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The rise of China and India on the Asian continent will inevitably shift the global balance of power

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The rise of China and India on the Asian continent will inevitably shift the global balance of power

Introduction

            The United States of America has for long been viewed as the most powerful nation worldwide, especially after the collapse of the USSR in 1990. It may be true that its economy is the largest compared to the rest, but this does not necessarily mean that it is or will remain to be the most powerful nation world wide for long. With the economies of several countries like China and India growing at fast rates, the U.S is bound to lose its place as the most powerful nation. This is an essay to prove the fact that the rise of India and China on the Asian continent will inevitably shift the global balance of power.

The balance of power in the past

            During the cod war between the U.S and NATO, and the USSR and the Soviet Bloc, the world was treated as bipolar, meaning that the two countries (USA and USSR) were recognized to be the two most powerful in the world of the time. The most visible part of the competition between the two was in space, nuclear, defense and other technology. The possession of advanced military equipments such as submarines, aircraft carriers, bombers and fighters was also an element of the relative power of these two nations. Since then, complex models have been designed to facilitate the effectiveness of measuring a nation’s global power. Economic and technological powers play a major role in these models. Other factors include natural resources, education and skills, investment in research and development and technology development. (Blackwill etal 1-2)

Economic size and power

            The ability of a state to achieve and sustain global hegemony has been developed as a model to measure a nation’s power. (Virmani 239) In this model, military capability is the outcome of an interaction between national resources and national performance. National resources consist of five building blocks: technology, enterprise, human resources, financial/capital resources and physical resources. National performance contains three factors: infrastructural capacity, ideational resources that augment or detract from the utilization of these natural resources. Although not all Asian countries have been able to advance in the aforementioned areas, statistics are proving that in future, the balance of power will shift. Asian countries have the fastest economic growth in the world, according to statistics from 1980 to 2003.

Table A: GDP Growth (1980 to 2003)

Economy
Rank
Average growth
China
1
9.5
Singapore
2
6.7
Korea
3
6.7
Vietnam
4
6.5
Taiwan
5
6.5
Oman
6
6.5
Malaysia
7
6.2
Thailand
8
6.0
India
9
5.7
Indonesia
10
5.3

Table B: Per Capita GDP Growth (1980 to 2003)

Economy
Rank
Average growth
China
1
8.2
Korea
2
5.6
Taiwan
3
5.3
Thailand
4
4.7
Vietnam
5
4.6
Ireland
6
4.5
Singapore
7
4.2
Hong Kong
8
3.9
India
9
3.7
Luxemburg
10
3.7
Indonesia
11
3.6
Malaysia
12
3.6

Note: Calculation is based on data from WDI, 2003 and WEO April 2004.

The rise of the Asian powers

            After the collapse of the Soviet Union and the end of the cold war, India was compelled to take a more national interest-based approach to different regions. India’ new economic policies demanded a more focus outreach that emphasized trade and commercial cooperation. It also demanded a direct political approach to different regions of Asia, rather than the multilateral mechanisms of G-77 and the Non-Aligned Movement (NAM). (Gillingham 288) As India began to reorient its foreign policy after the Cold War, the idea that much of Asia and the Indian Ocean formed its “extended neighborhood” began to take root. India’s relations with South-East Asia, the Persian Gulf and the Middle East began to acquire a new dynamism. The slow but certain re-emergence of India, the Dramatic rise of China, the reassertion of Japan and the uncertainties in the policies of a power that has dominated the region for more than half o century-the U.S.- have together compelled South East Asia to rethink its strategic environment and devise new approaches to managing the emerging multi-polarity in Asia. (Paul pg 296)

            As the region copes with the new complexities of Asian security, the focus here is on how great powers in Asia will relate. Since the end of the cold war, India has enjoyed the unprecedented and simultaneous deepening of its relations with all the great powers. India’s relation with China, the U.S. and even Japan are today in their best ever period since the middle of the 20th century. India has proclaimed “strategic relationships” of varying intensity with all the three powers. (Wu 1-2)

 Economic impact of China to the rest of the World

            China’s rise as an economic power is not only a matter off vital importance to the 1.3 billion Chinese people, but also as a matter of great influence and significance for the people of other countries. China is creating a new world record in economic growth. The rapid increase in China’s economic strength is reflected not only in the growth rate and the proportion of GDP in the world’s total, but also in the steady rise of the proportion of GDP increment in the world. The key to understanding the international impact of China’s emergence as a major economic power, as marked by it’s accession to the World Trade Organization (WTO), is that global division of labor at the end of the last millennium was a highly unnatural one. (Iriye 123)

 It was un-natural because the self-imposed isolation of China in the 1914-1979 periods and its slow integration into the international economy in the 1980-1991 periods kept over one-fifth of the human race from meaningful participation in the world trade and investment systems. This is why China’s accelerated integration in the world economy beginning in the 1990s has led to the significant relocation of labor-intensive industries to China. In-mid 2003, the electronic and electrical firms in Penang, Malaysia, employed 17% fewer workers than in 2000. On the other side of the Pacific, 500 of Mexico’s 3,770 foreign-owned export –oriented firms) have closed since 2001, and the surviving ones have reduced their employment by almost a third. (Shambaugh 145-146)

 Future trend of China’s development

            Foreign direct investment (FDI) into China increased from US$44.2 billion in 1997 to US$52.7 billion in 2002. This caused China’s share of total FDI into the developing world during this period to rise from 22.9% to 32.5%, and its share of total FDI into Asia to soar from 40.6 % to 55.5 %.( Chen etal 125) It is very difficult to forecast China’s future economic growth. In the book “Power and sustainability of the Chinese state”, the authors have tried to compile several predictions of the expected trends in the economic development of China as shown in the table.

