In this global world, no country is free from the consequences of any event in the international arena. These implications are especially deep-rooted when two major powers are involved. The US-China cut-throat competition has become a hot topic. After two years of the trade war, the US and China signed a phase one deal. However, after the COVID-19 pandemic, the US-China relationship is hit by another blow of rivalry. I aim to provide a brief look at the implications of US-China friction on India.
But before that, a short preview of the US-China relationship is important.
Washington and Beijing weren’t always feuding. The journey has various highs and lows, but discussing that is out of the purview of the article. However, one major event which serves as the starting point of China’s rise and thus US’s insecurity dates back to 1978. In this year, under the leadership of Deng Xiaoping, China underwent major economic reforms which included opening up for foreign investments, growth in the private sectors, etc.
Sidelining some modest fluctuations, China’s GDP shot up after these reforms. Compared to the US GDP per capita, China leapt from 2.7% to 15.7% from 1978 to 2005. In 2010, China was the world’s largest exporter; in 2011, the world’s largest manufacturer; in 2012, the world’s number 1 trading nation and the list goes on. China, which was the 10th largest economy in 1990, jumped to the position of 2nd largest economy by 2011. The poverty level also dropped from 88% in 1981 to 0.7% in 2015.
Thus, China’s unprecedented growth was alarming for the US. Seeing China rise to a position where it can challenge the US’s prerogatives was hard to ignore. The trade war started by the US and then retaliated by China is a mere demonstration of this increasing antagonism. However, the cost-benefit equation of this trade war pushed the two superpowers to end this deadlock and sign the phase one deal. Unfortunately, coronavirus hit the world, and the situation worsened.
President Trump called the coronavirus as the Chinese virus making China enraged. Loads of conspiracy and counter- conspiracy theories from both sides came up.US blamed China for information disorder. China asked American journalists to leave China. Speculations about China being opportunistic fueled because of investments from China and countries worldwide made stringent tweaks to their foreign investment policies. Owing to many such incidents, the two superpowers now boil with animosity.
This brings us to the major question.
What are the implications for India?
Because of the rivalry, the strategic activities in Asia will see a rise. Both the US and China will try to increase their influence by soft and hard power strategies like providing economic support, giving concessions for loans, providing health care equipment, etc. There is indeed a competition in aid providing too.
The US and China both have provided $1 million and $4 million respectively to Pakistan, for instance. Similarly, Sri Lanka was also provided with help from China and the US (under a broader scheme). These strategic moves are worrisome for India in the long run. To elaborate, such favours from the giants make India’s neighbouring countries vulnerable to future obligations. This is specifically worrying to India.
Furthermore, the US-China rivalry is not just in terms of suspicions and speculations. It is rather friction between a rising power and an established power. Just like Germany and the allied power in the pre-world war era. This means that we can expect the two forerunners engaging in bloc making to suppress the other.
For example, the action taken against Huawei company by the US in the 5G controversy was replicated by the UK owing to its alliance to the US. India might face the same, wherein future both the powers will increase pressure to fall in line with one of them. A more subtle example can be the recent calls by Australia and the US as India nears the lead role of the WHO executive body by May-end. They want India to take a firm stand against China.
This is more of a bigger picture. The more immediate implication is rather an exceptional opportunity for India. Amidst trade war, many academicians believed that India might have a silver lining. Although US-China is still intact to the phase one deal with both sides talking of cooperation (Reuters May 8, 2020), the rivalry is increasing.
This means that with rising risk aversion in the world because of the increased rivalry between the two giants, investors worldwide will search for safer options. This gives India an opportunity to expand its investments (obviously, after dealing with coronavirus).
In fact, according to a report by economic times, the USISPF has stated that nearly 200 American companies are thinking of moving their manufacturing base to India from China. Likewise, a report by the Times of India states that some South Korean firms are also thinking of India as an alternative to China. Indian states are also keenly trying to attract investors. So, if at all India does proper planning, attract investors and ensure a healthy trade environment, this can be a game-changer for India.
In conclusion, the rivalry of US-China seems inevitable unless both agree to healthy cooperation and work out a new strategic way of global power dynamics. On the whole, India has major two implications. One is embedded in the bigger picture of global politics, influence and taking a stand. The other involves taking practical steps to become a more significant part of the global economy and consequently the global world. One can only hope that India fights COVID-19 and start planning for the post-COVID world.