The Indian growth story in the past two decades has been inspiring for several developing countries but now is the time for India to become an inspiration for developed countries.
The clash of ideas and cultures has been going on for centuries between the East and the West. From the look of things in the years to come, it is quite possible for the East to outpace the West in many aspects. This would alter the course of history and geopolitics. The shift of centre of power has been in the waiting for quite some time. In the years to come, Asia is expected to regain its position as the foremost economic power that it had lost after the industrial revolution three centuries back. The unfailing shift of power scale towards China in the past decade or so is more of a threat for the West, which has tried every trick in the book to control the country’s meteoric growth.
One reason for this growing optimism among Asian countries is the abundance of natural resources in the region. According to an estimate, the Middle East, Russia and Central Asia combined account for almost 70 percent of global oil reserves and 65 percent natural gas reserves. Gas fields in Galkynysh, Turkmenistan are the second largest in the world. Countries that lie between the Mediterranean Sea and the Pacific including Russia, Ukraine, India, China, Pakistan and others account for more than half of the world’s wheat production.
South East and East Asian countries such as Indonesia, Vietnam and others account for 85 percent of the world’s rice production. When it comes to natural resources like silicon vital for production of semiconductors, almost three-quarters of global production is taking place in Russia and China. More so, South East Asian countries contribute a significant chunk to the global GDP. Countries including India, China, South Korea, Japan, Australia and New Zealand together have 30% of the global GDP, accounting for the total value of more than $30 trillion.
The West is in decline and the talks on how and when it will come down like everything that goes up are taking place in drawing rooms across the Asian continent. A spate of incidents of gun violence in the US is a great example of the spiritual decline of American society. This century has been termed as “the Asian century” because development is taking place in the East at an astonishing pace and scale. Some reports suggest that by 2050 the per capita income in Asian countries would increase by sixfold in terms of purchasing power parity (PPP). These developments are being projected amid the declining influence of the US, which has been spearheading the West for the past many decades.
The withdrawal of American forces from Afghanistan whilst the country was being taken over by Taliban last year without a single shot fired from either side and the US action during the Ukraine war limited to aiding the country under Russian onslaught to defend itself has shown the world that the war-weary US is in no mood to engage in another war. But President Joe Biden has recently proclaimed that in case Taiwan is attacked by China, who is an important US ally, his country would intervene. However, the past events — whether the US inaction in Afghanistan when the Taliban was taking over cities after cities or its role in the Russia-Ukraine war — has had an impact on the US strategic credibility in Europe and elsewhere. Beijing must perceive the new, weaker position of the US as its advantage in the Indo Pacific region, where it is directly or indirectly holding several ASEAN countries by their necks.
While China projects its aggressive efforts in the region — be it delivering crushing blows to pro-democracy protests in Hong Kong, its treatment of Taiwan as integral to the Chinese state, its hostilities along the LAC in Arunachal Pradesh or building of artificial Islands and defence infrastructure development in South China Sea — as the protection of its national interests rather than its attempt at global dominance. And it goes without saying that Beijing would do anything to keep the Western powers from interfering in its Asian adventures. Several countries have already dealt with the Xi Jinping regime’s aggressive policy of “bend the knee to Beijing or face dire consequences” . The continued dominance of China over the sea routes is also a great hindrance to the expansion of trade for several ASEAN countries, which are forbidden from taking trade routes through sea in the region.
The tensions between India and China have been rising ever since the PLA (People’s Liberation Army) entered the country’s East Ladakh territories in May 2020. In retaliation, the Indian government did restrict access of Chinese companies in Indian markets, banning close to 278 Chinese apps with a significantly huge user base but several companies with Chinese backing are still flourishing in the country. India recognises that the cost of full-fledged conflict with China would be too high. It might as well plunge the country into economic malaise, if it came to war.
Since 1993, India and China have been working to find peaceful solutions through mutual agreements to resolve border disputes, which have been a cause of rivalry and bitterness for the two neighbouring nations. After recent confrontations, India and China have now once again resorted to diplomacy to maintain the status quo and find peaceful solutions to territorial disputes. Considering India’s geographic location, China is not the enemy the country would want. India already has Pakistan on its north-western border with which a territorial dispute over a portion of land in the Kashmir region has been going on since 1947. China is a third party in this conflict as it claims some portion of the disputed land.
China’s dominance in East Asia
China’s journey in terms of economic growth has been remarkable in the past two decades. The nation with the world’s largest population has come a long way since the 1970s when it introduced a new, hybrid version of socialism that brought a large chunk of its population out of poverty. Today, China has become a powerful country that is shaping the future of several countries through investments.
The Belt and Road initiative of China comes under Beijing’s signature foreign and economic policy that President Xi Jinping had termed as “the project of the century” in 2017. China has been aiding infrastructure development in several Asian, African and South American countries. These strategic investments give China an edge in strengthening diplomatic ties and much-needed support in a fast-changing world. Yet several nations see the country’s aggressive approach to trade and its tactics as a threat.
