Can India push China back from its dominant perch?
When six former officials and academics of unique distinction jointly write a china book, it cannot be ignored. A well-written, analytical, empirically rich, and policy-driven product, it deserves to be on this year’s “must-read” lists.
Meeting China’s Challenge: Winning Through Strategic Patience and Economic Growth was written by Gautam Bambawale, former Indian Ambassador to China; Padma Vibhushan Vijay Kelkar, former chairman of the 13th Finance Committee; Padma Vibhushan Ramesh Mashelkar, Fellow of the Royal Society and former Director General of the Council for Scientific and Industrial Research; Ganesh Natarajan, Executive Chairman and Founder of 5F World; Ajit Ranade, Group Executive Chairman and Group Chief Economist Aditya Birla and Professor Ajay Shah, formerly of the Center for Monitoring Indian Economy.
Much has been written and spoken about India’s potential to stop and narrow the growing economic gap with China. This book is, however, among the very few that go beyond this statement. Using easy-to-understand numbers, it provides a roadmap for India to achieve this goal.
The “rise of China” is a growing concern. The “Thucydides Trap” captures this feeling well. Popularized by American political scientist Graham T Allison, the expression defines the conflict between an incumbent superpower and an emerging power which seeks to supplant it. India is caught in the midst of this geopolitical turmoil. While Chinese President Xi Jinping has signaled his willingness to use military coercion to resolve territorial disputes, India must navigate the intersecting currents of border security, economic dependence and nationalist sentiment. This book provides a compass for navigating through this unsubscribe.
The authors set three preconditions to chart the right course. First, the government should not intervene excessively in the economy. The current trend to “pick winners” and create “artificial monopolies” imposes regressive “political and political risks” on companies. Second, the coequitable balance of powers enshrined in the Constitution between the executive, the judiciary and the legislature should be restored. The concentration of power in the hands of the executive – the creation of the “administrative state” – dilutes entrepreneurship and private sector confidence. Third, the rule of law must be respected in letter and in spirit. The arbitrariness of authority should be circumscribed by law.
Assuming that all three of these conditions will be met, the authors argue that India is well placed to move to a faster economic growth path than China, and that, through the power of the combination, it can significantly reduce l current economic gap. They argue that India has a demographic advantage, that China’s export base is weakening, and that the fundamental tension between free-market economy and autocratic politics will eventually stifle China’s growth. They also detail the competitive potential of six sectors (telecoms, consumer electronics, automobiles, chemicals, healthcare and pharmaceuticals, and agriculture) and provide detailed data and analysis to describe how India can push China out of the country. its dominant position in each of these sectors.
The analytical narrative is realistic and strategic. The authors recognize the importance of the existing economic relations with China and advise against “myopic chauvinism”. They stress that China should not be allowed to enter or gain access to any sector of strategic or security importance. Chinese leaders should not be given a position on the board of directors of a company that controls or owns national security assets; Chinese equipment should not be used in the telecom / internet industry and Indian companies that depend on China for the supply of raw materials and / or middlemen should hold at least six months of inventory to limit the effect China’s leverage on them.
Economics is one of two strands of policy advice offered in the book. The second part is diplomacy. The authors instruct Indian diplomats to build international coalitions along three axes of natural partners. The first axis concerns other democracies (such as Australia, the United States, Japan); the second, countries that have faced the heat of China’s tough diplomacy; and the third, India’s sub-continental neighbors. The objective of building “balancing coalitions” with the 20 countries which are part of these axes should be to counter China through the aspects of economic, military and intelligence questions.
China has overtaken India in several economic and social areas. There are many who maintain that the race is lost. Using analytical logic, empirical evidence, and pragmatic policy recommendations, the authors argue that this would be a premature conclusion. The book should be read for their insight.
(Vikram Singh Mehta is president of the Center for Social and Economic Progress)