IN a study conducted for the Royal Institute of International Affairs, London in 1995, Vincent Cable, Liberal Democrat MP and head of the institute’s international economics programme, had predicted that were India and China to achieve a rapid level of development, it would have a significant impact on the world economy. But Cable also went on to say that China faced a very uncertain political future in the short term and that there was a question mark about the kind of regime that would emerge from communism. Equally, while India had a supple, responsive and a deep-rooted democracy, it too faced problems. These were the abundant political risks of sectarian violence and secessionist movements.

Nevertheless, the report concluded on a hopeful note, arguing that both countries had enormous potential and high risks.¹ At that time, the Indian economy was barely waking up from its socialist slumber, quite unaware of its potential, though the rest of the world had begun to take notice.

The question often asked today is whether or not India will catch up with China. The more important question, however, is whether China will catch up with the US. Since 1978, China has averaged 9.4% annual GDP growth and today holds $252 billion in US Treasury Bonds (plus $48 billion held by Hong Kong.) If predictions by Goldman Sachs that China will surpass the US economy by 2041 prove accurate, then this will happen in the lifetime of most Indians under the age of 25 today.²

This obviously means that India would lag behind unless China runs aground or India shows an unbelievably magnificent late spurt. The Chinese may not want to admit it but competition and rivalry for markets and resources in Asia are inevitable in the years ahead. Of course, all this assumes that the world has factored in peak oil and declining production which should be starting any time now, and global warming which scientists predict may even hit us by 2010. Should there be no cure, then all bets about global pre-eminence are off.

In search of a pre-eminent role, China is aggressively trying to shore up its position for the future, at least in Asia, as worked out by Clinton and Jiang in 1996. Alarmed by post 9/11 moves by the Bush administration, the Chinese have begun to move into the energy rich areas around the globe, reorganise their navy and strengthen relations in their periphery.

In recent months, they have repeatedly outmanoeuvred the Indians in their quest for oil and gas in Kazakhstan, Ecuador, Angola, Nigeria and even in India’s neighbourhood, Myanmar and Bangladesh. Myanmar announced last January that its gas would flow east to China and not to India. China has upgraded its relations with Bangladesh and is today the largest supplier of military hardware to that country. It has access to the Chittagong port, and a road link from Bangladesh through Myanmar will help carry goods as also gas. China would want to secure overland routes rather than be dependent only on sea lanes for its energy supplies.

 

China’s role in developing Gwadar port on the Baloch coast has been described as its biggest harvest. Its consistent and clandestine assistance for Pakistan’s nuclear and missile projects over the last 20 odd years will be factored by Indian strategic thinkers when they work on India-Chinese amity. Despite occasional cooperation and joint investments, China is unlikely to be magnanimous in giving India space for securing its strategic supplies. India will have to create suitable incentives and interests through trade, aid, and military support, accompanied by strenuous and fleet-footed diplomatic efforts to ensure create economic and security dependencies in the supplier states.

The Chinese will need to grow at 10% annually in order to provide jobs for the 25 million people that enter the market every year. Obviously, and increasingly, they are caught in an upward spiral of exploding expectations. China needs American markets for an essentially export driven economic growth. Therefore, Beijing must maintain acceptable standards of political relations with its trading partners and has near-perfected this art. China challenges Japan politically, reserves its anger for Japanese actions and opposes it, yet receives maximum imports from that country. With the US, while the vitriol is substituted by histrionics, China does not hesitate to bring down a US reconnaissance aircraft and then buys Boeing aircraft.

China’s quest for energy in areas that the Americans have long assumed to be their private preserve is most certainly viewed as a provocation in Washington. Beijing has aggressively and systematically pursued its search for oil and gas all across the globe, including Latin America and Africa as well. In addition, Beijing’s support to Teheran in the recent uranium enrichment controversy and admission of Iran into the Shanghai Cooperation Organisation as a full member, along with what US leaders describe as China’s excessive militarisation, fuels suspicion in an already surcharged atmosphere because of North Korea and Taiwan. This is bound to put the two on a collision course.

 

American long term strategy to prevent the rise of another centre of power is now back in the forefront of Pentagon planners after a four-year hiatus during which the Americans were fighting their global war on terror. China is back to being a strategic competitor and not a strategic partner of the Clinton era. The Americans have their annual National Security Strategy and their Quadrennial Defence Reviews (QDR) premised on a unipolar world of total dominance and unchallenged military power. The latest QDR released on 5 February 2006, re-states the US view that China has the greatest potential to compete militarily with the US and use disruptive military technologies which could offset traditional US military superiority – ‘absent US counter strategies’. These counter strategies include developing and acquiring new weapon systems that would ensure US superiority and success in any major confrontation. The era of a Long War has been ushered in with costly new weapon systems like the F-22A raptor air superiority fighter, the multi-service joint strike fighter and so on.³

 

During his rounds of strategic dialogue, Robert B. Zoellick, US Deputy Secretary of State, claims to have told the Chinese that they had to be transparent as they grow and became influential, and that others would respond to this. Further, that lack of transparency would only lead others not only to build their own defences but help others to do likewise. Zoellick is cited as having remarked that Japan, Australia, India and others in South East Asia shared US worries.⁴ Other strategies have included plans to launch trilateral military cooperation with Japan and South Korea to deal not only with threats from North Korea but also China.

