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Managing China

For that, India must first recover growth momentum, invest in human capabilities

Published: March 14, 2014 2:43:47 am
There is no gainsaying the fact that managing the rise of China is the single most important challenge for India. (PTI) There is no gainsaying the fact that managing the rise of China is the single most important challenge for India. (PTI)

The rise of China is no longer news. The recent deceleration of India’s economic growth is also not news. Yet, it is important to remind ourselves every day of the yawning gap between the world’s largest nations and its significance for India’s relations with the world.

A single good visual can often capture the essence of a thousand words. The picture that comes to mind when looking at a graph of the levels of national income (gross domestic product) of China and India from 1990 to 2012 is the open mouth of a crocodile. Joined at the jaw in the early 1990s, wide open by 2010.

If India had sustained the 9 per cent annual rate of growth that it logged in 2003-09 into the last five years, the lower jaw would have risen up and the crocodile would have looked less ominous. India’s growth deceleration of recent years, even in the face of China’s own decelerating growth, has widened the gap dramatically.

Consider the numbers. In 1990-92, the GDPs of both Asian giants were almost the same in US dollar terms, about $500 billion. By 2000, China’s GDP, at over a trillion dollars was already double that of India’s. China’s GDP began to accelerate after that. India’s GDP crossed the trillion dollar mark in 2007, by when China was close to five trillion. Already, the gap was significant and daunting. India did manage to move quickly from a trillion dollar economy to a two trillion dollar economy by 2011, but by then China had hit nine trillion.

After that, both countries slowed down, but that is hardly any consolation for India. At the end of the Cold War, while China and India were at a similar level of development, there were striking and important differences in the structures of their economies and capabilities of their people. These differences have enabled China to emerge, a quarter century later, as a global power.

China’s rise has divided the world into two camps: those who celebrate it — countries that are economically benefiting from its rise and don’t feel militarily threatened, and those who worry about it — countries that may be benefitting economically but worry about competition from China for power and markets. India remains in the middle. It has not yet been a major economic beneficiary of China’s rise, given the high and yawning trade gap — the trade balance graph looks more like the mouth of a hippopotamus than a crocodile — and the low level of Chinese investments in India. On the other hand, India worries about the secular loss of influence and markets within its neighbourhood, within wider Asia and within the world, and about China’s growing military capability.

Managing China’s rise now preoccupies scholars around the world, and the Indian American strategic affairs scholar, Ashley Tellis, has written a brilliant monograph advocating a nuanced approach. Entitled “Balancing Without Containment: An American Strategy for Managing China”, the monograph advocates a four-pronged strategy for the US: assist the rise of “countervailing powers” in Asia, create a new trading regime that serves US interests better than the existing multilateral system while exerting pressure on China to open up more, retain military superiority over China and reinvigorate the US economy so that it regains its technological and competitive edge.

In advocating the “balancing” of China rather than its “containment”, Tellis joins a growing band of Western scholars who have reconciled themselves to the inevitable rise of China. This is no Soviet Union, nor a flash in the pan Latin American bubble economy. Books like Gordon G. Chang’s The Coming Collapse of China ought to be shredded.

There is no gainsaying the fact that managing the rise of China is the single most important challenge for India. The first and most important step for India would be to recover its growth momentum and invest in its human capabilities. That has been the agenda of Indian governments for the past decade, till the present one lost its way a few years back, and that is the path to which a new government would have to return.

However, given the yawning gap between the two countries, and assuming China will manage its problems cleverly and retain its strengths, even if not its momentum, India will take some time to catch up. Therefore, managing this transition, wherein China has already emerged as a global superpower and India remains constrained by domestic factors, is an even more daunting challenge for India’s leadership.

It is important for Indians to remember that China was not destined to emerge as the only pre-eminent global power from the East. In the distant past, till the dawn of European colonialism, China and India were equals. More recently too, in the second half of the 20th century, they have been equals, though evolving very differently. Many in China today believe that they are indeed destined to replace the United States as the world’s only superpower. Younger international relations scholars rubbish the idea of a multipolar world, dubbing it a European and Indian idea, and view themselves as the inheritors of a unipolar world. History may have its surprises, but India should be better prepared for the 21st century.

In the run-up to the general elections, the only political leader who has even mentioned China in his public speeches is the BJP’s Narendra Modi. And even he only spoke to raise a cheer from the audience, warning China against further acts of aggression against India. That is the stuff of electoral rhetoric. The time has come, however, for our political leadership to articulate a strategy to catch up with China and, in the meanwhile, to manage its growing power.

In the transition from here to there, from the current imbalance to a future of greater balance, India needs policies at home and levers abroad to manage China’s rise. The US has to only slow China down to balance, if not contain, it. India has to catch up to even be able to balance it.

The writer is director for geo-economics and strategy, International Institute for Strategic Studies, London, and honorary senior fellow, Centre for Policy Research, New Delhi

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