China and India, dawn of the 'Asian Century'
- By Dan Steinbock
0 Comment(s)
Print
E-mail China.org.cn, May 14, 2015
 |
|
Chinese President Xi Jinping and Indian Prime Minister Narendra Modi sit on a swing during Xi’s visit in Modi’s hometown Gujarat state, on September 17, 2014. [Photo/Xinhua] |
It can be seen as Act 2 to the September 2014 visit President Xi Jinping made with Prime Minister Narendra Modi in New Delhi. The meeting did result in substantial trade deals but not yet in a diplomatic breakthrough.
As the two meet in Beijing, each will tread cautiously. There is too much at stake. If China and India would replicate the missteps of France and Germany in the late 19th and early 20th century, collateral damage would not penalize just Asia but the entire world.
Economic and strategic rise
Between 1870 and 1945, France and Germany experienced industrial takeoffs, which allowed each to benefit from accelerated economic development. However, the two were also swept by a tragic rivalry, which contributed to two world wars.
Today, China is amid its drive to technological maturity, whereas industrial revolution is only about to spread in India. In each, military modernization has taken off. Last year, US GDP amounted to $17.4 billion and China’s to $10.4 billion; but the mainland continues to grow almost three times faster than the US economy. In coming years, India’s $2 billion economy will leave behind Italy, Brazil, France and the UK.
After three decades of world-historical growth, China’s economy has been slowing. Much of the deceleration is structural reflecting the results of convergence and waning dividends from past reforms. In the past, China’s growth was fueled by investment and net exports; today it is driven increasingly by consumption and innovation.
In India, external vulnerabilities remained elevated until May 2014 election, which gave Modi’s conservative Bharatiya Janata Party (BJP) a landslide victory against the Indian National Congress. Modi’s new government has initiated economic reforms, from diesel price deregulation to more flexible labor markets.
Last year, China’s military expenditures amounted to $216 billion and India’s to $50 billion. In the former, the spending represents 2.1% of GDP, and in the latter, 2.4%. Even combined, military spending in China and India is less than half of that in the U.S. And yet, it already exceeds the military budgets of France, the UK, Germany, and Italy together.
Concurrently, regionalization is impacting even military modernization in the two nations. India imports 40% of its international arms from Russia and over 10% from China, whereas more than 70% of China’s international arms come from Pakistan, Bangladesh, and Myanmar.
Like Washington and Beijing, China and India nurture bilateral military dialogue, including military-to-military contacts. In early April, the two concluded their seventh Defense Dialogue in Beijing.
But it is the economic opportunities that are fueling hopes on both sides.
Asia’s economic revolution
With its rising economic and strategic might, Beijing could have chosen to focus on its own national interest or political aggrandizement. That is what the European powers did in the late 19th century and the U.S. in the interwar era (which contributed to World War II), and Japan in the 1930s (which led to the invasion of Manchuria in 1931, the war with China in 1937 and the devastation of much of Southeast Asia in the 1940s).
Instead, Beijing’s pivot to Asia has gone hand in hand with massive infrastructure plans with and for the entire region. In one way or another, India has a great potential role to play in and accelerate these initiatives.
Starting in fall 2013, President Xi Jinping has gradually unveiled several massive initiatives associated with the broader “One Belt, One Road” vision. The Silk Road Economic Belt calls for the integration of the region into a cohesive economic area through building infrastructure, increasing investment, broadening trade and adding to cultural exchanges. The massive Belt includes key areas in Central and West Asia, the Middle East and Europe, and over time even Africa.
The Maritime Silk Road is a complementary initiative that seeks to foster cooperation in Southeast Asia, Oceania and North Africa, through the South China Sea, the South Pacific Ocean and the wider Indian Ocean area – which naturally translates to closer proximity to India.
Go to Forum >>0 Comment(s)