Much has been said about India and China slugging away at each other. These are the two growth engines of the global economy and the pair have recently announced that they will have more high level visits and enhanced communications to enhance bilateral ties, which makes a lot sense. The two are looking at collaborating on tenders for the global pharmaceutical market, which basically means they would control it.
According to Michael Witt, Affiliate Professor of Asian Business and Comparative Management at INSEAD, India could well pull ahead of China in years to come. It's like the race between the hare and the tortoise.
He offers several reasons for this. First, is China's one child policy which has condemned China to have an ageing, and therefore less vibrant, population. Secondly, China does not have the institutions to ensure it can maintain its breakneck economic growth. And finally, China is entering a period of rivalry and potential conflict with the United States, which could play to India's advantage.
Witt writes: "It is in this context that India may emerge maybe not triumphant, but possibly privileged. For realists, a stronger India represents a useful ally for balancing China's increasing economic and military strength. For liberals, India tends to be more palatable as a partner because it is a fellow Western-style democracy, albeit an imperfect one with a poor human rights record. It is consequently possible that the United States will begin to offer preferential treatment to India just as friction with China grows. Such a move would not be unprecedented. During the Cold War, the United States promoted economic growth and development among allies such as Japan, South Korea, and West Germany by providing, among others, access to finance and markets."
In the meantime, China and India will continue to reshape the global economy. But we need to watch this space if India pulls ahead of the Chinese industrial machine.
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