31th January 2024 (9 Topics)
India’s New Possibilities Amid China’s Economic Shift
Context:
Amidst the changing dynamics of global economic power, particularly China's relative decline, India has a potential to fill the gap.
- China’s Economic Decline:
- Downward trend: Analysts suggest an irreversible decline in China’s share of global GDP, attributing it to demographic decline, anti-market interventions, high debt, and declining worker productivity. China’s share of the world’s working-age population is expected to decline from 19% to 10% in the next three decades.
-Uncertainties: Debates exist on whether China can initiate reforms to reclaim faster growth or if internal political changes may lead to more accommodative external policies. Hence, there is a need for India to reassess assumptions about global power distribution, recognizing the US's enduring strength and the emerging limits to China's power.
- Challenges for India: India should avoid nationalist hubris, focus on building strengths, and engage in cooperative regional efforts to thrive amid the evolving global power dynamics.
- Global Economic Implications:
- Shift in power: Emerging markets like India, Indonesia, Mexico, Brazil, and Poland, along with the US, are contributing to the expansion of the global economy, highlighting a shift in economic power.
-US-China Gap: The US economy is at $28 trillion in 2023, while China's is at $18 trillion, indicating a growing gap between their comprehensive national power.
-Cautious and on guard: While not expecting an immediate overtake of the Chinese economy, India must remain vigilant in boundary issues and regional influence competitions.
- Implications for World Order:
- China Behind US: The notion of China overtaking the US GDP is deemed unlikely, challenging the idea of a bipolar world or a G2 dominated by the US and China.
-Multi-polarity: A changing economic landscape suggests a more multipolar Asia, with India, Indonesia, Vietnam, and the Philippines experiencing faster economic growth.
- India's chance: India’s economic acceleration, coupled with China's slower growth, allows Delhi to steadily reduce the economic gap with Beijing. Despite not overtaking China soon, India can confidently cope with Chinese power by building national capabilities, strengthening regional coalitions like the Quad, and adapting to the evolving power shift.
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