BY PRADIP BAIJAL
In most nations, massive economic changes take place every 70-100 years, changing the nations totally. Sometimes these changes destroy the nations, or they take them to the top. Industrial Revolutions 1.0 (1760-1860) and 2.0 (1850-1930) (and some other factors) multiplied US/UK and European economies 5, 6 times, while India/China went down 10 times (1820-1970) during a similar period. The US had an earlier phase of growth 7-10 times post civil war and American reforms, taking America to the top.
Industrial Revolution 3.0 after 1950 reversed growth patterns in the world, with IR 3.0 technologies available everywhere on the wire/wireless. The Chinese growth 8 times during the short period of 1970-2019 was most remarkable when the US illogically decided to help China to deal with the Cold War and other reasons, though India grew only 2.5-3 times, having all the technical advantages of China but was hit by crony capitalism after 2006. South-East Asia suffered similarly. These changes sometimes occur with nations changing their course themselves like China, while others lose by not taking appropriate action. But on average, changes take place after about 70-100 years.
The world is changing now with IR 4.0 and 5.0, on the same wire or wireless, and similar technologies, giving advantage to China and India. But both the US and China are now fighting each other after the most illogical transformation where the US abetted Chinese growth during seven President's rule, mostly at their own cost, only checked by Donald Trump. Mao Zedong, Deng Xiaoping and China were able to deceive America during these periods, mostly through deception (refer my book "Containing the China Onslaught" for details). It would normally have led to war.
No one could anticipate that Coronavirus would change the world so drastically when the world had stabilized against diseases etc. It is alleged that China again deceived the US about the nature and period of Corona. There were several other factors in starting a US/China confrontation post 2016.
Geopolitical analysts believe that this will change the global order, and with business as usual, China will become the dominant player in the coming years. The global community is terrified with the thought that China's political governance model will be accepted by the countries. India will face serious challenges in the coming years because India and China have old rivalries, competing in the same region with similar populations, and have fought many wars. Indian strategists have a tough job to find out the ways to grow India faster, the nations being at par 20 years back and thwart the Chinese onslaught in the 'east' now.
India needs a new grand strategy because the older one isn't paying strategic and tactical benefits in the short, medium and long term. India has invested a lot of energy on arcane social and academic issues/disputes in the last 70 years and entangled itself in solving historical blunders.
India now, 70 years after 1950, is gradually moving from idealistic grand strategy to realism to fasten the economic and security progress. Grand strategy is simply securing the state through use of power intelligently. In the eras of IR 4.0 and 5.0 countries can start growing at double digit in no time. China is emerging as the biggest challenge in Asia due to its growing economic and military power. China as a hegemonic state doesn't believe in peaceful coexistence. India is also facing Pakistan precisely because of the nature of the Chinese and Pakistani state. Bangladesh may start becoming a nuisance once it achieves fair prosperity. India has immense potential if it is channelized properly. Our inefficiency is often confused with tolerance and is slowing the progress of India.
China's security and economic statecraft vis-?-vis India is pre-defined. China is growing in every new tech and leading the technology groups in international regulatory bodies. It is too early to judge, except noticing that China is ahead in 5G, and is very aggressive. Old technologies, networks will also have to be continuously upgraded. At present China appears 3-4 years ahead, but India has shown capacity to move ahead fast.
China also has to deal with very difficult political questions, like dealing with inevitably increasing Maslovian forces as exhibited very powerfully in Hong Kong, bigger following of pro-democracy forces, Uighur issues and increasing acceptance of Deng's invalid son, the world's mistrust of China etc. India is presently gaining peanuts from the trade war between the US and China in comparison with other countries in the region, but this looks likely to change. Labour arbitrage is decreasing. IR 4.0 and the cost of robots everywhere is the same. Indian technologists in IT, digital etc. have been the best, and new models of digital business are evolving. More competition and flexibility is needed by allowing competition between states in labour policies particularly after Covid.
The former Singaporean diplomat Kishor Mahbubani had said in his new book that US politics has been captured by a short-sighted plutocracy that would not survive long if the Foreign Corrupt Practices Act, criminalising bribery of officials abroad, is applied at home -- and lacking any strategic brain, the US has become over-reliant on military muscle and been entangled in perpetual wars in the Middle East. The US may account for half of global defence spending, but how much use is its military hardware in a software age? US aircraft carriers, which can cost up to $13bn to build, can be easily sunk by one of China's DF-26 missiles, costing a few hundred thousand dollars. The US's social and economic model has stopped delivering for most of its people. "America is the only developed society where the average income of the bottom 50 per cent of the population has gone down over the past 30 years. In the same period, the Chinese people have experienced the greatest improvement in their standard of living ever seen in Chinese history," he writes. I have shown in my previous article that everyone under-assesses the US's historic and strategic power at its own peril.
