7 PM | An Asian engine driven by India and China| 9th December 2019

Context:Role of India and China in new world order.


  • The Asian continent, home to sixty per cent of humanity, high economic growth rates and a burgeoning middle class and markets.
  • The Asian landmass straddles the Indo-Pacific. Asia is increasingly being defined in the broader geographical context of the Pacific and Indian Oceans through which pass the key Sea lanes of Communication (SLOCs) for energy, raw materials and trade. 
  • With some of the highest military expenditures in the world, Asia is in a state of flux. Territorial and maritime disputes have the potential to cast a shadow on peace and stability.

Asia Pacific:

  • The ‘Asia Pacific’ relates to that part of Asia which lies in the Pacific Ocean.
  • It is an idea proposed and supported by Asia’s Pacific powers who sought a term to describe their common region.
  • The Asia Pacific, therefore, has three major constituents: north-east Asia, south-east Asia and Oceania (South Western Pacific).
  • Despite the nomenclature suggesting to the contrary, India is not a part of the region.
  • The Asia-Pacific is more of an economic conception, rather than a security related notion.
  • Since the late 1980s, it has been popular as a zone of emerging markets that have been experiencing rapid economic growth.
  • The only multilateral institution that effectively represents the Asia Pacific, therefore, is the Asia-Pacific Economic Cooperation forum (APEC), which does not include India.


  • The Indo-Pacific is an integrated theatre that combines the Indian Ocean and the Pacific Ocean, and the land masses that surround them.
  • Even though it is still an evolving concept, most analysts see it as an idea that captures the shift in power and influence from the West to the East.
  • Its geographical expanse is still undefined but it is said to range from the coast of East Africa, across the Indian Ocean, to the Western Pacific, including countries like Japan and Australia.
  • It is both a strategic as well as an economic domain comprising important sea-lines of communication that connect the littorals of the two oceans. Since it is primarily a maritime space, the Indo-Pacific is associated with maritime security and cooperation.

New World Order:

  • The term first came into prominence after World War I, when US President Woodrow Wilson used its variant (“new order of the world”) while proposing the formation of the first global political organisation, the League of Nations, in order to “end all wars” and consolidate the victories of his European allies in the name of collective security and democracy.
  • Post World War II, the term is used with reference to the birth of several international institutions in the mid-20th century such as the United Nations (UN), World Bank, International Monetary Fund (IMF), General Agreement on Tariffs and Trade (GATT) which gave way to World Trade Organisation (WTO), International Court of Justice (ICJ), Nuclear Non-Proliferation Treaty (NPT), etc.
  • In recent decades, the term has been associated with the US-led neoliberal order of free-trade globalisation which followed the collapse of the Soviet Union. In fact, the term was popularised by President George H. W. Bush, when on the eve of the First Gulf War (1990) he unabashedly declared “there is no substitute for American leadership” after the Cold War and that this uni-polarity is about to herald a “new world order”.
  • In recent decades, the term has been associated with the US-led neoliberal order of free-trade globalisation which followed the collapse of the Soviet Union. In fact, the term was popularised by President George H. W. Bush, when on the eve of the First Gulf War (1990) he unabashedly declared “there is no substitute for American leadership” after the Cold War and that this uni-polarity is about to herald a “new world order”.
  • In fact, India’s idea of a future world order has a polycentric construct, in which multiple actors with disparate political systems, cultural traditions and economic interests forge interdependent relations, in the absence of hegemonic polarities. Thus, India has pursued a policy of building multiple alignments – the G20, BRICS (Brazil, Russia, India, China and South Africa), Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), and the Shanghai Cooperation Organisation (SCO), even as it seeks a permanent seat at the UN Security Council.

Changing scenario in the world:

  • Traditional and non-traditional security threats (economic and military competition, climate change, piracy, radical ideology, cyber threats, drug and human trafficking, and energy and food security) have grown in magnitude. 
  • Trade and technology are at the heart of a new round of competition and contestation. 
  • Nationalism and regionalism are on the rise. There is less multilateralism but greater multi-polarity.
  • Hedging and multi-alignment are the order of the day.

