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Minhaz Merchant

Minhaz Merchant is the biographer of Rajiv Gandhi and Aditya Birla and author of The New Clash of Civilizations (Rupa, 2014). He is founder of Sterling Newspapers Pvt. Ltd. which was acquired by the Indian Express group

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The New G3: US, China And India

With the additional assets of democracy and laws, India’s role in a putative G3 will prove pivotal.

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A triangle of powerful nations has historically fashioned the warp and weft of geopolitics. In the late nineteenth century, the three great powers were imperial Britain, the United States and a rising Germany. In the mid-twentieth century, the US, Britain and the Soviet Union formed the dominant troika. 

As the twenty-first century enters its second quartile, the three most important nations will be the US, China and India. Global power is a combination of hard and soft power. Despite India’s slowing economic growth, its momentum makes it inevitable that it will emerge as the third largest economy in the world by 2030 with an estimated nominal GDP of $8 trillion. This assumes an average annual growth rate of seven per cent and an inflation rate of three per cent. On this basis, nominal GDP will double from $2.9 trillion in 2019 to around $6 trillion in 2026 and further to $8 trillion in 2030.

Poverty will decline gradually, the fall picking up speed after 2025. By 2030, Indians living below the poverty line as defined by the World Bank could fall to below 10 per cent of the population – which will begin to plateau at around 1.5 billion. 

The nominal GDPs of the world’s three largest economies in 2030 are estimated to be: US $30 trillion; China $25 trillion; India $8 trillion. China will thus narrow its GDP gap with the US. The gap between China and India too will narrow from nearly 5:1 today to 3:1.

A second key component of hard power is military. China could rival the US over the next decade at sea, in the air and on land. Its defence budget is approaching $200 billion (four times India’s and about one-fourth America’s). Beyond economic and military power though is realpolitik. Through history, two countries have allied to confront a third for domination. In the last century, Britain and the US were ranged against the Soviet Union. Today, Communist China has replaced the Soviet Union as the main threat to the US-led Western alliance while India is set to take the place Britain occupied by America’s side for over a century. 

With China and the US locked in a trade war, India has several options. It is the balancing pivot between the two superpowers. Despite tensions between Washington and New Delhi over high import duties, the US has sought to bring India ever-closer within its geopolitical orbit. China too recognises the importance of India as the third angle of the future triangle of power. It has adopted a dual strategy to minimise the impact of a US-India axis challenging Beijing.

The first strategy is to contain India’s economic and military rise by using Pakistan to keep India off-balance. That is the core reason for China’s unyielding support for Pakistan. Beijing treats it own Muslims in Xinjiang harshly to stamp out every vestige of radical Islam in China but is comfortable investing in Pakistan, a state sponsor of terrorism. Beijing’s second strategy is to use the “Wuhan spirit” to prevent India from drifting too far into America’s geopolitical orbit. 

Like water, geopolitics finds its own level. The centuries of European domination are over. They began with slave trading in the 1600s and colonial invasions in the Americas in the early 1700s and later in Asia and Australia. These were followed by the creation of Western-dominated institutions like the United Nations, World Bank and the IMF. When gunships were no longer viable, these institutions projected power through global finance and UNSC vetoes. The G7 was an outcome of this world order. The grouping comprised the world’s most powerful economies after the Second World War: the US, Britain, Canada, France, Germany, Japan and Italy. 

Of these only the US will count as a global power in 2030. China has emerged as the principal counterweight to Washington in what is today effectively a duality of power. American concerns over China’s rise are amplified by worries over cyber security and Chinese efforts to steal intellectual property rights (IPR). The British Defence Secretary Gavin Williamson was recently dismissed by British Prime Minister Theresa May for allegedly leaking Britain’s plan to grant controversial Chinese telecom network giant Huawei permission to build a part of the UK’s 5G architecture. Washington has banned Huawei and is putting pressure on European allies to do the same. India too plans to use Huawei telecom network infrastructure for its 5G rollout next year. That could now face pressure from Washington.

A G3 triangle of power comprising the US, China and India in the second quartile of this century (i.e., after 2025) will have conflicting national interests though India and the US clearly have more in common: democracy, language and laws. Moreover, US weaponry is well integrated into India’s armed forces. 

China’s totalitarian state poses problems for the India-US axis. Apart from cyber security threats and IPR violations in the US, India continues to have tense relations on the Line of Actual Control (LoAC). Despite over 25 rounds of border negotiations, there has been little movement to resolve the dispute over the colonial McMahon Line that demarcates the two countries’ borders. 

India’s best option now is to focus on economic growth. China has acquired its status as a global power by doubling its economy every seven years since the mid-1990s. India will need to do the same to achieve the critical mass of a middle-income country. By 2030, with nominal GDP at $8 trillion and a population of 1.5 billion, India’s per capita income will rise from $2,000 today to just under $6,000.

China’s current per capita income is around $9,000 which puts India close to the level needed to be a major global trade player. India’s total merchandise and services exports in 2019 were $535 billion. These should cross $1 trillion by 2026, assuming an average annual growth rate of 10 per cent for the export of services and goods. 

That is the launch pad China built 15 years ago to move into the big league. India must aim to do the same. With the additional assets of democracy and laws, India’s role in a putative G3 will prove pivotal.

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