Forecasts for China’s GDP Growth % (2005-2020)

Period
Global Insight (2006)
Economic Intelligence Unit (2006)
Goldman Sachs(2005)
JCER (2007)
World Bank (2007)
2005-2010
8.6
8.0
7.1

2010-2015
7.2
5.5
5.8

2015-2020
6.4
4.4
5.0

2005-2020
7.4
6.0
6.0
5.5
6.6

China’s place in science and technology

            Science and Technology activities in China, for instance, R&D expenses, scientific publication, patent application, and university graduates, and the like show rapid and simultaneous increases, creating a new image of China that is a scientific and technological powerhouse. However, if China wishes to cause the shift in the global power from the U.S, then it has to reduce the number of mergers and other associations with multinational companies. The supposed technological power of China at the present stage needs to be depreciated to a certain degree due to the heavy dependency upon the foreign entities and the modularized, black boxed, fragmented nature of the technology scattered in China which are actually, in many cases, in the hands of multi national companies. In the long run, however, if the Chinese firms’ increasing investments in assimilation and absorption of external knowledge and the Chinese government policy efforts to enhance the higher education and indigenous innovation would bear fruits, China could improve the structural deficiency and further catalyze the dynamic process of the transformation of the fragmented set of the S&T knowledge into organically combined and economically useful knowledge. (Lee etal 171)

India’s economic growth

            India’s economy has been growing since the 1970s. This sterling growth performance for a large democratic developing country is welcome news, not only for its people but also for the South Asia region. According to the conventional view, the sources of India’s recent acceleration of economic growth may be traced to policy reforms at the beginning of the 1990s under the government of Prime Minister P. V. Narasimha Rao. His government liberalized the economy by eliminating import controls and reducing custom duties, devaluing the currency, eliminating controls on private investment, and breaking the public sector business monopoly of the key industries. (Aghion, 282)

            India’s growth miracle is valuable as a bench mark for other developing countries that are experiencing significant growth shortcomings and looking for strategies to achieve high growth rates. India’s growth miracle has contributed to raising the overall growth rate of the South Asia region from 1.2 percent in 1960 to 3.3 percent per annum in 1980-2000. (Singh 5) There are a number of reasons for optimism that India’s growth take-off and surges of the past two decades will be sustained over several decades for a number of reasons. One reason is that India’s ongoing gradual policy and institutional reform programs have remained on track despite changes in governments that have involved quite different political and social values. Second, the reform agenda continues to enjoy the support of major interest groups or stakeholders: politicians and public officials, family business and business groups, organized labor, the expanding middle class, and civil societies. Third, India’s social capital of a large, educated, English-proficient middle class of about three hundred million not only has purchasing power but also is ready and eager to create the opportunities for business networking and career advancement necessary to succeed in today’s global economy. (World Bank 1997)

            A number of observations have stressed that the approach of India to realizing high growth rates is driven by bottom-up activities of the entrepreneurs and business firms. The country has already produced dozens of world-class firms such as Infosys, Ranbaxy, and Reliance. During the last four years, several Indian companies received much coveted Deming Prize for managerial innovation. The country has well developed private sector as reflected in the fact that at one end of the scale it has large business houses like The Tata Group, a conglomerate that manufacturers automobiles and steel as well as software and consulting systems. At the other hand of the scale, the country has hundreds of small-to-medium size firms. Several of these firms are growing at a very rapid pace, posting gain of 10-25 percent a year. (Tanzi 127)

            Indian success in the IT industry is well documented but the performance of other industries has improved considerably. For instance, in the auto parts industry, the revenue more than doubled once in a year, from $4 billion to above 10$ billion. Another dimension of bottom-up activity of the Indian economy is that the middle class has been very important contributor to the demand side of the growth process. Personal consumption of the country makes up 67% of its GDP. The country has a sturdy “rule of law” and a well-run financial system to finance customer durable goods and homes. Indian artistes and designers now speak of extending their influence overseas. Movie tars of Bollywood speak of building their audience globally from their home base of half a billion fan in the country as was reported in Newsweek, March 6, 2006, titled, “India Rising.” Poverty rates have improved and will continue to improve over time. (Ruet 39)