The great-power competition has begun in earnest, and the coronavirus pandemic has turned a conscious uncoupling into a messy breakup. Both sides will try to encash the happenings in many regions in the world, to impact the growth process. Maybe many other technologies will also emerge, to change the growth equations, Situations are turning very eventful for different countries to watch. But the nature of American power being what it is, and China going through an international attack on its credibility is an unlikely winner.
Strategies for India's prominence in the Asian century:
India needs a credible presence in the 'East' to survive the Chinese onslaught to re-establish its space for growth, unnaturally taken away by Chinese deception. I am indicating some ideas for long-term policy thinking, but ultimately the policies will have to be written along with the democracies who have the best core competence in different sectors today. For the first time, these countries have common interests with India in trying to deal with a very powerful China. In summary, India may facilitate:
- Democratic nations coming together to counter China. As Tanvi Madan, a young Indian author, suggests in her IDSA article: "India's available options will be determined not just by how India sees China and the US, but by how these two countries conceive of India's role and relative importance in their broader strategies." In Washington, the Sino-US relationship had a relatively higher priority than the US-India one. This priority has totally reversed and India must continue encashing in real terms. Its relationships with all other democracies must be strategized to continue this advantage, all democratic countries being fed up with China's tributary state nature and policies. The change in relationship is happening very fast, and India must invest more in these relationships with other democracies, to make them broader and deeper. It also needs to make democratic countries increase investments in India. Investment comes with risk, but if handled well, can also bring returns. Another way is for India to strengthen its own capacity by encashing the digital DNA of Indians all over the world, and thus its power and influence. The country can indeed use the relationships with China and the US to do this. But India will have to be proactive in making these efforts.
- India has taken various policy reforms in the last few months to attract the foreign companies in India. These should be implemented efficiently.
Need to effect futuristic economic changes, have to be identified along with identified collaborators. We cannot start with elementary R&D. We have to develop counterparts of the US in the US-China cooperation. As Prof Ajay Shah puts it, "A nation's status in the world is critically about an extensive engagement with the world economy. The processes of economic diplomacy and 'soft power' are closely related to economic inter-linkages with the world." India has undergone two changes over the last 15 years: On the one hand, GDP has risen, but in addition, cross-border flows expressed as per cent of GDP have also risen substantially. Looking forward, an enhanced engagement with the external world will make a considerable difference to India's footprint in international affairs, and the extent to which countries will have an interest in being mindful of India's interests. From a policy perspective, this requires a shift away from an isolationist framework rooted in mistrust of foreigners, and fear of being called aligned. In the new world of continuously changing technologies and partisan world institutions, India must discover its new path of growing itself and also collaborating with its new partners. China did not grow miraculously on its own. US and world institutions did play a big partisan role. While many changes have taken place, much more remains to be done."
India must take its place at the high table -- Security Council. With China being under attack internationally, this is the ideal time to strategise entry or sell the idea of a democratic UN or a lobby within.
Minimizing Chinese influence in the Indian Ocean and in the seas east of China through a NATO-like structure of democracies in this region.
Prevention of IPR and Technology Theft. Stronger WTO, and forcing a situation within WTO those IPR thefts bring real disadvantage. There cannot be repetitions of planned Tiananmen massacres and Uighur discriminations and yet partisan US treatment towards China by, for e.g., accelerating Chinese membership in 2001, bringing in a billion within WTO to the disadvantage of the whole rule abiding world and clear disadvantage of countries like Soviet Union/India/Souh East Asia etc. and no action after damning WTO 2017 and other reports of US and other countries against China for IPR and technology thefts, which have led to WTO becoming a non-institution. WHO seems to be going the same way, and its credibility has to be re-established by an independent enquiry into Covid, and change of guard, if necessary. UN institutions, which can be easily damned for their actions, weaken the entire UN's credibility.
Tackling the Threat to the Sovereignty of Nations through appropriate technology.
The US and other advanced democratic nations should decouple with China economically, as even Trump has announced and make India a manufacturing and mass base hub for research e.g. for IR 3.0, 4.0 and 5.0 technologies and for space, drugs and automobile parts etc. so that dependendence on China for all manufacturing cycles can reduce for effective competition to be opened up. The world should recognize that democracies following all UNO rules should be put in advantageous positions.
India's policy problems in Achieving Sound Economic Growth (over-regulation) need to 'Be Dealt with Quickly' for IR 4.0, 5.0 and manufacturing technologies, as was effectively dealt for IR 3.0 technologies like mobile telephony, IT, broadband, broadcasting etc. in the past.
Facilitate shifting the centre of the fourth/fifth Industrial Revolution from China to India.
Challenge the Chinese Source of Power, created and nurtured carefully within their totalitarian systems, which have taken the world for a ride.
Developing more platforms like Aadhaar, JAM, UPI, Aarogya Setu digital stack etc and greater digital use on all networks.
Focusing on securing indigenization in one or more industries every year, by writing long/short-term programs.
(Pradip Baijal is former Secretary, Disinvestment and former Chairman, TRAI. He is the author of Containing the China Onslaught)