How China Perceives India’s Rise

It appears that the Chinese perception about India’s rise is reluctantly and incrementally changing

Ever since the Galwan clash and the prolonged military standoff between India and China, the relationship has witnessed a downward spiral. People to people relations have come to a grinding halt, the bullish trade being the only exception. In such a situation, there are very few first-hand accounts on India’s socio-economic development in Chinese media: Prof. Zhang Jiadong’s article in the Global Times written after his India visit in December 2023, in which he lauds the Bharat narrative and tries to inject some positive energy to the frosty political relationship; some like Chen Jing, who have not visited India, but have tried to put a story about India’s rise by taking inputs from the resident Chinese in India. Times Bole equity, one of the top ten “Equity Investment Institutions with the Best Return in China” in a recent article on India’s rise, believes that China’s biggest competitor in the future will not be ASEAN, Japan, the United States, the European Union, or Russia, but India.

All the above authors have relied on a few variables to evaluate India’s economic rise and the challenges it poses to China. Some of the variables that have been looked into are demographic dividend, land resources, economic strength, military power, cultural influence, and national governance level. Times Bole maintains that India has become the “most promising” （最有希望）large economy globally and is ambitious to become the “next China” (下一个中国). However, in official discourse people like Xin Shiping, a Xinhua columnist, Wang Yi, China’s foreign minister, and others have been arguing that “the next China is still China.” Wang Yi repeated his assertion during the recently concluded Munich Security Conference. Ding Yifan, former Deputy Director of the Research Institute of World Development, China Development Research Centre even forecast that “India will never develop into the next China,” but the official discourse has been rebuffed by Li Guangman by pointing out that the rise of India is a reality. Let’s examine these dimensions one by one.

One, India’s huge market and demographic dividend have been regarded as the foundation for catching up with other economies in the next decade. Times Bole posits that by 2030 India’s population will reach more than 1.5 billion, compared to China’s less than 1.4 billion. The potential of such a gigantic consumer market has been compared with the sales of Apple phones in India. In the words of Chen Jing, in 2022, Apple sold 6.5 million iPhones in India and is expected to sell 9-9.5 million units in 2023. iPhone’s yearly revenue in India will be close to 10 billion US dollars, and will soon surpass Japan, the way passenger car sales did. According to Chen, in the 2022-23 fiscal year, India sold 3.62 million cars against Japan’s 3.45 million in 2022. Annual sales in 2023 are expected to reach 4 million units. The number of cars per thousand people in India has rapidly increased from 15 in 2010 to 36 in 2022, which is close to the level of China in 2006. Air India and IndiGo separately placing orders for 470 and 500 passenger aircraft with Boeing and Airbus worth US$125 billion—largest in aviation history—Ahmedabad-Mumbai high-speed railway, and the prospective Delhi-Mumbai high-speed railway projects have been cited as examples of India’s rise and massive market. Indian government’s big announcement that it will invest a total of US$720 billion in upgrading the railway system by 2030 has been cited as a “big boost” (力度很大) to the infrastructure.

Two, India has definite land resource advantage over China, argues the Times Bole article. It posits that China’s overall land area may be larger than India’s, but India’s arable land area far exceeds China’s. India’s landmass consists of plains and plateaus; therefore, it is easier and more convenient to build infrastructure than in China. Moreover, India is also rich in mineral resources. Bauxite reserves and coal production both rank fifth in the world, and mica exports account for 60% of the world’s exports. In 2022, India’s steel and cement production was 124 and 380 million tons respectively, a “sign of boom” according to Chen. Although the potential is currently limited by technology and governance issues, however, India’s resource development and utilization rate could be put in a higher growth trajectory by employing better technologies, posits Time Bole. Being located in the middle of the Eurasian continent, India has natural geographical advantage of connecting with East Asia, with Europe and Africa.

