.
Our assistance thus far has been limited to emergency aid – to meet immediate crises and existing shortages. We have not met the requirements essential for long-range economic growth – nor have we alleviated the harsh realities which India faced a year ago. Her population continues nearly to out-pace her economic development – her shortage of foreign exchange continues to increase – and a general loss of hope and morale continues to spread.
This is the critical year for India. This is the year when the second Five Year Plan will prove to be either fruitful or futile. This is also the year when the Third Plan beginning in 1961 will be designed. This is the year, in short, when India must appraise her future and her relations with the rest of the world.
I do not say that India could not tread water for a few more years before going under. But this is the year the Indians need confidence that they can plan major efforts for long-range progress with some assurance of substantial, long-term assistance from the Western world.
Our aid should, of course, be based upon sound criteria and productive investment. But let us remember economies need time to mature. Our own nation, in the days of its youth, sold railroad bonds to the British and other Europeans – and these were long-term (40 or 50 year) debentures. With the growth of our productive capacity, we gradually became a creditor nation with the ability to repay these foreign investments. There is no question that the Indians, given proper assurance and assistance, could do the same.
Many of the other governments in Asia and the Middle East are now balanced precariously on the wall of indecision between the East and the West. Of course an adequate program of aid to India is no magic persuader – nor is it a panacea for all of India's difficulties. There is no such solution for these tough problems. The barriers are great. The political and ideological dilemmas are many.
But I am confident that we can recover the initiative, that we can give a doubting world the realization that we – and not Russia and China – can help them achieve real stability and growth.
In short, it is our job to prove that we can devote as much energy, intelligence, idealism, and sacrifice to the survival and triumph of the open society as the Russian despots can extort by compulsion in defense of their closed system of tyranny. We can give a convincing demonstration that we have not a propaganda or crisis interest but an enduring long-term interest in the productive economic growth of the less developed nations.
This year, all over the Western world – and particularly in an impressive Washington ceremony last month – we commemorate a notable anniversary: the founding of NATO. Whatever its handicaps may be today, this unique and historic association of free nations in a community of effort demonstrated that alliances can prosper on positive, as well as negative, goals.
Let us bear that decision in mind today. For, just as in 1949 the historic front was in West Europe, so in 1959 the gateway to fresh achievement lies in Asia. As Russia cast her ominous shadow across the horizon of our hopes during the last decade, so in the next decade we must take measure of a new power – China, whose mounting strength is the cardinal political development of this area.
How will we meet the challenge of the next ten years, between now and 1969? Will we be reminded of a lost journey which ended with the fall of Prague in the spring of 1939 – or the new vitality of the democratic alliance which was formed in the spring of 1949?
The answer lies in part in Congressional action, along the lines I have indicated, on the Development Loan Fund – our best tool for aiding long-range capital development. But the job should not and cannot be done by the United States alone. We need – as we needed 10 years ago – another historic effort in international collaboration – among the capital exporting nations in the world and India herself.
That is why Senator Cooper and I have recommended the creation of an international joint mission to India – to work out with the Indians an accurate appraisal of their needs over the life of the Third Plan – to weave together the various aid programs of the Western nations – and to give both assurance and incentive not only to the Indians but to democratic leaders throughout the under-developed world – to demonstrate to them, and to enable them to demonstrate to their political followers, that there is a democratic way of achieving economic development as an alternative to the forced mobilization of men and materials. Once again, the free world can unite on a positive program with positive goals – instead of hanging together only out of fear of evils which we all oppose. Coalitions of Free states impose strains and sometimes handicaps, particularly in a period of peace and apathy. The allies of the U.S.S.R. and China, on the other hand, are never critical or uncooperative – they are at the very least silently, if grudgingly, submissive. But in a time of crisis, free alliance finds unity and strength, even in the free exchange of ideas – while the Red satellites in a time of crisis are sources of anxiety, uncertainty and trouble.
The situation in India today is a crisis – and it is an opportunity to demonstrate Western unity and strength. The moment is ripe for giving new meaning to the Atlantic Community and relating its peaceful enterprises to the aspirations of the uncommitted world. If the President and Congress give new momentum to our foreign assistance program, then we can expect with reason that the nations of the Common Market and of the Commonwealth will also give realization to a larger effort of their own. Both the Secretary-General of NATO, Mr. Spaak, and the world spokesman of the Common Market, Mr. Monnet, have underscored in recent months that the great issues of the member nations lie outside Europe and pre-eminently in the under-developed areas.
