By Mohan Guruswamy
The rise of China as the world’s greatest exporter, as largest manufacturing nation and its great economic appetite poses a new set of challenges. At a meeting of Southeast Asian nations in 2010, China’s then foreign minister Yang Jiechi, facing a barrage of complaints about his country’s behaviour in the region, blurted out the sort of thing polite leaders usually prefer to leave unsaid. “China is a big country,” he pointed out, “and other countries are small countries, and that is just a fact.”
Indeed it is; and China is big not merely in terms of territory and population, but also military might. Its Communist Party is presiding over the world’s largest military build-up. And that is a fact too — one that the rest of the world has to come to terms with.
China’s defence budget has almost certainly experienced double digit growth for two decades. According to Stockholm International Peace Research Institute (SIPRI), Beijing’s annual defence spending rose from over $30 billion in 2000 to over $135 billion in 2014. SIPRI usually adds about 50% to the official figure that China gives for its defence spending, because even basic military items such as research and development are kept off budget. Including those items would imply total military spending in 2014, based on the latest announcement from Beijing, would be around $200 billion.
This is not a sum India can match, and the last thing we need to get caught in is a numbers game. A one-party dictatorship will always be able to outspend us, even if our GDPs get closer.
That said, the threat from China should not be exaggerated. There are three limiting factors. First, unlike the former Soviet Union, China has a vital national interest in the stability of the global economic system. Its military leaders constantly stress that the development of what is still only a middle-income country with a lot of very poor people takes precedence over military ambition.
The increase in its military spending reflects the growth of the economy, rather than an expanding share of national income. For many years China has spent the same proportion of GDP on defence (a bit over 2%, whereas America spends about 4.7%).
The real test of China’s willingness to keep military spending constant will come when its headlong economic growth starts to slow further. But on past form, China’s leaders will continue to worry more about internal threats to their control than external ones. Last year, spending on internal security outstripped military spending for the first time. With a rapidly ageing population, it is also a good bet that meeting the demand for better health care will become a higher priority than maintaining military spending.
India on the other hand will keep growing long after China has stopped growing. Its youthful population and present growth trends indicate the accumulation of the world’s largest middle class in India. This growth is projected to begin in 2015 and continue well past 2050.
In fact so big will this become that India during this period will increasingly power world economic growth, and not China. In 2050, India is projected to have a population of 1.6 billion, and of this 1.3 billion will belong to the middle and upper classes. The lower classes will be constant at around 300 million, as it is now.
India already has the world’s third largest GDP. Many economists prophesize that in 2050 it will be India that will be the world’s biggest economy, not China. In per capita terms we might still be poorer, but in GDP terms we will be bigger.
According to a study by US banking group Citi, India will be the world’s largest economy within 39 years. Indian GDP in 2050, measured by purchasing power parity (PPP), will be $85.97 trillion. China, in second place, will have a GDP of $80.02 trillion and the US $39.07 trillion.
Now comes the dilemma for India. Robert Kaplan writes: “As the United States and China become great power rivals, the direction in which India tilts could determine the course of geo-politics in Eurasia in the 21st century. India, in other words, looms at the ultimate pivot state.”
Now if one were an Indian planner, he or she would be looking at the China/Pakistan axis with askance. India has had conflicts, and still perceives threats from both – jointly and severally. The Tibetan desert, once intended to be India’s buffer against the north, now has become China’s buffer against India. The planner will not be looking at all if he or she were not looking at the Indian Ocean as a theatre. After all, it is also China’s lifeline and its lifeblood flows here.
Now if one were a Chinese planner, he or she would be looking with concern at India’s growth and increasing ability to project power in the Indian Ocean Rim (IOR). The planner will also note what experts are saying about India’s growth trajectory. That it will be growing long after China gets walking sticks. That it is the ultimate pivot state in the grand struggle for primacy between the West led by the USA and Japan, and China.
There is a certain equilibrium in Sino-Indian affairs that make recourse to force extremely improbable. Both modern states are inheritors of age-old traditions and the wisdom of the ages. Both now read their semaphores well and know how much of the sword must be unsheathed to send a message. This ability will ensure the swords remain recessed, and for the plowshares to be out at work.
(Mohan Guruswamy heads the Centre for Policy Alternatives, New Delhi. He is a Distinguished Fellow at the Observer Research Foundation, New Delhi. He can be contacted atsouthasiamonitor1@gmail.com)
This article appeared at South Asia Monitor.
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