Three, both Chen and Times Bole articles argue that India is copying Chinese growth story of the 1990s. With a series of drastic economic reforms such as “Made in India” (2014), “National Solar Mission” (2015), “Startup India” (2016), GST reforms aimed to simplify tax and promote market unification (2017), “100 trillion-rupee” national infrastructure plan (2019), and “2 trillion-rupee production-linked incentive scheme” etc., have brought unprecedented high growth to the Indian economy, and since 2015, India has become the world’s fastest-growing major economy. India’s low cost manufacturing industry with demographic dividend has made India a preferred location for relocation of some of the manufacturing industries in the world. Manufacturing industry has increased from US$74.6 billion in 2000 to US$450.86 billion in 2022, a six-fold increase, which is an increase of 46.6% since Narendra Modi came to power in 2014. If trade in goods and services is added together it amounts to a whopping US$1.21 trillion. Needless to say, India’s tertiary industries such as finance, IT, and service outsourcing are more developed than China’s. India’s strengths in fields such as aerospace, military industry, space technology, and bio sciences will give it an added advantage.

Four, as India’s economy rises, so will its military power, argues Times Bole. In terms of global military ranking, India is ranked fourth. India has a well-established navy, army, and air force, as well as nuclear strike capabilities. It is one of the nine countries in the world that openly possesses nuclear weapons, one of the seven countries with intercontinental missiles, and has two aircraft carriers. With the lingering border dispute, most of the above articles posit, it is extremely difficult to negotiate a settlement, as India eyes Chinese territory.

Five, the West is more likely to accept the rise of India, however Chen believes once India’s economic scale increases, it will obviously become a target of the US robbery (劫掠对象). Though the author of Times Bole article has not compared India and China’s political systems, however, argues that India has been favoured over China by the West. For example, in the Russia-Ukraine conflict, India, like China, adopted a neutral policy. However, Western countries did not make irresponsible remarks about India, but only blamed China. As a result, India not only obtained cheap Russian oil, but also processed and exported it to Europe, making huge profits. The author is apprehensive about India’s mobilization and organizational capabilities marred by ethnic and religious conflicts. Nevertheless, argues that India’s unique democratic system could be brought to a full play by initiating political and religious reforms.

In the face of all these challenges posed by India, the Times Bole article argues that since it would be extremely difficult to block India’s development from the outside (从外部阻断印度发展), therefore a healthy competition in the economic field, with the goal of achieving a win-win situation should be promoted. Conversely, Li Guangman argues that China must not help countries accelerate their development in the areas such as transportation, electricity, steel, agriculture, photovoltaics and other infrastructure and industrial chains for short-term economic benefits, let alone transfer some of China’s advantageous industries and industrial chains to India. The Times Bole also favours protecting China’s core competencies in emerging industries such as digital economy and intelligent manufacturing in the process of supply chain relocation to India. The author cautions that the transfer of the entire industrial chain from China to other countries must be avoided. Chen also favours cooperation with India by saying that Chinese companies have made a lot of money from the Indian market, therefore, brands such as BYD’s Honor are preparing to enter India. Chinese companies will not ignore the expanding Indian market. However, Chen insists that it is because of the aggressive and enterprising competitiveness of the Chinese companies, that India has put a ban on a number of Chinese entities in India, and built national consciousness by being hostile to China. However, citing India’s advantages over China in the chemical and pharmaceutical industries, he believes, China can achieve win-win results and development with India through healthy competition.

Notwithstanding the fact that many in China envy India’s strong growth trajectory and find it hard to digest, they however find solace in the fact that the gap between the two is huge and that “India can never be a second China” as spelled by Ding Yifan. Ding argues that Indians have always been wary of, and even repellent of foreign investment, for they believe that others will “take advantage of them” (别人来赚他便宜). The other argument he provides is that India doesn’t have a “complete industrial chain” (齐备的工业产业链). Li Guangman, on the other hand, says that these are “obviously unconvincing” arguments given the reality of India’s rise. It appears that the Chinese perception about India’s rise is reluctantly and incrementally changing. They have come to realise that India has “all-round advantages” (全方位的优势) at present. They are envious of the bullish Indian stock market, and the messages left by the Chinese netizens on Indian embassy Weibo on 4-5 February 2024 in the wake of China’s stock crash say it all. “I swear that I will never believe the remarks that smear you in China again”, “Great country, great financial market”, “I envy India’s stock market, it’s so awesome”, read some of the posts.