Tri-Polar World in the Making?

The problems and potential in India, China

By N. Gunasekaran

Trends in the global economy lead Deutsche Bank to project that by 2020 India will be the second-largest economy in the world, behind the United States, with China in third place and Japan pushed back to fourth. Another study gives the Indian economy the third largest position in the years after 2030.

The foretellers say that the present unipolar world would become bipolar and then in the next half-century a tri-polar world, consisting of USA, China and India. Why do they strike out Europe? In their view, it would be in wilderness then!

True, China had nearly a 10% annual growth rate for the past two decades, doubling income every six years and quadrupling national income in two decades. With $850 billion in foreign trade in 2003, China has achieved fourth place in the world economy. It has about 5% of exports in markets all over the world, mainly in the US. And it has 4% of world imports, receiving the most investment among developing countries.

Hence, China is considered a long-term threat to the US. Recently, Republican former Sen. Larry Pressler, while criticizing the US administration's decision to supply F-16 fighter jets to Pakistan, asked the Bush administration to adopt a pro-India stance, since India could act as a "major bulwark" for the US "against China in East Asia."

The increase in Chinese imports causes fear in US elite circles about a possible financial meltdown. US trade deficits exceed $600 billion a year and capital borrowing from abroad approaches 7% of GDP.

Now "Free Trade" advocates, including Sen. Hillary Clinton, D-N.Y., have changed their stances. They consider demand for an "import surcharge" as high as 50% on all Chinese imports.

Many analysts write that Americans' preoccupation with the war on terrorism and West Asia has deflected their attention from this menace. Then why do all predictions about the next half-century state that the US would preserve its pre-eminent status?

The right to have US dollars be treated as equivalent to gold in the reserves of all central banks across the world is advantageous for the US. That is, US trade deficits are shared by all nations. This possibility for the US to "tax" the rest of the world makes its pre-eminent position safe in the future also.

Taxing the whole world to serve multinational corporate interests makes the present world order most inequitable and unjust. The American "lifestyle" and prosperity demands the pauperization of others. The US corporate system is a system of plunder through military might.

The ongoing globalization further strengthens this inequitable order. To serve elites in India and in developing countries in Southeast Asia, Africa and Latin America, globalization has been bringing the latest consumer goods to their home market. That results in growing trade deficits and high debt, putting constant pressure on local currencies.

When commentators say that India is an emerging economic giant, they speak mainly of the Indian city of Bangalore, the hub of the information-technology industry. It is always under the influx of foreign and Indian companies since the supply of cheap programmers is inexhaustible there, crowding more than 150,000 software engineers. Here, companies can hire high-quality engineers, professionals that are said not to be found even in Silicon Valley.

These companies have invested huge amounts of money, though lesser than their investments in other countries. But the saddest part of the story is that these companies serve the global market more than the Indian market, and cater to the needs of a tiny percentage of India's huge work force. And rather than bringing in any new technology to India, they in fact suck out technology from India. They have invested either in developing software on demand or providing research assistance to their US counterparts, and not in manufacturing plants that provide a large local employment. These companies are provided with perks, privileges, tax breaks, tax write-offs and preferential treatment in the allocation of land and round-the-clock electricity supply.

In India, there is a huge domestic market, largely untapped due to lack of policies that promote productive employment and intensive growth. Instead, people are losing public services such as transport, health care and education. While the purchasing power of millions of downtrodden people is dwindling with mounting disparities in society, clichés such as "High-tech India" and "India as a global player coming ahead of China" become meaningless.

Compared to India, the Chinese have higher growth rates -- 10.8% and 11.9% in the last two decades in the manufacturing sector. This initial manufacturing growth contributed much to achieve a 13.5% growth in the service sector in the 1980s. The Chinese are more successful because they had engaged in globalization by and large on their own terms.

China's approach to the agrarian question is one of its major assets. Access to land for the peasantry had been a prerequisite for its survival, growth and accelerated modernization.

The Indian ruling political class has been evasive regarding this question since gaining independence. They still preserve the influential rural elites with huge accumulated lands in their hands. China's per capita GDP has now doubled that of India's.

Since China had already laid foundations, it was able to achieve many successes over the past 20 years, such as balanced economic growth, impressive urbanization with 200 million new urbanized sections, and tremendous capacity for technological absorption. But despite all of this progress, 60% of the population lives in poverty-stricken Western China.

So, Asian people, among whom the Chinese and Indians are the main contingents, must unite to oppose the savage dominance of American multinational interests in the global economy. The present world order, which preserves corporations' interests, has to be replaced by a meaningful equitable order. What is needed is not a unipolar or bipolar or tri-polar world, but a world that guarantees social justice to all its common people.

N. Gunasekeran is a writer and activist in Chennai, India.

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