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India wants to become Asia's superpower: competition with China has begun


India wants to become Asia's superpower and strives for geopolitical influence. By 2023 it will overtake China as the most populous country. In the economy, catching up is becoming more difficult.

India wants to become Asia's superpower and strives for geopolitical influence.

By 2023 it will overtake China as the most populous country.

In the economy, catching up is becoming more difficult.

New Delhi/Frankfurt – India has long been overshadowed by China.

Since the 1990s, a rapid boom has made the People's Republic the "world's factory" for everything from T-shirts to high-tech products.

The West, meanwhile, praised India as the "greatest democracy in the world";

However, the companies preferred to do business with communist-ruled China.

India presented itself as too bureaucratic and withdrawn, which also looks back on a long tradition of non-alignment – ​​including proximity to the Soviet Union and later Russia.

But the shadowy existence should soon be over.

Prime Minister Narendra Modi wants to lead India to great power status;

The long-term goal is to become one of several poles of a future multipolar world, on an equal footing with the USA and China.

India wants to lead and no longer be satisfied with a balancing role, Modi said shortly after taking office in 2014. In August 2022, in his speech marking the 75th anniversary of independence from Great Britain, Modi promised India within the next quarter century – i.e. by 2047 to make a developed country.

In mid-January, Foreign Minister Subrahmanyam Jaishankar stressed in a speech in Chennai that India had become a country that helps shape the global agenda and influences its outcomes.

India also benefits from its central location on the Indian Ocean.

"The Indian Ocean is poised to gain greater geopolitical importance," Jaishankar said.

"How well India uses its geographic location will be a major factor in its relevance in the world."

India or China: who is the great power of the future?

But China's head of state Xi Jinping also has big plans.

By 2049, the 100th anniversary of the People's Republic of China, he wants his country "to be at the forefront of the world in terms of national strength and international influence".

This was announced by Xi at the Communist Party Congress in October.

So who will be Asia's most important superpower in a few decades, India or China?

It's too early for an answer.

According to a UN forecast, China will lose its top spot to India this year, at least in terms of population size.

Both giant states currently have a good 1.4 billion people, with China a few million ahead.

But India's population continues to grow.

China, on the other hand, had to report last week that its population had shrunk in 2022 for the first time in decades.

This trend will weaken China's economy in the long term;

already the formerly endless pool of young workers on which China's firms have relied for decades is beginning to dwindle.

In terms of economic development, however, India has a lot of catching up to do: in 2022, China's annual economic output was almost 18 trillion US dollars, around six times that of India (3 trillion US dollars).

And so far, the OECD is expecting continued strong growth for the People's Republic - in a largely parallel path to India, which would bring the subcontinent significantly stronger growth than before, but will not bring India any closer to China by 2060.

China and India used to develop in parallel - until China triggered the well-known rapid development with a strong push for reforms in the early 1990s, explains Gerwin Bell, chief economist for Asia at the global asset manager PGIM Fixed Income, in an interview with the

Frankfurter Rundschau



India's economy needs many reforms

Despite all the optimism that India will play a greater role in the future, Bell sees major challenges that the country urgently needs to tackle: the fiscal deficit is too high, the savings rate too low, and there is still room for improvement in legal certainty.

Reforms are necessary, for example in property rights or land use.

“But all of this is happening at the pace of a glacier, three steps forward and two steps back.” India recently modernized its bankruptcy law, but the new law has only just ended up in court.

The privatization of many state-owned companies, such as the utility companies, which he believes is necessary, is also taking a long time, says Bell.

"The problem is that these things mean a huge break with the status quo." There were repeated protests against planned land reforms in 2022.

However, if India opens up and solves its problems, it could quickly become more attractive to international investors.

Not every company is permanently satisfied with China's current role as the world's factory, says Bell.

“The answer to that is: you have to find a production site that is as big as China.

And that could be India.” However, that would not be a sure-fire success.

China has managed to settle entire supply chains, including logistics centers, in their own country, says Bell.

"That wouldn't be as easy in India as it is in China." For example, the one-party state of China could relatively easily clear huge areas of land for industrial zones, ports or railway lines.

"You can't do that in India."

India's geopolitical tactics

China also draws its power from its economic success and strong connections with the world;

many states depend on products and raw materials from China.

Modi, however, does not seem to want to wait until an economic boom automatically gives his country geopolitical influence.

India is currently taking advantage of the tensions surrounding the Ukraine war.

Modi refuses to condemn Russia's war of aggression against Ukraine, which initially drew criticism from his country - but soon sparked competition for his favor.

"Each of the other major powers -- the United States, Russia and China -- are aggressively courting India to deny their adversaries a strategic advantage," said security expert Derek Grossmann of the US think tank Rand Corporation.

In a divided world, everyone wants the great India in their camp.

The US stopped criticizing India for its neutral stance on Russia in the Ukraine war in April 2022.

From then on, it was said that US President Joe Biden and Modi would continue their "close consultations" on Russia.

China's then-Foreign Minister Wang Yi traveled to Delhi in an attempt to free India "from Washington's increasingly tight grip," as Grossmann puts it.

Russia once brought India into play as a mediator a few months ago - although negotiations are not really an option at the moment.

The aim of Modi and his Hindu nationalist government is "to create an independent superpower role for India, to accelerate the transition to a multipolar international system - and finally to cement the new status with a permanent seat on the United Nations Security Council," writes gross man

India remains wary of China

Beijing is watching all of this closely.

"India's rise has accelerated due to its comparative advantages in areas such as economy, politics and international situation," wrote Zheng Yongnian, a professor at the Chinese University of Hong Kong, in an essay last week.

The US worked to build a substantive relationship with India to contain China: "Both Western governments and Western capital are consciously helping India transform and improve its business environment." Allianz, which wants to ensure security and stability in the Indo-Pacific, especially with regard to China.

India is also a member of the Shanghai Cooperation Organization (SCO, with China, Russia and several Central Asian countries) founded by China, as well as the BRICS group with China, Russia, Brazil and South Africa.

But New Delhi is suspicious of Beijing and its claims to be a superpower in Asia.

Again and again there are border skirmishes on the long border of the two giant states across the Himalayas.

A few months ago, soldiers from both countries used sticks to fight each other.

“Delhi is of course aware that its willingness to become a stronger US partner irritates Beijing,” writes C. Raja Mohan of the Asia Society Policy Institute in Delhi.

"But Delhi also knows that it's its closer ties to the US that prompt Beijing to adopt a milder tone towards India." These are the first power games by a country that wants to have a say.

There will be an opportunity to do so in 2023: In November, India assumed the rotating presidency of the G20 group of leading industrialized and emerging countries.

Source: merkur

All news articles on 2023-01-24

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