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Sunday, January 23, 2022

Can India push China off its dominant perch?

In a new book, some of India’s finest minds present a compass to navigate the geopolitical churn with China

Updated: January 8, 2022 6:24:53 pm
china and india In the book, the authors analyse India’s potential to narrow the widening economic gap with China. (Photo: Express Archives)

When six former public servants and scholars of unique distinction conjointly author a book on China, it cannot be disregarded. A well-written, analytical, empirically rich and policy-oriented product, it deserves to be in the “must read” lists of the year.

Rising to the China Challenge: Winning Through Strategic Patience and Economic Growth has been authored by Gautam Bambawale, India’s former Ambassador to China; Padma Vibhushan Vijay Kelkar, former chairman of the 13th Finance Commission; Padma Vibhushan Ramesh Mashelkar, Fellow of the Royal Society and former director-general of the Council of Scientific and Industrial Research; Ganesh Natarajan, executive chairman and founder of 5F World; Ajit Ranade, group executive president and chief economist at the Aditya Birla Group and Professor Ajay Shah, formerly with the Centre for Monitoring Indian Economy.

Much has been written and spoken about the potential for India to arrest and narrow the widening economic gap with China. This book is, however, among the very few that goes beyond that statement. With the help of readily understood numerics, it provides a road map for India to reach this objective.

the rise of china In the book, the authors have laid out three preconditions for charting the right path.

The “rise of China” has been a growing concern. The “Thucydides Trap” aptly captures this sentiment. Popularised by American political scientist Graham T Allison, the phrase defines the conflict between an incumbent super power and an emergent power that looks to displace it. India is caught in the midst of this geopolitical churn. With Chinese President Xi Jinping signalling a willingness to use military coercion to resolve territorial disputes, India has to navigate the cross-currents of border security, economic dependency, and nationalistic sentiment. This book provides a compass for navigating through this churn.

The authors have laid out three preconditions for charting the right path. First, the government must not intervene excessively in the economy. The present tendency to “pick winners” and create “artificial monopolies” imposes regressive “political and policy risk” on businesses. Second, the coequal balance of power enshrined in the Constitution, between the Executive, the Judiciary and the Legislative, should be restored. The concentration of power in the hands of the Executive — the creation of the “administrative state” — dilutes entrepreneurialism and private-sector confidence. Third, the rule of law must be respected in letter and spirit. The arbitrariness of authority should be circumscribed by law.

On this assumption that these three conditions will be met, the authors argue that India is well placed to move on to a faster economic-growth trajectory than China and that through the power of compounding it can substantially narrow the current economic gap. They argue that India is demographically advantaged, that China’s export base is weakening, and that the fundamental tension between market economics and autocratic politics will in time choke China’s growth. They also detail the competitive potential of six sectors (telecom, consumer electronics, automobiles, chemicals, healthcare and pharmaceutical, and agriculture) and provide extensive data and analysis to describe how India can push China off its dominant perch in each of these sectors.

The analytical narrative is realistic and strategic. The authors recognise the importance of the existing economic relations with China and advise against “myopic jingoism”. They emphasise that China must not be allowed entry or access to any sector that has strategic or security significance. Chinese executives must not be given a board position on any company that controls or owns national security assets; Chinese equipment must not be used in the telecom/internet business and Indian companies that rely on China for sourcing of raw materials and/or intermediaries must hold at least six months of inventory to limit China’s leverage over them.

Economics is one of the two prongs of strategic advice offered in the book. The second prong is diplomacy. The authors task Indian diplomats to build international coalitions along three axes of natural partners. The first axis is other democracies (such as Australia, the US, Japan); the second, the countries that have faced the heat of China’s muscular diplomacy; and the third, India’s subcontinental neighbours. The objective of building “balancing coalitions” with the 20 countries that fall along these axes should be to counter China across the swathes of economic, military and intelligence issues.

China has run ahead of India in several economic and social spheres. There are many who maintain the race is lost. Through analytic logic, empirical data and pragmatic policy recommendations, the authors argue this would be a premature conclusion. The book should be read for their insight.

(Vikram Singh Mehta is chairman, Centre for Social and Economic Progress)

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