Indian Boom and Chinese Mirror

From “unbelievable India!” to “inevitable India!” For decades, boards around the world have questioned whether it is appropriate to invest in India, a country with constant but illusory promises of growth. That question is redundant today, just ask J.P. Morgan Chase or Apple, Walmart CEO Warren Buffett or Tesla owner Elon Musk… Those intent on navigating the murky waters of the modern world will no longer find India under the heading of sacred cows or Gandhi, Mother Teresa, or the Beatles in Rishikesh, but in a group of receding joggers.

However, to speak of the Indian Age seems to us a premature exaggeration. Our era is a time of hyperbole followed by lethargic distractions, the one-dimensional immediacy of soundbites and tweets. And all this at the expense of that long view, with which the great historian Fernand Braudel invited us to measure the pace of History. In the early 2000s, there was talk of America’s second century, after the first, described by Henry Luce in 1941, which, however, had to wait until the end of the war to fully deploy its forces: both were consigned to the capacious archives of history; subsequently the Asian Century, measured by the snapshot of the Asian Tigers mentioned in Pareg Khanna’s successful and brilliant essay; then on to the Chinese Century, the son of President Xi Jinping’s Chinese dream. The shortcuts that arose from the desire to hang a label around the neck of a hybrid and elusive era, as if defining it, helped calm us down. By contrast, in a world that is apolar rather than multipolar, victimized by polycrisies that quickly follow one another, the image of the nobody’s world described by Charles Kupchan or the world of Ian Bremmer’s Zero-Sum Game comes to mind.

The Indian Century story is thus an exaggeration, as journalists once used a shortcut to unite India and China into a single mega-community, Chindia, which was soon destined to fizzle out. Two Asian giants that look at each other across the peaks of the Himalayas and vie for leadership in the Global South – a vast caldera that is home to 88 percent of the world’s population and now produces more than half of the world’s GDP – they are not yet playing in the same group and may never be, even though they have a few things in common. Based on the meaning of History united by the calendar, in 2047, the centenary of independence from Britain, India projects itself as a developed country, just like China, a hundred years after the PRC was proclaimed. Both have a vivid historical memory of colonialism and cultivate a proclaimed sense of revenge; both take a long-term view and patiently weave their web, remembering that until the first decades of the nineteenth century they were the two largest economies in the world; both are proponents of the elusive concept of Asianness, that is, foreignness relative to the West. If it is instructive to read Chinese President Xi Jinping’s statements about China’s march toward modernity, so too are the statements of Indian Prime Minister Modi, who on the eve of the start of voting for the 2024 legislative elections said: “During this new mandate, we will chart our nation’s course for the next thousand years. We will make India a symbol of growth, prosperity, and global leadership.”

But that’s where the similarities end. China has changed the world. Will India be able to do the same in the next 30 years? Perhaps, but doubts are legitimate, if only out of prudence. With virtually equal populations – but India’s population in 2100 will be twice that of China – India’s GDP is five times smaller than China’s, and the Middle Kingdom’s exports alone are worth as much as the entire Elephant’s GDP. Nobel laureate Amartya Sen recalls that in the 1960s India was ahead of China in education and health care, but today it lags behind Bangladesh and Sri Lanka, and China’s per capita income in the same period was 75% of India’s, but today it is four times higher. China’s per capita income in 1991 was 158th in the world, and today it is 75th, while India was 161st, and today it is 159th, meaning it has essentially not risen. Wages in India are on average five times lower than in China. The contrasts, while strong in China, are explosive in India: Piketty of the Paris School of Economics points out that one percent of the population receives 23 percent of income and has 40 percent of wealth. India, Naya Bharat, or New India, in terms of social contrasts, is becoming a raj of billionaires: today, the powerful no longer hide their wealth as they once did, they no longer drive around in modest Ambassador cars with tinted windows, they flaunt their wealth.

In India, a glass is never full or empty, it is always half full and empty. In fact, if one were to limit oneself to reading statistics, it would be unfair to the reality that is beginning to speak more Hindi than Mandarin. China’s economic and social dead end is evident after 50 years of uninterrupted growth, its huge debts and its irreversible demographic crisis: a middle-income country that risks growing old before it achieves prosperity. By contrast, India, with a median age of 28, is pushing the gas pedal: consumption is booming, and innovation is accelerating. The impressive expansion of the middle class continues at an extraordinary pace: the number of families with incomes above $10,000 a year has grown from 2 million in 1990 to 70 million in 2022, and, according to the UN, 415 million people have been lifted out of poverty since 2005, while the percentage of poor people in India has fallen from 27 to 16 percent of the population in five years. One fact should grab attention: India’s global share of knowledge-intensive services has doubled in 15 years from three to six percent. China continues to focus on exports, struggling to develop its domestic market, while for India there are no external constraints yet: it can afford to grow over the next decades within its own borders. Numbers matter: even just five percent of wealthy consumers in a country of 1.5 billion souls represents a market equal to the population of all of Germany. Moreover, the international context looks favorable: India seems to offer a third way in a world rocked by confrontation between the United States and China, as well as by Russia’s invasion of Ukraine, and New Delhi is being fought over by Western governments looking for a convenient counterweight to Beijing: India shares interests, not values, with the West.

India has finally started the race, the Elephant has indeed grown wings, but the enthusiasm seems premature: it will take at least a generation for the road in front of it to turn into a highway. Nowhere is it written that if China collapses under the weight of its own contradictions, India will be ready to take its place. It is the country with the lowest per capita income among G-20 members, it is one-thirtieth of America’s, and it may take decades for it to reach Indonesia’s level; 46 percent of the population over the age of 25 has not completed elementary school; nearly half work in agriculture but produce only 15 percent of national wealth; India’s exports are only 2 percent of world exports; no more than one in four women work; it sends probes to the Moon and Mars, but more than half of children under the age of 14 are unable to multiply and divide, despite the fact that 1.5 million engineers and 25,000 graduates of very prestige high-tech institutes get their degrees each year. Moreover – and this seems to us an important element of reflection – China has benefited from a long period of openness to trade with the West, but the international environment today is much less benevolent. Not to mention that India, because of its idiosyncrasy to pacts and alliances, has been left out of major pan-Asian economic architectures, while Vietnam, Malaysia, Indonesia, and Singapore, direct competitors, have benefited from it.

To summarize, as the Americans say: “China got there first,” and it is unlikely that the USA and Europe are willing to “welcome” another China that contributes to the shrinking of what is left of their manufacturing industries. We are in a phase of globalization that is fragmented but far from complete, and in a global economy worth $105 trillion by 2030, seven of the ten largest economies will be located in the south of the world, led by China, India, Japan, and Korea. And an attentive observer will see that Africa has not quite joined the Chinese and Wagner, but in turn has also started the race. In 2010, Asian GDP was 20 percent of the total, today it’s 35 percent; by 2035, the GDP of the developing world will exceed that of the Euro-American region; Exxon, the largest of the old Seven Sisters, is no longer even listed on the Dow Jones index, and Taiwan’s TSMC and Korea’s Samsung are virtual global semiconductor monopolists…

In conclusion, India is not a chopsticks-based Asia and will never be a copy of Chinese ginseng in curry sauce. But this is not bad news in any way, in fact it contains two pieces of good news: not a dictatorship, but a democracy, albeit noisy and colored by a belching identity, is in the driver’s seat of the global economic locomotive; for the first time, a developing country is being modernized while abiding by the rules of the democratic game. It’s no small thing these days…