India is not China, and many of its residents fear it will never be. It’s hard to imagine a future in which the subcontinent’s manufacturing dominates the world, its foreign investment shapes nations’ destinies, and the challenge of its economic system forces the West to reshape its own policies and principles.
But that is, apparently, what the US administration fears. Speaking in New Delhi last week, Deputy Secretary of State Christopher Landau warned that “we will not make the same mistakes with India that we did with China 20 years ago.” Although he claimed the recently agreed framework for Indo-US trade would be a win-win, nevertheless America did not intend to let India develop new markets just in case “the next thing we know, you are beating us at many commercial things.”
Landau’s statement blended confrontation and insecurity the way only America-Firsters can. Even so, it’s worth taking seriously. Not least because a milder version of his claim might be true: The rush to invest and build up China after it entered the global trading system in 2001 will not be replicated for any other developing country. A unique set of factors — the explosion of intercontinental trade, and a ubiquitous end-of-history confidence — made that possible. The stars will not align so favorably for anyone else.
But even if you are willing to buy the Landau view that the West’s interest in China was a mistake, his complete failure to diagnose what went wrong is still dangerous. The problem wasn’t that an emerging economy drew interest and investment. The problem was that the world over-invested in an explicitly mercantilist, state-directed model that had the incentive and ability to pivot swiftly into expanding its own economic power at everyone else’s expense.
India’s political economy is messy and frustrating — but it is driven by the private sector, not by the state. Companies make their own choices about how to borrow, what to make, and where to sell. They operate in the pursuit of profits, not control. Such a nation has neither the ability to, nor any interest in, dominating supply networks. It wants to fit into value chains, not own them.
Nor is its commercial culture the same as China’s, as foreign investors both enthusiastic and depressed will agree. You may lose your money in India, but not your intellectual property. Those fearful of investing usually worry their local partners will miss targets, not that they will become globe-spanning rivals.
What it produces, and how it expands, is substantively different as well. Growth is driven by domestic consumption and dominated by services, rather than living off investment and exports. New Delhi has spent more than a decade focusing on domestic production and subsidizing factories — and, after all that, manufacturing has stayed exactly the same proportion of gross domestic product as it was to begin with. Momentum alone will drive its output toward being a sixth and then a fifth of the global total; but it will grow alongside the West, not substituting it. These are complementary economies.
The West could invest twice as much in India as it did in China two decades ago ,and it still would not produce a systemic rival. In fact, isolating the nation — starving it of markets, technology and financing — is much more likely to produce a geopolitical and geo-economic challenger. Even at the best of times, India has a tendency to turn inward, to believe that its growth will happen in spite of the outside world and not because of it. These are not the best of times, and the US should be careful to not feed this instinct.
What they used to call “engagement” with China may not have turned it into a constructive participant in the post-War global order; but active disengagement with the Global South, and with India in particular, will certainly create opponents and disruptors of that system.
The most potent threat that India poses to the US and the West is the same as it always was: underperformance. Even a MAGA-driven Washington should worry not that its patronage will cause another China to emerge, but that in spite of its trickles of support neither India, nor any other country or grouping, will be able to balance China.
This report is auto-generated from bloomberg news service. ThePrint holds no responsibility for its content.