THE Economic Times, India's premier financial broadsheet, has predicted that India will be the new economic superpower by 2020. Is it possible?
IF YOU'RE LOOKING FOR A thunderous wave of ebullience for Asia's economies in 2010 and beyond, forget China, Japan or even South Korea. In fact, forget all the rest of Asia's - but India. Who says? The Economic Times, India's premier financial broadsheet. That's who. The front page of its Jan 1, 2010 edition emblazoned the headline India World No 1 in 2020. The sub-headline: `Ageing Dragon will make way for the new king of the jungles'.
The `ageing dragon' refers to China, of course. The language was as effusive as it was also pointed. India, the article says, would seriously challenge the supremacy of the United States and China as the world's number one and two economies, respectively. Indeed, it even hints that by 2020, India could overtake China, at the very least. But China, amongst others, will do its damnedest to halt the charge of India into becoming a global superpower in its own right.
But before you start condemning the article's futuristic projections for India's economy as a case of `pigs might fly too', it's worth contextualizing the predictions on the one hand, and on the other measuring it against present-day realities in India.
And bear in mind that in the space of the next decade, anything can happen. Anything is possible. Just as it was in the last decade when the world's economies grew and grew before the 2008-09 bubble, wrapped in cheap money, imploded. And in 1997-98 when most of Asia's debt-ridden sandcastle economies were whacked sideways and two or three were almost buried. And in the same decade become desperately recessed, even depressed, after witnessing its phenomenal rise in the 1980s. Until today, Japan is struggling to re-emerge to reclaim its old juggernaut status.
The Economic Times article says don't hold your breath over Japan's re- emergence any time soon. But China's problems will soon start to reflect Japan's demographically, as its population starts to age. India's, though, is becoming more and more literate than China's. By 2020, Indians will give birth to another 500 million babies, taking India's population then to about 1.5-plus billion people. How will India house, feed, educate and give them jobs?
paper bag printingAdd rapidly growing literacy rates - a misnomer if you come to India since many do not speak the world's lingua franca and could not care less - India's workforce will be positioned to take advantage of information technology growth and development. Mergers and acquisitions of global media houses such as Rupert Murdoch's and The New York Times by Indian business giants also seem `certain'.
Conversely, China will suffer the Japanese syndrome of a rapidly ageing population that, in turn, will affect final demand. So much so Beijing's capitalist regime (it is communist only in name) will see growth decelerate. Beijing will revalue its currency. Nothing new here since China has routinely manipulated its currency anyway vis-a-vis the greenback.
Moreover, China's export-growth model will come under stress. Again, nothing new here either, as most of Asia's economies have proven this problem, more or less, since the Asian financial crisis of the late 1990s. But China's problem is particularly acute since the bulk of its foreign revenues come from the export of its cheap manufactures. It'll be forced to re-model its growth strategy going forward, and probably sooner rather than later. Imagine a world without cheap Chinese exports.
It can't do what the Japanese had tr
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