            According to Siddiqui, the future growth prospects are excellent to achieve an average growth rate of 8% per year for several decades into the future, provided the current trend between ideality and idealism in policy making is maintained. According to the earlier on quoted Goldman Sachs forecast, India’s gross domestic product is poised to grow at 7 to 8 percent per annum from most of the 21st century. Researchers have also said that it is feasible to add 2% to India’s current growth rate over the next two decades. The use of Micro economics development strategy instead of a foreign direct investment development strategy is well suited for high growth rate success for India by the year 2020. He also says that India is well positioned to catch up with China and could surpass it. More research by the Centre of Indian Industries and McKinsey, India’s manufacturing exports are poised to reach US$ 300 billion by 2015. This amounts to a surge of 650 percent in manufacturing exports in various skill-based industries such as specialized automotives parts, electrical and electronic parts, chemicals and pharmaceutical products, and so forth. (Siddiqui 89)

Conclusion

            Today, India is the least consequential to the ordering of the Asian security. Nevertheless, India’s importance for security policies of Asia is beginning to grow, if only slowly. The debate on India’s rise and its implications for Asian and global balance of power centers around new expectation and residual skepticism about the sustainability of India’s recent impressive economic performance-of close to 9% annual growth rates during he middle of the first decade of the 21st century. If India can maintain this performance, its political and military weight in South Asia will definitely improve. The expectation on India’s rise has also begun to inject a new dynamism into India’s relations with the great powers of Asia. As a result, India is no longer marginal to either the regional politics of Asia or the great power system that shapes it. For the first time during the mid 1950s, it is clear that India is becoming an important factor, not only in Asia, but worldwide. (Sisodia etal 35)

            China on the other and, has a more stable economic growth that India. Moreover, most Chinese analysts seem to view a favorable global balance in which the United States has a slight edge. (Ninkovich 189) Today in America, there is an enormous demand for information about the world’s fastest growing economy, China, which is also the largest social system. (Thompson 189) People in the United State are s worried about China that they try to ignore it. Besides Japan, China is the other nation on earth that that could threaten the national security of the United States, yet there is almost no serious work done on them in the United States.

It is time that Americans realized that there has been a continuing but slow balance of power since the end of the Cold War in Asia. In the present age, people are simply waiting for an incident to reveal how thoroughly the balance of power has shifted. China is determined to oversee that there is a balance in the global shift of power, and has started reacting to Japan’s power and efforts to exert its own economic influence among the overseas Chinese and on-Asian investors. There has also been the obvious drift of American policy, reflecting both inertia after the cold war with regard to military deployments and expediency in day-to-day policy, depending on domestic political considerations. As these forces work their way into the consciousness of the peoples of Pacific Asia, the concrete pattern of relations is one of waiting for some incident that will make the intrinsic situation extrinsic. Such an incident would reveal how much the global balance of power has shifted in favor of Asia, and how little prepared the Americans are for coping with this development.

Works cited

1)      Aghion P., Durlauf S. N. Handbook of economic growth. Elsevier, 2005, pg 282

2)      Blackwill R. D., Dibb P. America’s Asian alliances. MIT Press, 2000, pg 1-2

3)      Blij H. J. The Power of Place: Geography, Destiny, and Globalization’s Rough Landscape. Oxford University Press US, 2008, pg 4

4)      Chen J., Shujie Yao. Globalization, competition and growth in China. Hong Kong: Routledge, 2006

5)      Deng Y., Wang. F. L. China rising: power and motivation in Chinese foreign policy. Rowman & Littlefield, 2005, pg 103

6)      Gillingham J. Design for a new Europe. Cambridge University Press, 2006, pg 288

7)      Iriye A. China and Japan in the global setting. Harvard University Press, 1992, pg 123

8)      Lee K., Kim J. H., Kim J. H., Woo W. T. Power and Sustainability of the Chinese State. New York: Taylor & Francis, 2009

9)      Ninkovich F. A. The United States and imperialism. Wiley-Blackwell, 2001, pg 189

10)  Paul T. V., Wirtz J. J., Fortmann M. Balance of power: theory and practice in the 21st century. Stanford University Press, 2004, pg 296

11)  Ruet J. Privatizing power cuts? Ownership and reform of state electricity boards in India. Academic Foundation, 2005, pg 39

12)  Shambaugh D. L. American studies of contemporary China. M.E. Sharpe, 1993, 145-146

13)  Siddiqui A. India and South Asia: economic developments in the age of globalization. Bangladesh: M.E. Sharpe, 2006, pg 89

14)  Singh A. K. Land Use, Environment and Economic Growth in India. M.D. Publications Pvt. Ltd., 1997, pg 5

15)  Sisodia N. S., Krishnappa V. Global Power Shifts and Strategic Transition in Asia. Academic Foundation, 2009, pg 35

16)  Tanzi V., Chu K. Income distribution and high-quality growth. MIT Press, 1997, pg 127

17)  Thompson K. W. China, Taiwan, Japan, the United States, and the world. University Press of America, 1997, pg 189

18)  Virmani A. Propelling India from Socialist Stagnation to Global Power: Growth process. Academic Foundation, 2006

19)  World Bank. India: sustaining rapid economic growth. World Bank Publications, 1997

20)  Wu Y. China’s economic growth: a miracle with Chinese characteristics. Routledge, 2004, pg 1-2

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