The creditor states of Europe are deeply involved in India's future, as is Japan and other potential members of this common enterprise. Our task now is to harness all of the resources of the nations more effectively, and to work out with the Indian Government the most effective method in participating in their developmental plans.
If the aid which India has received from all sources should remain at its current level, the increase in national income would barely outstrip population growth – bring no significant decreases in unemployment – increase the alarming deficit of food grains – and require sharp curbs on private enterprise in that economy.
If, however, foreign investment in India from all sources can rise to a figure of about $1 billion per year, then we can foresee with some confidence a growth in Indian income in the range of 25 to 30 per cent as against a 10 to 12 per cent growth in population. Unemployment might be reduced. Provided India takes vigorous measures of agricultural reform, food supply might finally outpace the increase of population, and the private sector of the economy would again reflect the dynamism which it exhibited at the end of the First Plan.
But it is not enough merely to provide sufficient money. Equally important is our attitude and our understanding. For if we undertake this effort in the wrong spirit, or for the wrong reasons, or in the wrong way, then any and all financial measures will be in vain.
I have spoken here today about India's race with Red China. We want India to win that race. We want India to be a free and thriving leader of a free and thriving Asia. But if our interest appears to be purely selfish, anti-Communist and part of the Cold War – if it appears to the Indian people that our motives are purely political – then we shall play into the hands of Communist and neutralist propagandists, cruelly distort America's image abroad, and undo much of the psychological effect that we expect from our generosity.
We ought to return to the generous spirit in which the original Point Four Program was conceived; stress our positive interest in, and moral responsibility for, relieving misery and poverty; and acknowledge to ourselves and the world that, communism or no communism, we cannot be an island unto ourselves. That alone would do justice to the innately decent motives from which most Americans do support foreign aid.
There is considerable talk these days in Washington about distinguishing between military and economic assistance, and emphasizing the latter. I join in that endeavor, and consider it of major importance to the success of this program. But there are other distinctions which must be made – distinctions which are important to public understanding of the issues – and important to the self-respect and sensitivity of recipient nations.
Let us distinguish between lending a helping hand to countries – such as India – which are carrying forward their own development – and, on the other hand, underwriting the entire economies of such vital but shaky areas as South Korea, Formosa and South Viet-Nam. In one case, we are providing the all-important missing link in a total development effort – but in the other, capital development is only an incidental part of over-all budget support.
Secondly, let us distinguish between aid shipments that are geared to the needs of the recipient countries, and those which are more geared to our domestic needs to dispose of agricultural surpluses. Certainly food shipments for famine relief in India and Pakistan are worthwhile – but where foreign needs and domestic embarrassments do not happen to coincide so nicely, we would not subordinate needs of the recipient country to our domestic political conveniences.
Finally, let us distinguish between foreign aid needed to prop up a faltering friend – and aid which is part of a comprehensive, long-range foreign economic policy.
Foreign aid is important to most underdeveloped countries; but for many of them the real life-and-death question is markets for their export commodities; compared to that, foreign aid receipts are often frills and luxuries. Many underdeveloped countries, if they had to choose between foreign aid and stable markets, would choose the latter.
The one commodity nations, such as Bolivia and Ghana, are particularly affected by our business conditions and market policies – but even nations such as India are concerned about the economic cycle in this nation, about our plans for commodity stabilization, and about our hopes for reciprocal trade agreement with more predicable tariff procedures.
All of this, by way of attitude and action, can be done – and must be done.
The Free World cannot shame Russia and China into freedom – but it can inspire democracy to enrich its own freedoms. Freedom's banner will be vindicated or lost not by the test of military strength alone – but by the purity and passion of our commitment to democracy, by our dedication to the advancing hopes of new nations, and by our determination to prove that freedom can lift the haggard burden of poverty from desolate lands. We have not yet conquered the frontiers of fear. But neither have we yet fully explored the horizons of hope.
Source: Papers of John F. Kennedy. Pre-Presidential Papers. Senate Files, Box 903, "Conference on India and the United States, Washington, D.C., 4 May 1959." John F. Kennedy Presidential Library.