Wednesday, 13 March 2013

‘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 The author can be contacted at 

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 worlds 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 
Indias 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 Indias being about equal with the latter. 

The EG have also been enhancing their political prowess through bilateral, regional and multilateral 
policies. Chinas foreign relations have been motivated by its desire for national sovereignty and 
territorial security, accompanied by a defensive military stance. Indias 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
liberalisation, in the early 1990s, 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 

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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