US preparations in Asia had begun earlier last year. US Secretary of Defence, Donald Rumsfeld, gave the first indication that the US was refocusing on China when he spoke at the International Institute of Strategic Studies, Singapore, on 5 June 2005. Rumsfeld said that a candid discussion about China could not neglect to mention areas of concern in the region. He spoke about China’s expanding missile forces, capable of reaching any part of the globe, and wondered why this was necessary ‘since no nation threatens China’ (not even the US$ 793 billion defence budget for 2006-07, one must assume).⁵ The latest in what appears to be a campaign to militarise feverishly, is the Rand Corporation study, ‘Chinese Responses to US Military Transformation and Implications for the Department of Defence.’⁶ The right wing neo-con mouthpiece, The Weekly Standard said that the report painted an alarming picture of Chinese military progress with a ‘dogged focus on countering American military advances.⁷

 

It is not surprising that the Chinese are not taking any chances. They have watched the US move into West and Central Asia under the pretext of its Global War on Terror and deployment of NATO forces in its neighbourhood as the US would want to be the controller of all energy supplies from West Asia and the Caspian.⁸

The new found US-India amity, the US-South Korea and Japan trilateral arrangement and Japanese activism on Taiwan and participation in the campaign in Iraq are all seen in Beijing as moves towards a steady build-up of alliances and arrangements designed to keep it under check. The Chinese have explained their national security strategy in a white paper, ‘China’s National Defence in 2004’ released in December, which speaks of multi-polarity and a bumpy road to globalization. The posture of active defence implies that the Chinese are willing to be patient, peaceful and accommodating so long as world events turn out according to their expectations. If not, they will then change their attitude, for what China desires is total dominance in East Asia which means that the US must withdraw.

China seeks a close strategic partner in Russia through purchase of state-of-the-art weaponry and energy from the Russians. Joint military exercises and their togetherness in the SCO is designed to checkmate Americans and NATO in Central Asia. There was a time when there was talk of a trilateral arrangement between Russia, China and India, but this has not taken off yet. The Indo-US nuclear deal is likely to dampen forward movement of this tripartite arrangement as Beijing could view this as an attempt to use India to counterbalance it. President Hu may have come away from his recent US visit wondering if the wrong anthem at the welcome ceremony and the Falung Gong protest inside the Rose Garden, was typical US maladroitness or a sinister message.

 

The Chinese economic miracle has some flaws. The development has taken place through wholly owned foreign enterprises and joint ventures; private Chinese firms have not played any significant role – with a maximum of 5% in electronics and telecommunications and as low as 1% in computers and peripherals.⁹ In India, the private sector has played a much larger role. If there is disenchantment and impatience in India with the fallout of development, it is impossible to accept that there is none in China. It is only that the rest of the world does not get to know. Unless political reform is initiated, political turmoil is more or less inevitable later. This reform is all the more necessary because China must now continue to seek economic prosperity at a rapid rate to keep rising expectations from blowing out of control. This would require it to seek markets and resources even more aggressively.

 

It is sometimes rather dramatically said that with the rise of China and India two out of four people in the world will be living in the fastest growing economies. This of course does not mean that 40% of Indians and Chinese will be prosperous. Disparities will not only remain but are likely to grow in both countries. The Singapore Foreign Minister, George Yeo, speaking at the Boao Forum on 22 April 2006, struck a cautionary tone when he began by saying: ‘History has a way of disappointing the optimist. As a huge wave of optimism sweeps over large parts of Asia from China to India, it is not surprising that some Asians should now be talking about the 21st century being an Asian century. This is hubris. With so many problems confronting us, we have to be modest in our self-estimation and avoid over-reaching ourselves.’

India and China may provide the largest markets, but the US is still geostrategically the paramount power and not about to leave the region. Actually, in the global economy, the US and China are like two elephants riding a bicycle in tandem; should one of the elephants topple, the global economy will topple.

China will strive to keep intact its image as a peaceful nation, speak the language of moderation till the Americans begin to pull out, and then move in to fill the vacuum. In the meanwhile, it will seek to strengthen its military muscle.

 

Footnotes:

1. Vincent Cable, ‘China and India: Economic Reform and Global Integration.’ Report for the Royal Institute of International Affairs, London 1995, cited by Vladimir Wolpert in his report, ‘Economic Reform in China: India Could Create New Asian Tigers.’ 1 September 1995.

2. Victor N. Corpus, ‘If it comes to a shooting war…’ Asia Times, 20 April 2006. Corpus draws scenarios of an all-out war between the US and China.

3. Vikram Sood, ‘Faster, Higher, Stronger’, The Hindustan Times, 28 February 2006, and Michael T. Klare, ‘Greeting Hu With a 21-Gun Salute’, Tom Dispatch, 19 April 2006.

4. Bill Getz, ‘More Muscle, With Eye on China’, The Washington Times, 20 April 2006.

5. Secretary Rumsfeld’s remarks to the International Institute for Strategic Studies, Singapore, 5 June 2005.

6. National Defence Research Institute, Rand Corporation, ‘Chinese Responses to US Military Transformation and Implications For the Department of Defence’, April 2006.

7. Christian Lowe, ‘China’s Emerging Military’, The Weekly Standard, 19 April 2006.

8. Vikram Sood, ‘Step on the Gas’, The Hindustan Times, New Delhi, 4 April 2005; ‘Slipping and Sliding’, The Hindustan Times, New Delhi, 28 September 2005; and ‘Oil’s Not Right With the World’, The Hindustan Times, Mumbai, 5 December 2005.

9. George F. Gilboy, ‘The Myth Behind China’s Miracle’, Foreign Affairs, July/August 2004.