Who will be The Next Super Power? Can China or India be a Super Power?

When we talk of a superpower nation, the first thing that comes to our mind is The United States. And to great extent, it is true. In fact it is the only superpower nation which comes to our top of mind search, with no one else coming close enough. But the world is changing fast and so is its international scenario. In these dynamic times, complacence has no room as its said, “hide sight is no excuse for foresight”.

A superpower is a country that has the capacity to project dominating power and influence anywhere in the world, and sometimes, in more than one region of the globe at a time. Four components of influence mark a superpower, Miller says: military, economic, political, and cultural. At present though USA has the upper edge in all these spheres, but other nations are fast catching up and might overtake Uncle Sam for the top slot.

Here I am talking of the two developing nations who not only have the potential but the hunger to dominate the world; INDIA and CHINA. China and India have not only shown phenomenal growth in the recent past but have emerged as one of the few strong economies of the world. But the economies are fast moving towards development and it will not be surprising if any of them surpasses The US. But only one will succeed to the top of all. Who will be it?

At present, India’s GDP stands at 1.09 Trillion Dollars, while theat of US and China are at 14.33 and 3.42 respectively. The GDP projections of WOE IMF, Oct ’08 states that in 2050 China will surpass all with a GDP of about 42 Trillion Dollars, followed by the US at 34 and India at 25 Trillion Dollars. However, GDP is not all we have to consider before passing out the verdict. There are plenty of other factors on the anvil before construing any judgment.

In the recent years, china has shown considerable improvement compared to others in almost every field. China’s International Reserves have been increasing ever since 1998 with ever increasing trade surplus which in 2007 was about $290 bn. India on the other hand has been successful in maintaining a constantly growing trade deficit which stood at $ 55 bn in 2007.

It’s not that India’s not on right track, in fact it’s in the league of top contenders for the Number 1 position. We have population of 1095 million and it’s been proved by China that people are a nations assets. Our official unemployment stands at 7.9 %, far less than that of China’s 17 %.our investment rate is 37 % of GDP as compared to US’s only 14.6 %. According to a Research released by AT Kearmey India ranks number 1 on attractive index for offshore location followed by China and Malaysia. It has emerged as leader in IT and Services with favorable labor pool, education system, English proficiency and cost advantage. Majority of billionaires from Asia Indians with 4 in top 10 richest people of the world. However, still there are many things that keep India from becoming a major power in the world.

To begin with, India has 26 percent of its people below poverty line and to add to this a fifth of the population with income above the poverty line is vulnerable to receding back into poverty due to unexpected income loss and other shocks. Almost 80 percent of the people live on less than 2 $ a day and form a vulnerable part of the society. Although we claim that the ratio of poverty has come down from 53.9 percent during 1958 to 26.1 percent during 2000 but the absolute number reveals the reality which depicts that the incidence of poverty has indeed increased from 220.6 million in 1958 to 260.3 million during 2000. Nearly nine out of 10 pregnant women aged between 15 and 49 years suffer from malnutrition and about half of all children (47%) under-five suffer from underweight and 21 percent of the populations are undernourished. India alone has more undernourished people (204 million) than all of sub-Saharan Africa combined.

33 percent of the worlds illiterate live in India whereas this figure is only 11 percent in China. 80,000 of our schools are without black board and 1, 44,000 have only one teacher, yet we boast about the Sarav Siksha Abhiyan. 25 percent of the MPs have criminal record in this nation which also happens to be one of the world’s lowest voter turnouts of about 58 percent. We have 13 judges per million of population. There are 3 Crore (30 million) pending cases in our courts 25.5 millions in District & Sub-district court , 3.36 lakhs in High Court & 39,000 in Supreme Court. We have one of the lowest conviction rate just 42.4% (in 2005). Japan & Russia have 99% conviction rate.

Health care Budget of India is just 0.9% of the Gross Domestic Product while we spend loads on defense and other activities which don’t give any returns. Average amount a person spends on health care in India - $82 while in US it is $5267, just notice the gap. Yet India has become a Hub for Medical Tourism: An angioplasty that takes $50,000 in US costs just $11,000 in India. Heart Surgery costs $6000 (as against 30,000 in US) & Bone marrow transplant costs $26,000 (as against $2,50,000 in US). We have one of the largest slums of the world with over 100 million people in India living in them. In Human Development Report of 177 nations, India ranks at a poor 127th place while china is at 85^th. 60 percent of our population depends on agriculture which contributes only 22 percent in the GDP of the country. According to C Rangarajan Report, elasticity of the Agriculture sector is 0, i.e. additional input in agriculture will not generate any ore employment. Still we depend a lot on agriculture. India’s total debt stands at staggering $ 658 billion.

China on the other hand has managed to put many feathers in its cap. With GDP of $ 3.5 Trillion, it is the second most powerful economy after the US in terms of PPP (Purchasing Power Parity). It has managed to record GDP growth on double figures at 13 percent making it one of the fastest growing economies of the world. According to Goldman Sachs study, in aggregate terms, China is the fourth largest economy and may surpass the size of world’s largest economy i.e. US by 2040. It’s expected to overtake over take Japan by 2020. And there are facts to prove this.

Though t is the most populated country in the world, but somehow they have managed to put breaks on it. With its population growing at 0.61 percent, it’s placed itself at a comfortable position as compared to India who still grows at 1.56 percent annually in terms of its inhabitants. China has available labor pool of about 800 million efficient people. Per capita income of China is at healthy $ 5300 compared to India’s $ 2800 with an average inflation rate of 4.15 percent as compared to India’s average of 6.5 percent.

Savings and Investment plays an important role in the country’s growth. Higher the savings, higher is investment and thus more is the money flow in the economy. This forms the biases of high multiplier which accelerates growth. China with investment rate of 44 percent of GDP thus manages more circulation of money as compared to India’s 36 percent of GDP. Moreover, there GDP size of $ 3.42 trillion compared to India’s $1 trillion makes this some a mammoth.

Compared to the US, India and China, China’s the only one with a positive Current balance account of $ 262 billion. India on the other hand has negative current balance of $ 98 billion while deficits for the USA are staggering $562 billion, thanks to the subprime crises and the numerous bailout packages. Also, public debts of China are only 22 % of GDP compared to India’s 82 % and US’s 75 %. Total abut of debt on China is about $ 120 billion while that of India and the US is 658 Billion $ and 10.76 Trillion $ respectively.

Backbone of any country is its manufacturing sector. Manufacturing sector not only provides necessary employment to people, but also generate the necessary foreign earnings for the nation. China has a thriving manufacturing sector which makes it the number 1 choice to be a super power. With an Industrial Production growth of 22 percent, it has left its competitions far behind in this field. India’s complacency of 7.9 percent growth in industrial production and USA’s dismal 3.2 percent has added to the gap created. No wonder why we see “ Made In China” tag on all the goods we buy.

The main driving force for China is its stable political structure and sound policies. The best example being the SEZ policy that China has implemented. India on the other hand has not even able to mend the basics of this policy since it emulated in 2000, almost a decade back. Still we have low production zones, land acquisition disputes like Nandigram and low capacity utilization. The conducive environment that the Chinese Government provides to its industries has not been replicated in India.

Thus China, with a literacy rate of 91 percent and just 10 million people below the poverty line and its growing economic clout certainly seems to overtake US in no so far future to be the new super power in the world. And if some of the predictions by research companies are right, we might see a change in the world political and economic system in about next 20 years.

For More artical - http://www.hindustantimes.com/