The emergence of China as America’s rival in the domain of trade, defence and new-age technologies is shaping the course of today’s geopolitics. One can gauge the rise of the Chinese nation by its trade dominance and share in global exports. The country’s foreign trade accounts for 35% of its GDP and it is the world’s largest exporter of goods. The US, despite sharing a complicated relationship with China, had bilateral trade amounting to $657.4 billion in 2021.
The Chinese government holds a large chunk of US national debt with $1060 billion in treasury holdings, which is almost 14% of the total US debt and second only to Japan’s share of 17%. This approach aids the export-oriented China in selling its products at cheap prices in the US market, which in turn also supports the value of the US dollar to remain stable. In the past two years, China’s economic recovery after the pandemic has been steady with manufacturing, investments and exports acting as the main drivers.
India’s Chance to Fly
The only answer to China’s growing dominance in the region is a strong, self-reliant India, which is now strengthening its position in the Indo-Pacific region. Japan may be far ahead of India in several departments but India has the advantage of its population and a large domestic market. The country’s exports last year at $417 billion showed an upward trajectory but the rising imports of $611.8 billion left a deficit of $192.24 billion. The US-India bilateral trade has been showing a downward trend since 2019, when it stood at $146.1 billion. The US trade with India dropped to 18% to $122 billion in 2020. According to the United States Census Bureau, the trade between the two countries totaled an estimate of $113.3 billion last year.
If one considers India’s vast national market and the way the Indian economy is faring despite trials and tribulations, the picture looks promising in terms of economic growth in the future. Currently, India ranks sixth in the list of countries with the highest total value of GDP. Although, Indian government’s dream of becoming a $5 trillion economy by 2025 may remain distant, the growth will continue at a more or less similar pace if no ‘out of the box’ economic reforms are adopted to further boost the economy.
The nation whose founding fathers like Jawaharlal Nehru saw a stable future of the country in terms of agriculture alone has come a long way since 1991 when its economy moved towards liberalisation. The country is now opening new avenues for itself and exploring uncharted territories in terms of its plans for becoming the world’s biggest producer of renewable energy. The Indian growth story in the past two decades has been inspiring for several developing countries but now is the time for India to become an inspiration for developed countries. This will be a huge challenge for the second most populous country in the world, which is still struggling to contain mass poverty and unemployment. If truth be told India is like two sides of a coin which are never similar — one side may be shining: India of ultra-rich and all-conquering business tycoons, but the other side shows a grim reality: poverty-stricken India of the deprived.
India’s trade relations with developed countries are vital as the country has begun working on its future endeavours — the most fruitful of which can turn out to be clean energy production. The leaders in India understand the economical and political consequences of the growing Chinese influence and the geopolitical tensions that are arising due to its regional dominance. The Indian government has been looking at economic stability during these tough times. A few pending FTAs with the US, the European Union and the UK, can certainly change the game greatly.
The US economic cooperation for Asian countries — especially for India — can further help keep China’s rise in check. A stable and strong New Delhi can be the right answer to counter China or at least restrict its aspiration of territorial sovereignty beyond its borders. Those holding power in New Delhi are well aware of the aforementioned consequences of Chinese dominance. The country is working to create a more favourable environment for foreign investors, especially for those who are spurning China to set their moorings in India. China finds itself amid a web of problems in these tough times as the country battles a fresh outbreak of covid-19 infections with the most stringent lockdowns.
Far bigger problem for China is shattering the perception that is quickly gaining ground — all is not well in the country. This compelled state-run China Daily to recently do advertorials about progress in China in Indian newspapers. The Chinese Communist Party’s propaganda has also appeared in reputed Indian publications in the past as paid advertisements.
A worrying sign for China is the increasing number of investors exiting the Chinese market and seeking newer pastures. That’s where India’s chances to consolidate further lie. India has already outgrown several Asian countries and if it can leverage this advantage there will be no stopping for the nation which will have the largest workforce in the world by 2030. While the challenges that China will face in this decade —one of which an economist has called “baby bust” — are the aging population and the “credit bubble” that the nation has created with its increasing debt levels. China had been warned by the IMF of its dangerous debt levels in 2017.
As more and more American corporations continue to source raw material from India and considering the efforts from both sides to further strengthen economic ties, evidently the two countries are headed in the right direction. This is all a result of the germination of sentiment in the US to limit the growing dependence on China for its domestic needs. These are all signs of the shifting structure of the global economy and India’s chance to fly above the Red Dragon in the years to come.
https://www.financialexpress.com/defence/the-race-of-two-asian-giants-how-indias-rise-can-keep-chinas-growing-influence-in-check/2596112/