Obstacles lying ahead:

  • Protectionism:
  • Protectionism refers to government actions and policies that restrict or restrain international trade for the benefit of a single domestic economy.
  • Protectionist policies are usually implemented with the goal to improve economic activity within a domestic economy but can also be implemented for safety or quality concerns.
  • The liberal trading order has encountered protectionism in the form of tariff and non-tariff barriers.
  • India’s service exports which touch $29.6 billion in the U.S. market, and pharma products, especially generic drugs, which account for 20% of global generic medicines, have barely been able to scratch the surface in the Chinese market.
  • Geopolitical considerations are increasingly driving trade and investment decisions; on the other hand, geo-economic forces unleashed by China’s economic rise are redefining the geo-strategic landscape of the Indo-Pacific region.
  • Mercantilism:Mercantilism was an economic system of trade that spanned from the 16th century to the 18th century. Mercantilism banked on the principle that the world’s wealth was static, and consequently, many European nations attempted to accumulate the largest possible share of that wealth by maximizing their exports and by limiting their imports via tariffs. There is a looming danger for developing countries on account of ‘zero-sum’ mercantilism
  • Global Economy:The global economy is likely to grow at its slowest pace in a decade, at 3% in 2019.
21st century: Asian Century The Asian Century refers to the dominant role that Asia is expected to play in the 21st century due to its burgeoning economy and demographic trends. The concept of the Asian Century gained credence following the rapid economic growth of China and India since the 1980s, which propelled both of them to the ranks of the world’s largest economies.Asian economies are on track to become larger than the rest of the world combined in 2020, in purchasing power parity (PPP) terms.Growth is being powered by China and India, now two of the biggest global economies, as well as smaller nations, such as Indonesia, Vietnam, the Philippines, and Bangladesh.  

India and China: Engines of growth

  • Both India and China are expected to contribute to the global economic growth in the future.
  • India is also transforming into a knowledge-based, skill-supported and technology-driven society.
  • A liberal FDI regime combined with a youthful demographic profile makes India an attractive destination.
  • India attaches great importance to its relations with China, a large trade partner in goods.
  • Since 2015, there has been a spurt in Chinese FDI in India (at around $8 billion).
  • There is great scope for China to participate in flagship initiatives such as the ‘Smart Cities Mission’ and ‘Skill India’ programmes.
  • As the world’s second-largest economy, China can and must play a constructive role globally and within Asia to help the world return to higher growth rates. 

Peace and Cooperation is the key to success:

  • India faces a huge and rising trade imbalance. Bilateral trade today is approximately $95 billion. The decision at the Mamallapuram Summit, in October, to set up a new mechanism to discuss the trade imbalance, is aimed at addressing this issue.
  • There are suggestions that the era of the World Trade Organisation (WTO)-anchored, Most Favoured Nation (MFN)-based regime is drawing to a close and that the future lies in a web of free trade agreements. However, there is still scope for India and China to work together to strengthen the WTO.
  • The RCEP should have a wider ambit, including trade in services. Many countries (especially Japan which still boasts the world’s second-largest developed economy) have openly favoured a more accommodating position that addresses India’s concerns and facilitates its joining the RCEP. China too should pro-actively work to ensure India’s membership.
  • Beyond jointly training Afghan diplomats under the “India-China Plus One” framework, China and India could explore the potential to work together on Asian infrastructure and connectivity development on the basis of equality and an open and transparent model under the Asian Infrastructure Investment Bank (AIIB).
  • As China’s presence in South Asia grows, greater transparency in its actions and closer consultations with India are also necessary to help allay concerns. China should also be mindful of its forays into the Exclusive Economic Zone of others.
  • As two of the world’s biggest importers of oil and gas, the two nations should have a joint consultative mechanism to protect the interests of consumers.


It is worth recalling Prime Minister Narendra Modi statement at the Raisina Dialogue in 2017 that “there is enough room for all Asian countries to prosper together, and that the Asia of rivalry will hold us all back.” It is the Asia of cooperation that will shape this century.


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