India's Response to a Rising China
Economic and Strategic Challenges and Opportunities

Dr. Pant is a Reader at King’s College London. He is a contributor to Strategic Asia 2011–12: Asia Responds to Its Rising Powers—China and India, which explores how key Asian states and regions are responding to the rise of China and India and is the eleventh volume of the series.

Asia specialists identify China as the economic frontrunner in Asia, yet India is expected to overtake China in population within the next fifteen years. Does India’s democratic status, coupled with a potentially massive labor input, create any meaningful advantage for the subcontinent?

The chapter “India Comes to Terms with a Rising China” by Harsh V. Pant appears in Strategic Asia 2011-12: Asia Responds to Its Rising Powers—China and India (September 2011).

To a certain extent, I think it does. Many have argued that India is a more viable long-term investment destination and a more valuable economic partner given the differences in political institutions between China and India. But there is a big debate on this issue. India as a democracy has operated in a messy manner, with coalition governments being the norm for the last two decades. Some people argue that this is the root cause of its poor economic decisionmaking. Those making this argument compare India with perceptions of official Chinese decisionmaking and argue that, at the moment, China seems to have tipped the scale.

A contrasting argument puts the long-term viability of India as more profound. Because of the country’s sheer size, it has an advantageous labor input for the global economy. Also, because India is a democracy, it is fundamentally more efficient at making decisions in the long-term. It may be messy in the short-term, but for many, India is a better long-term bet.

In your work, you discuss a history of attempted cooperation between India and China. You also list significant common interests such as energy security and global economic security. Do opportunities still exist for India and China to cooperate?

There are a number of issues on which these countries have been cooperating, and there is a strategic reason behind this collaboration. For a long time, both countries were worried about American supremacy and how second tier countries like themselves could work together to balance American power.

More recently, these countries have had to coordinate their actions on a number of global issues. Most salient are, of course, the climate change negotiations in Copenhagen and the Doha trade negotiations, where one led and the other followed and, as a result, the negotiations collapsed. Western countries have categorically blamed India and China for the collapse of these negotiations. It is evident that these countries can coordinate on global issues, and both see a larger reality that the Western-dominated global economic order needs to be challenged by emerging powers, especially India and China.

The recent global financial crisis has prompted demand for the restructuring of global economic institutions, and China and India have taken the International Monetary Fund (IMF) and the World Bank to task in order to gain a greater role. The two states are also “sovereignty hawks” and have opposed military interventions led by the Western states.

Specific to energy security, do you see an opportunity for cooperation?

A few years ago, there was a lot of attention to the notion that China and India might cooperate on energy security, as they do have some common interests. That relationship did not materialize, and instead they compete against each other in drilling for oil reserves and in controlling oil fields across the globe. There is a growing sense that energy is a zero-sum game, and since it is such a crucial factor in their economic growth, both countries want to secure their energy supplies. That early potential for cooperation is all but gone.

Many experts are taking note of China’s focus on military acquisitions. Your writings discuss India’s acquisition strategy, and you note that India has reached out to allies such as Japan, South Korea, and the United States. Do you see a real opportunity for India to balance the strategic environment in Asia?

The rise of China has been quite rapid in the sense that Indian and American strategists had not contemplated so sudden and so dramatic an ascent. Many countries in the Asia-Pacific region are worried about China’s rise because it is happening at a much faster rate than anticipated. And the question that has been posed is: what are the real intentions of China in possessing such a major military force?

Many states in the Asia-Pacific have argued that India should seek to balance the region. And, of course, the United States was one of the first countries to acknowledge India’s role, when the Bush administration pushed India to become a major player in the region. It is not entirely clear that India is ready to play that sort of role. New Delhi has yet to reach a domestic consensus on what kind of role it wants to play. If it does want to perform the part of balancer, that would mean acknowledging some significant divergent interests with China.

For a long time, India has relied on the United States, because it has some significant conflicting interests with China. Indian elites would indeed like to see the formation of a balancing coalition. There is a growing perception that the United States on its own will not be able to shoulder all of the responsibility. Other countries need to respond to restore regional stability, and India has a stake in that stability.

To what extent do you feel that India is hampered by its own rampant poverty as it allies itself to developed economies like Japan, South Korea, and the United States?

The major issues that confront India today are still domestic: poverty, socio-economic inequality, an imbalance between the aspirations of a rising middle class and the inability of governing elites to meet those aspirations. There is a large majority of Indians who cannot provide for their basic necessities. These are the political issues that will determine India’s global role. Until India can get its domestic house in order, it will be very difficult to define the country regionally and globally.

There is also a question of leadership. India is at the moment facing a governance deficit. With a leadership vacuum, there seems to be a sense of drift in the country on major policy issues, both domestic and global, and so there is no articulation of the role India wants to play in the world. This is something important for any country as it rises in the global hierarchy. For India not to articulate that role has been a major factor hampering communications with its allies, friends, and adversaries regarding what role India sees for itself in the region and in the world.

You have spoken about significant divergent interests between India and China. What do you think is the core issue?

China’s various actions in recent years seem to have convinced Indian elites that China does not take Indian security concerns very seriously and does not recognize India as a major global player. For a long time, the political elite in India were unwilling to acknowledge that there were significant problems in Indian relations with China. That acknowledgment took a long time in coming. If you recall, in 1998 the Indian defense minister had made a statement that China is India’s number one enemy. That created a major backlash, and many Indian elites immediately suggested otherwise.

The arc of Indian foreign policy since then has been a reaction to China’s growing profile. Now there is an acceptance of the reality that significant divergent interests exist. Yes, there is some convergence on environmental and economic issues, but the relationship remains fraught with tension. That does not mean that India should take on China militarily, but it does mean that New Delhi should respond more proactively to what China seems to be doing in regard to India and the surrounding region. That realization pervades Indian policymaking today. This is a very crucial change in Indian foreign policy and will determine most of the initiatives that India will take regarding China.

This interview was conducted by Erin Fried, the Program Coordinator for the Political and Security Affairs group at NBR.