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US courting India and China

world Updated: Aug 14, 2009 14:59 IST
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On her visit to India this week, Hillary Clinton sometimes seemed more Commerce Secretary than Secretary of State, wooing "India Inc." with meetings in Mumbai before visiting politicians in New Delhi. And it's no wonder--with American companies struggling at home, she knows that for at least the next few years, the world has just two big, fast-growing markets--India and China--and American companies can't afford to be left out of competition for sales.

Take India, where Clinton has just concluded a five-day visit. While American soldiers are fighting extremists in nearby Afghanistan (and high-tech American drones occasionally bomb neighboring Pakistan, India's nemesis), American companies are fighting British and European firms for tens of billions of dollars in defense contracts in India, which is busy modernizing its military.

During Clinton's visit, the US and India signed two agreements: India will designate two sites where American companies will have exclusive rights to sell India nuclear power reactors worth up to $10 billion; and a deal that lets the U.S. ensure India doesn't transfer to third parties any sensitive military technology it buys from the U.S.

The Indian defense and nuclear equipment markets opened to the U.S. after the Bush administration broke with tradition last year and ended a three-decade ban on the sale of civilian nuclear fuel and technology to India. The U.S. is wooing India both economically and diplomatically as a bulwark against China's growing global power.

Meanwhile, American diplomats have been treading cautiously this month on what human rights groups say is a Chinese crackdown on minority Muslim Uighurs in China's Xinjiang region, leading to riots and nearly 200 deaths. After all, China also announced this month that its foreign currency holdings hit a new record of more than $2 trillion, much of which is invested in US Treasury securities. Diplomatic criticism of China's Internet filtering software, Green Dam, was louder, particularly after the US tech industry complained of the harm Beijing's filters could inflict on their sales there.

Geopolitics are shifting in part because more and more America companies are earning bigger profits in Asia than in the US.

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