Asia's Looming Power Shift

Asia's Looming Power Shift

Mini Teaser: The choices of China, India and Japan will define Asia's future. Their lack of unity and diversity of weaknesses will leave big problems unaddressed.

by Author(s): Rajan Menon

IF CHINA’S successes routinely make headlines, it is India’s failures that get attention. While the acceleration of India’s economic growth after its reforms of the early 1990s have received coverage, enumerations of India’s failings, especially relative to China, are more common, and there are many of them. India’s 2012 per capita GDP was $3,900, ranking 168th worldwide; for China, the respective numbers were $9,300 and 123rd; for Japan, $36,900 and 38th; for South Korea (whose income per person in the early 1950s was on par with India’s) $32,800 and 44th. India’s literacy rate is 73.4 percent, while those of China, Indonesia and Malaysia are over 90 percent. Fully 32 percent of all Indians subsist on less than $1.25 a day (in terms of purchasing-power parity), compared to 13 percent in China, 18 percent in Indonesia, 21 percent in Pakistan, 1.5 percent in Iran and 0 percent in Malaysia. In life expectancy, India ranks 164th; in Greater Asia, only Pakistan, Nepal, Tajikistan and Afghanistan fare worse. Its infant-mortality rate ranks 50th; the only states in the region with worse records are Afghanistan, Pakistan, Cambodia, Myanmar, Laos and Bangladesh. India’s infrastructure is antiquated—a drag on economic growth and inward foreign investment—and a stark contrast to China’s. In the UN’s most recent “Human Development Index” rankings—a composite measure of individuals’ access to basic necessities—India places 136th, and the only countries in Greater Asia that trail it are the likes of Afghanistan, Myanmar and Papua New Guinea. India’s anemic industrial-manufacturing base is a major barrier to export-led growth and poverty reduction. Its university system, despite pockets of excellence, cannot meet present and projected needs in science and engineering. India’s cumulative inward foreign direct investment in 2010 was $191 billion, compared to China’s $574 billion and lilliputian Singapore’s $274 billion. Neighbors with far smaller populations—Thailand, Taiwan and South Korea—were close in absolute terms and far ahead per capita. Though the subject of much hype, India’s information-technology sector employs a tiny proportion of the workforce and cannot offset the country’s weaknesses in manufacturing.

It’s true that India has scored some gains, among them a drop in the poverty rate, made possible by its accelerated economic growth since the early 1990s—averaging 6 percent for much of the 1990s, 5.5 percent between 1998 and 2002, 8.8 percent between 2003 and 2007, and 6.5 percent between 2008 and 2012, a sharp contrast to the 3.5 percent average from 1950 to 1980. But the dismal quality-of-life statistics cited above make predictions of India’s impending rise as a global power sound hollow. India can’t soon close the economic gap with China. Nor, despite huge strides in modernizing its armed forces since the humiliating 1962 defeat at China’s hands, can it balance China militarily without powerful coalition partners—a reality that will remain unchanged during the next few decades.

Yet India has impressive strengths compared to China. China’s urbanization, advances in education and, above all, its draconian population-control practices have, in a few decades, reduced its total fertility rate (TFR), or children born per woman of childbearing age. It is now 1.55, well below what’s required (2.11) to maintain a country’s current population size. India’s TFR, by contrast, is 2.55. China’s population is shrinking, and this trend will continue, increasing the proportion of retirees, skewing the ratio of retirees to taxpayers and increasing expenditures on the nonworking population. This pattern bolsters the “demographic transition theory” (economic advancement reduces population growth), which has been evident in the West and Japan as well. But as the demographer Nicholas Eberstadt notes, Europe and Japan got rich before they became old. China’s experience will be the opposite, and that portends problems for sustaining high economic growth and investment. By contrast, 25 percent of India’s population is projected to be below twenty-four years of age by 2025 (compared to 18 percent for China), guaranteeing an abundant supply of labor.

Paradoxically, some of India’s apparent weaknesses are strengths. India lacked the preconditions deemed necessary for democracy (in particular, high literacy and a large middle class). Yet it established a democratic system in 1947 and has nurtured it successfully ever since. Power has been transferred peacefully numerous times through national, state and local elections over nearly seven decades. India is a linguistic and religious kaleidoscope, but this trait, far from being an impediment to stability, has made it harder to organize mass movements against the central government. It also has increased the significance of state-level politics, thus localizing problems.

