As India considers how to make the most of its demographic dividend, China has reported its first annual population decline since 1961. At the same time, the West is courting India for trade and security partnerships, and attempting to shift its supply chains away from China, in part to limit Chinese technological development. And while analysts predict that India will become the world’s third-largest economy by 2027, many are now questioning China’s ability to overtake the United States as the world’s largest within the next few decades.
In this Big Question, we ask Pranab Bardhan, Brahma Chellaney, Pinelopi Koujianou Goldberg, and Yi Fuxian whether the economic fortunes of India and China will continue to diverge, and what that could mean for the global economy.
BRAHMA CHELLANEY
Chinese President Xi Jinping seems to be in a hurry to achieve what he calls the “Chinese dream” – that is, China’s global preeminence. With a demographic crisis looming, economic growth stalled, and the global environment becoming increasingly unfavorable, Xi seems to have concluded that China has a narrow window of strategic opportunity to shape the international order in its favor. So, his appetite for risk has grown.
But, while China remains a middle-income country, long-term structural constraints – including a shrinking and rapidly aging population, slowing productivity growth, and massive debts – are already beginning to bite. This could severely hamper Xi’s ability to advance his ambitions and even threaten China’s status as the world’s factory.
India, by contrast, has demographics on its side. With a median age of 28.4, India is one of the world’s youngest countries. This large youthful population is propelling rapid economic growth, contributing to a consumption boom, and driving innovation, reflected in the emergence of a world-class information economy. About one-fifth of the world’s working-age population is likely to live in India by 2025.
India has about 600 million more people than all of Europe’s 44 countries combined. Moreover, India is the first developing economy that, from the beginning, has strived to modernize and prosper through a democratic system, despite the challenges posed by its cultural and ethnic diversity. And, unlike China, India is not seen as hungry for the land and resources of others, and its rise has not been accompanied by greater assertiveness.
But for the century to belong to India, the country must make the most of its relatively low labor costs and Western companies’ growing interest in shifting production away from China to become a manufacturing powerhouse. This would not only be good for the global economy; India’s accelerated rise could also help counter Chinese expansionism.
Brahma Chellaney, Professor of Strategic Studies at the New Delhi-based Center for Policy Research and Fellow at the Robert Bosch Academy in Berlin, is the author of nine books, including Asian Juggernaut; Water: Asia’s New Battleground; and Water, Peace, and War: Confronting the Global Water Crisis.
Stagecraft and Statecraft 