Over the past months, the world has been straining to deal with increasingly unpredictable policy shifts originating from Washington. The US, in its fading years as world policeman, has seen fit to impose punitive tariffs on friend and foe alike, becoming utterly transactional in the process and resorting to strong-arm techniques to settle trade deals in its favour. Even as these shocks and dislocations have transmitted themselves across the world, they have also annealed out to reveal how other nations could deal with each other and with the US in a clearer way.

The US has reversed its doctrine from Roosevelt back to Monroe—from expansionism to withdrawal into the Americas. Finding its global footprint to be increasingly unsustainable, it has simultaneously chosen to cut back on its internal and external spending. With its apparent withdrawal from several regions of the world, particularly Asia, we suggest that the resulting power vacuum there could be filled in part by the two giants, India and China, which together hold 35 per cent of the world’s population.

China is now poised to become the strongest economic power in the world in a few years. Its currency has strengthened, and its reserves of physical gold are impressive and increasing steadily. Its military strength might be largely untested, but its belligerence towards its immediate neighbours suggests that its defence capabilities are considerable.

India’s external relations with China and the US have seen ups and downs. There must be a certain calculus that it must consider while dealing with these two great powers. What it must do is to shrewdly assess their utility in any projected Indian rise. In this context, India might be able to bank upon its long-standing good equations with Russia, a country which is assuming greater importance in world affairs with a decreasing American presence in Europe.

Ties with China have not enjoyed the same levels of bonhomie that India has had with the US, owing to the border dispute and continued distrust between the two nations. However, given the rapidly evolving world order, the India-China thaw cannot be viewed simply as another crest in their historically cyclical relationship. For starters, China has faced a demographic problem, the full brunt of which will be really felt only by 2050. This poses an impediment because its labour force will start to dwindle slowly. With our young, growing workforce (and a rising domestic market), we could see Chinese companies shifting their production to India and entering joint ventures with Indian companies, particularly in the pharmaceutical and automotive sectors. This will also help relieve the burden of growth from the service sector and reduce our dependence on the US.

Regarding this overdependence of the US, it is worthwhile considering that many countries have advanced economically in the past because of their linking their economies with that of the US. Is this true anymore? We believe that it is probably no longer the case because Pax Americana is in crisis.

Under the Biden........

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