India’s diversity also has compartmentalized crises, whether violence in Kashmir, Sikh separatism, tribal and Maoist insurgencies, or riots provoked by the government’s efforts, now abandoned, to make Hindi the national language. The strong elements of decentralization in India’s political system reduce the probability that an upheaval in the center will radiate outward, encompassing the rest of the country—a contrast to what occurred in the twilight of the Soviet Union and to what could happen in China.

Then there are the clear-cut strengths of the Indian polity. The army has stayed clear of politics, which provides an added source of political stability. Despite Indian democracy’s blemishes (such as elections marred by corruption and patronage, and parties anchored in personalities), the country faces nothing comparable to China’s base-superstructure misalignment. India’s problem is the reverse of China’s: a lagging “base.” That’s a serious challenge but not comparable to the obsolescence of an entrenched political order.

THE LAST of the trio, Japan, has long since solved the problem of meeting its citizens’ basic needs. And it rivals Europe and America in living standards. Japan took to democracy when it was imposed by America following World War II and has maintained it through the decades while avoiding the kind of social turmoil experienced by the West in the 1960s and by Europe now. Japan is about as monoethnic as countries get (and employs a restrictive immigration policy to stay that way). The homogeneity has eased the bargaining and compromises integral to democratic politics. Though Japan descended into decades of deflation after the early 1990s, it now seems to be emerging from that swamp. It retains a world-class industrial and technological base and service sector, and its economy is still the world’s third largest. These assets give Japan the wherewithal to increase its military power relatively quickly. It can also do so without significant economic strain: thanks to its alliance with the United States, defense spending has averaged below 1 percent of GDP since the end of World War II. Altering the established pattern will ignite controversy at home and abroad, but Japan’s decades-long strategy of relying on American protection—outsourcing defense—will become less tenable as the balance of power between America and China changes. Changes in Japan’s defense strategy loom, and it is absurd to see the choices as limited to the militarism of the past or the minimalism of the present.

The “peace constitution,” many citizens’ aversion to abandoning military minimalism and still-strong Asian memories of Japanese imperialism will together make it difficult for Tokyo to respond to the new context. Yet, with an economy reliant on imports for just about everything needed to keep operating, Japan is especially vulnerable to states with naval power capable of blocking sea-lanes. It has been fortunate for almost seventy years: the national interest of the United States, the world’s preeminent maritime power, required that it keep sea routes secure, including Asian sea-lanes. Though the United States will maintain its naval preponderance for many years, China, also dependent on sea-lanes and thus susceptible to their disruption, will continue to expand its naval power with the advantage of having significant resources in hand. For the first time since 1945, Japan will face an ascendant Asian power that is an adversary committed to becoming a front-rank naval power.

Japan also faces serious demographic problems. Although the aging of Japanese society accelerated once Japan got rich, the process continues, and the Japanese seem unwilling to turn to immigration as a solution. Japan’s population, now close to 128 million, is projected to shrink to ninety-seven million by midcentury. Demographic constraints will shape Japan’s defense choices, inclining it toward sea and air power and high-tech weapons, but it will not rule out increases in defense spending or a rethinking of the established national-security strategy.

THE BIGGEST security challenge for much of Greater Asia will be balancing China, whose neighbors will hedge their bets even if the Chinese leadership uses sticks sparingly and carrots liberally, while emphasizing China’s “peaceful rise.” In the politics of nations, words have slippery meanings, and intentions are difficult to divine. Hence, states dwell on others’ deeds and on the changes in relative capabilities that create new power ratios.

Asian countries that have fought wars or had skirmishes with China will be particularly inclined to hedge. China’s growing capabilities will coincide with its territorial disputes with India, Japan and various Southeast Asian countries. It could resolve these disagreements to reassure the region, but that has not been the predilection of rising powers. China is more likely to retain what it has, offer partial concessions to India, and press its claims more forcefully over the Senkaku/Diaoyu islands as well as the Spratlys/Nansha and Paracel/Xisha archipelagoes. A Chinese leadership reliant on nationalism to manage internal instability will be even less willing (or able) to make compromises.

Image: Pullquote: Greater Asia is like a big bus crammed with passengers...the bus has several steering wheels and no consensus on a common course, least of all among the drivers.Essay Types: Essay