Seeing the elephant

India has a lot more untapped potential than China.

Economics | South Asia

8 November 2016

“Seeing the elephant” is a 19th century American saying, meaning the gaining of world experience at a significant cost. It originated from travelling circuses, where curious people would pay exorbitant sums to literally, see the elephant.

Today there is an altogether different sort of elephant, one for which the cost is incurred when it is not seen. The identity of this pachyderm is, of course, India.

India has long played second fiddle to its North-Eastern neighbour, coming up short on most metrics of hard power including economics and military strength. India’s strengths in areas such as its stable democratic government have failed to make up the difference in raw growth that China has enjoyed over the last 25 years.


World Bank comparison of Chinese and Indian GDP growth since 1990

This however is beginning to change. In particular since the landslide election of Narendra Modi of the Bharatiya Janata Party, India has begun to show more muscle on the international stage.

In its local region, the Modi government has been proactive in engaging its neighbours. Bhutan and Nepal were two of the first countries visited by President Modi, and have since successfully concluded important energy agreements with New Delhi.

More significant however has been India’s growing interests in South-east Asia. In the 20th century India purused the “Look East” policy, aimed at capitalising on its historic and cultural connections with South-east Asia. This century India has revived this policy, and is pursuing ever closer relations with the region, in particular economic ties such as its trade deals with Singapore and Thailand.

India is also enhancing its position strategically. Vietnam in particular is developing close ties with India, and in early September the two countries signed a US $500 million dollar arms agreement. They also maintain training relationships in high tech platforms such as submarines and fighter jets.

For China this represents perhaps its most significant long term strategic challenge in Asia. While the statistics today paint a bleak picture for India in comparison to China, and a positively stark one in comparison to the US, the long-term trends are in India’s favour.

In the most basic sense, India simply has a lot more untapped potential than China. China today is experiencing the slowing of growth common to all newly industrialised countries, while India remains further behind in this process. China’s lead is, in this sense, transient.


Source: IMF WEO database (October 2014) for 2014 estimates, PwC projections for 2030 and 2050

India also has a number of hidden strengths. Regime stability is a controversial question in China, with many Westerners and some Chinese prediciting that the Communist Party will have to reform or collapse. Whether such bleak scenarios are true or not this issue has no hold over India, which has enjoyed 70 years of stable democratic rule.

In strategic terms India is able to play the role of an offsider. China today appears to believe that it can force the US out of Asia, and that if it does so it will be the regional hegemon. The first proposition is highly debatable. The second is geographically illiterate.

India is fundamentally tied to Asia in a way that the United States is not. If and until China can work out how to send the Indian subcontinent back towards Antarctica, Asia will be home to two billion-strong giants; neighbours who inhabit the same geographic space.

Many nations in Asia are today turning to the US for support. The issues in the South and East China Seas are largely working to the US’ diplomatic favour, with many historically unfriendly Asian nations such as Vietnam seeking Washington’s support. It would be folly to think that even if shorn of the US, these nations would not just turn to the next best thing.

The emerging reality in Asia is not bipolar or even unipolar, but multipolar. Even if China succeeded in forcing the US out, other competitors most of all India would emerge to take its place. Failing to take other powers into consideration only makes openings for them.

Those looking to catch a glimpse of who will be playing ringmaster in the Asia-Pacific would be wise to check in with the elephant.

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