ASIA’S two giants – China and India – are currently the fastest growing economies. Over the past three decades, China’s switchover from an autarkic, centrally-planned economy towards a socialist market economy underpinned by global economic integration has generated robust economic growth. China is the fourth largest economy in the world in terms of GDP and when adjustments are made for the differences in domestic purchasing power parity of national currencies, China becomes the world’s second largest economy. If China maintains its current level of growth, it could overtake the US economy as early as 2025.
Side by side, though not as spectacular as China’s, India’s post-1991 economic reforms and global integration have helped the economy to grow at more than six per cent since 1992. India’s average annual growth in GDP reached 7.3 per cent in 2003 and fluctuated between 8.5 to nine per cent since 2004, placing it among the world’s fastest growing economies. If India maintains its growth momentum over the next several years, it will propel the current 800 billion US dollars economy into the rank of the world’s five largest economies.
This raises a number of questions: Which country’s developmental path is more sustainable and why? Can the late-starter India overtake its giant northern neighbour? Will India’ trajectory prove more enduring? What does the rise of China and India mean for the United States in terms of the global economy and for international security and stability?
This book tries to provide the answers to such and many other related questions.
To begin with the book synthesises the core ideas, policies and actors as well as the interplay of domestic and external events that have influenced and shaped the political economy of pre-reform India (1947-91) and China (1949-78).
It proceeds to provides a comparative review of China’s and India’s approaches to global economic integration or the “transition to the socialist market economy” as referred to in China and the more modest “economic liberalisation” in India.
It then examines these same issues with reference to India and why the contemporary era of globalisation has proven conducive to India’s rise. Both Chapters 3 and 4 critically appraise the two countries’ macro-economic structures – agriculture, industry, banking, capital markets and financial systems, including trade, business and commerce.
By tracing the evolution of Sino-Indian relations from the heady years of 1950 of Chini-Hindi bhai-bhai; the 1962 border war and India’s humiliating defeat; the antagonism and hostility during the Cold War; the gradual ‘thawing’ of hostilities after Prime Minister Rajiv Gandhi’s visit to China in 1988 and Chinese Premier Wen Jinbao’s visit to New Delhi in 2005 and the signing of the “strategic and cooperative partnership” between the two countries.
It explores the evolving relationship between the US, the most powerful democracy and India, the world’s largest democracy. It illustrates the relations that have traversed from estrangement during much of Cold War towards a more “productive engagement”. Here it needs to be said that though both China and US are major trading partners, there is concern in the US over an ascending China.
The question what the rise of China means for the US and indeed, for the global community is discussed here. What is most intriguing to the world is whether China will act a “responsible stakeholder” or use its power to expand its own interests. The author of the book feels that Chinese and American interests will both converge and diverge, making it difficult to predict China’s behaviour.
The author in general is of the view that the world’s two oldest civilisations are trying to shake off the burdens of history to claim their “rightful” position in the world after overcoming the challenges they face and what their respective rise will mean to the world.
This book is a good account of the challenges faced in the current political scenario by both China and India and what would be USA’s role in maintaining a balance with them.
(Cambridge University Press, 4381/4 Ansari Road, Daryaganj, New Delhi-110002; www.cambridge.org)