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Past Event

Inside Out: India and China

On September 8th, Brookings India and the US Embassy, New Delhi hosted a lecture by Dr. William Antholis (Managing Director of Brookings Institution) on global dynamics and transitions in governance occurring in India and China. The move to new leadership in both countries has reflected a bottom-up, ‘inside-out’, approach to domestic governance while also affecting dynamics between India, China and the US – the vertices of a newly emerging triangular framework, critical to the future of the global order.

Structures of Governance

India and China, two of the world’s largest emerging economies have recently seen transitions to new leadership. In 2013, Xi Jinping assumed leadership as the Chinese premier while Narendra Modi was overwhelmingly elected Prime Minister of India earlier this year. Both leaders have taken their positions after having had extensive experience in local governance. Modi was the Chief Minister of the state of Gujarat prior to assuming office as Prime Minister, while Jinping was Governor of both the Fujian and the Zhejiang provinces in his early political career. The question that arises is whether these two leaders, both of whom have expressed ambitious goals for change and economic growth, will be able to transition from local governance systems to a central one, thus recreating the success they had within their respective state and provincial governments at the national level.

The primary challenge lies in creating a balance between giving states and provinces autonomous power to implement their own governance, innovation and revenue generation strategies, while maintaining the collectivity of nationhood. While this is a question that is particularly relevant for the two Asian nations, the US also faces this challenge. The success of nation-wide schemes (such as healthcare) ultimately lies in the implementation at the state level. China and India have similar distinctions within their respective states and provinces. India’s backward states, (like Bihar and Uttaranchal) have a higher population, rates of poverty and unemployment than other states – and as such, are similar to the badlands of China. The forward leaning states of Gujarat, Tamil Nadu and Maharashtra are similar to the heartlands of China, where revenue generation is greater and development efforts have seen fruition. Both nations face the same challenge of integrating these two demographics – sustaining and boosting the performance of states that are already ‘leaning forward’, while providing new avenues for development and economic growth in the badlands.

The Dynamics of the Triangular Framework

The dynamics of the triangular framework with India, China and the US will significantly depend upon the bilateral relationships between the nations.

The US-China Bilateral

The US and China share a transactional relationship with particularly strong economic ties. Both countries have the world’s largest bilateral economic relationship, with China holding the largest amount of US debt, worth 1.25 trillion dollars. This stable financial and trade relationship was initiated by key business stakeholders in both nations and has continued to strengthen over the years. In addition to an economic relationship, the US and China have also partnered in areas of environmental concern as air pollution in China has increasingly become politically toxic. However, both nations have also had some points of contention over the years. Human Rights has been an important area of disagreement between the two nations with the US pointing out the inaction towards a number of human rights violations in China. There have also been instances of trade dispute, cyber theft and growing apprehension of the strength of the Chinese currency.

The US-India Bilateral

India shares the unique distinction of being the only large global player with strong bipartisan support from the US for strengthened bilateral ties. The US and India have a relationship that is based on shared democratic values, with both nations finding comfort in transparent dealings firmly rooted in the democratic system. The two nations share a growing economic and trade relationship, with India having a trade surplus with the US. Over the years, there has been steady progression in cooperation between the two countries at a strategic and political level. There has, however, been some criticism that the Indo-US relationship has not lived up to its expectations. This is largely due to the fact that so far, the two nations have had a difference in opinion with regard to their respective expectations from democracy. There has been contention within the WTO, and the two nations have disagreed on matters of political instability in the central Asian region. However, there is great potential for this relationship to grow in the future with the new Modi government presenting a blank canvas for stronger, renewed bilateral ties and increased foreign investment. With shared democratic values still in place, the two nations can further bridge gaps in their economic relationship. On the political front, the US could possibly use its strong ties with India to help forge better relations with Iran as India is the only other large global player with good relations with both Iran and Israel.

The India-China Bilateral

This bilateral is seemingly uncharted territory for both nations, with China unsure of what to make of India’s growth. China views India’s information-based economy and its unprecedented growth in innovation and technology with both concern and admiration, as although China has seen tremendous economic growth, it has struggled with increasing entrepreneurship and innovation within the nation. This provides an avenue for collaborative learning and development for the two nations. In the future, these two nations could see greater cooperation in the area of economic development, particularly through the recently created BRICS bank. As the two largest nations in the lot, it is expected that a majority of the efforts of the bank would be targeted towards increased funding for development projects in Asia, providing opportunity for collaboration.

Potential global dynamics for the future

The course of the respective bilateral relationships will ultimately determine the future of this trifecta. Broadly however, there are three possible ways this dynamic could proceed:

  1. One of the three parties could fall out of the trifecta. While there is potential for stronger bilateral relations on all sides, the differences in political, humanitarian and economic ideologies could lead to one of the three parties breaking off ending up in a bilateral relationship with the two remaining players.
  2. The growing distrust of the third party could worsen leading to the dynamic changing drastically. As it currently stands, each party harbors some skepticism towards the bilateral relationship between the other two parties. If this were to go unchecked, it could lead to a reordering of the triangular framework.
  3. With a new government and the greatest economic potential of the three nations, India could very well become the point of convergence for the three nations. Stronger Indo-US relations could serve as an example for China by eliminating some of the distrust they have for the large western superpower. India also has the potential to attract foreign investment from both China and the US, which could lead to stronger ties between the two nations.

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