‘Globalisation and the ‘Emerging Giants’ - China and India - Challenging the World: a Note’

‘Globalisation and the ‘Emerging Giants’ - China and India - Challenging the World: a Note’  

By Dr. Sumit Roy* 

originally appearing in the EIAS Newsletter, November 2010 

Dr Sumit Roy is Visiting Senior Research Fellow, School of International Relations and Strategic 

Studies, Jadavpur University, Kolkata, India. This ‘Note’ is based on his Occasional Paper, 

‘Globalisation and the ‘Emerging Giants’-China and India,’ May 2010, published by the School of 

International Relations and Strategic Studies, Jadavpur University, Kolkata, India. Available on 

http://asiandrivers.open.ac.uk/. The author can be contacted at sumitroy100@hotmail.com 

Globalisation, an historical process of interlocking nations, encapsulates a vision of a ‘world without 

borders.’ A key challenge is the political economy of the relationship between globalisation and the 

‘Emerging Giants’, China and India, underscored by structural transformation and their capacity to 

reshape national and global destinies. This approach captures their mounting power, pursuit of 

economic liberalisation and strategic ties. 

The Emerging Giants (EG) have been intensifying their hold on the world political economy. They 

account for about 40% of the world‟s population and show high growth rates in recent years (China 

over 9% per annum and India over 8% per annum) set within a „centralised‟ and a „mixed‟ structure. 

Their strong position is underlined by the growth of their share of global GDP over time (from 16.4% 

in 1913, falling to 8.7% in 1950 and then rising to 12.59% average between 1985 and 1995 and 16.88% 

between 1995 and 2003 and forecast to surpass 40% by 2025-30). Stemming from the opening up of 

the EG through trade and Foreign Direct Investment (FDI) linkages, which are expected to be 

intensified, this is more marked in China than in India. EG trade, seen as a proportion of global GDP, 

rose from 1.1% (1990) to 3.6% (2004). China revealed a rise from 1% in 1990 to 2.8% in 2004 while 

India‟s trade rose from 0.1% in 1990 to 0.8% in 2004.  

The importance of EG-world economic exchange is seen in the relative share of trade in domestic 

GDP. In 2008, China (40%) and India (30%) mirrored eachother in their sharply increasing demand for 

commodities, raw materials and manufactured goods. FDI, too, as a ratio of their domestic GDP, 

though more modest than trade, is expected to rise quickly, especially in China. The recent financial 

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crisis (2008) has adversely hit most countries, including the EG, but the latter, unlike developed 

countries, had positive rates of growth during this phase. There has been a gradual return in 2010 to 

their pre-crisis growth rates. Indeed, the EG, and especially China, are seen as a major force in lifting 

the world economy out of the recession. 

Forecasts see China as the second largest economy in the world by 2016 and India as the third largest 

by 2035. However, low per capita income, inequality and poverty in the EG are likely to persist over 

this time frame. By 2050, the total production in China is expected to be 60% larger than in the USA, 

with India‟s being about equal with the latter. 

The EG have also been enhancing their political prowess through bilateral, regional and multilateral 

policies. China‟s foreign relations have been motivated by its desire for national sovereignty and 

territorial security, accompanied by a defensive military stance. India‟s was circumscribed by Cold 

War priorities but, in the post Cold War era, it has been building strategic political and economic 

alliances at all levels. Intra China-India rivalries pose new tensions over regional and global security 

but they could pave the way, along with the existing powers (eg.USA), to re-order world order and 

peace. This has been accompanied by a call for more EG influence over policies on finance, 

development, trade and peace through the Bretton Woods institutions, i.e. the IMF, the World Bank, 

the WTO and the United Nations, as well as the G20 (which includes membership of developed (G8) 

and major developing nations). The urgency to overcome the recent financial crisis has reinforced the 

need to accommodate the EG more fully in such institutions. 

The future of the world, therefore, is irrefutably tied to that of China and India. Structural 

transformation has underpinned the integration of the EG into the world economy. This has been 

galvanised through market based domestic and external liberalisation, unfolding a shift from a „closed‟ 

agricultural to an „open‟ industrial and technological economy. 

Pre-liberalisation measures provided the context for liberalisation thrusts and enhanced or thwarted the 

latter. Chinese pre-reform measures created a strong basis for subsequent restructuring of the economy, 

resulting in high savings with significant capital formation, investment in infrastructure, health care, 

literacy and primary health care, and the virtual elimination of landlessness. In contrast, the pre-reform 

phase in India was marked by landlessness, poverty and inequality and relatively low rates of growth 

(4-5% per annum). 

Liberalisation in China was initiated in 1978, in the post-Mao era, with market-based thrusts in 

agriculture, industry and services, state-owned sectors and de-regulation of product prices. India‟s 

liberalisation, in the early 1990‟s, set out to restructure the economy selectively, initially the domestic 

and then the external sector, through intensifying the market. Essentially, liberalisation has been much 

more prominent in China, compared with India, through export-led growth and foreign direct 

investment in the framework of „strategic liberalisation.‟ However, in both, debates on an undue 

curbing of the state and the prevalence of poverty, inequality and exclusion of specific groups (rural 

and urban poor, the marginalised, etc), due to liberalisation, have stressed that these problems have to 

be overcome. In the aftermath of the financial crisis, there is a global onslaught on the market and re-

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emphasis on the state, while being more cautious of ‘opening up’ economies. This is exemplified by the 

EG, which boosted state fiscal and monetary expenditure with reliance on the domestic sector to re- 

stimulate growth. 

Strategic ties of the EG with each other and with other regions are major drivers in boosting their long- 

term growth and political influence. This unfolds mutual cooperation to enhance their goals in spite of 

‘old’and „new‟ economic, political and military tensions, while intensifying trade and investment links 

with developing regions, exemplified by Africa, as a source of raw materials (especially of energy) and 

markets, underscored by a shift from Cold War ideology and politics to Post-Cold War economic 

development. 

There is hope that the EG will usher in a more balanced and a more equal world. This, however, is 

fraught with new challenges. 

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