India and China: Strategic partners in global governance reform

China-India relations have “strategic significance” and “global impact” as both are large developing countries and emerging markets, Chinese Premier Li Keqiang told visiting external affairs minister Salman Khurshid last week, and on his return, the minister, in a press interview, said that “India and China have to collaborate for the Asian century”. Shaping this vision should be top of the agenda of the high-level dialogue later this month.

Changing the political relationship between two rising powers seeking to establish their territorial integrity, identity and rightful place in world affairs requires that both countries use the opportunity provided by their shared interest in global governance reform to develop close cooperation, which will lead to a demarcated border rather than let a colonial legacy dominate bilateral relations.

The re-emergence of India and China is a response to globalization, with states gaining in influence not because of the size of their military but the strength of their economy. According to an objective analysis of long-term economic trends by the OECD around 2030 Asia will be the world’s powerhouse just as it was prior to 1800. Currently the OECD has two-third of global output compared to one-fourth in China and India, and by 2060 these two countries will have a little less than half of world GDP with OECD’s share shrinking to one-quarter. China is expected to surpass the US by 2016 to become the largest economy in the world, and India’s GDP is expected to exceed that of the US by 2060, increasing from 11% to 18% as a share of global GDP while China’s share will remain at 28% during this period, and the relative share of both the US and the Euro area will decline.

By 2060, in developing countries demand for food, water and energy is expected to double. Reshaping a global system that served the natural resource and security needs of 20 per cent of the population to one that will share prosperity and peace with all in an interdependent world will require a common definition of the collective future of countries. Therefore, India and China will have to reconstruct international relations theory, as the focus of both realists and idealists is on material force and material benefit whereas we now need a global vision of sharing natural resources and technology. A shared vision of prosperity for four billion people who have yet to benefit from globalization will provide the legitimacy to reshape the global order.

The multilateral system is now divided into three related but distinct spheres. In the United Nations, with its stress on political and human rights, redistribution has been kept outside the agenda. Economic and social issues have been relegated to the Bretton Woods Institutions with governance based on ‘one dollar one vote’ rather than ‘one country one vote’. The Security Council continues to give the victors of World War II veto powers to serve their national interests, even in a multi-polar world. This compartmentalized arrangement is not able to respond to tradeoffs between economic growth and global ecological limits.

Therefore, the shift will be more than just a continuation of the current system, because it will require new global rules based both on markets and social considerations. Creating markets for economic growth and then creating new markets to clean up have led to the current global ecological crisis; climate change is an example of market failure. After the financial crisis of 2008 there is also a questioning of the free market ideology, or “Washington Consensus”. In a multi-polar world sitting on the high-table has lost its relevance, and in the Security Council the focus is shifting to preventive diplomacy and mediation – promoting peace rather than managing conflict. In just five years the BRICS grouping has moved beyond a dialogue forum to cooperative mechanisms challenging the 60 year hegemony of the undemocratic Bretton Woods Institutions by agreeing to establish a new development bank. The real significance of the Fifth BRICS Summit, in March, was that developing countries will not look to the West for developmental guidance and will evolve their own state-driven infrastructure led frameworks that will support sustainable development.

The deliberations on the post-2015 agenda for the United Nations provide the opportunity to shape the global agenda on how standards of living can be raised world-wide within ecological limits, by taking an integrated view of global change.

First, the focus will have to be on consumption, rather than production, and with human welfare measured not just in terms of economic activity but through broader criteria including ecosystem services.

Second, it must be recognized environmental, technological and societal transformations are interlinked and cannot be considered in isolation. The current scientific consensus on how to meet the challenge of global change focuses on societal dynamics as both the root of environmental problems and the potential solution to them. Therefore, technological innovation will be a key driver, requiring a review of the Intellectual Rights Regime, which ignores societal concerns.

Third, in this re-balancing, while reliance will continue on a global rule-based system, new approaches responding to new challenges will be needed in areas such as cyberspace, outer space, energy, water and food. The shift will not be easy because the post world war II global governance was designed by the current powers to serve their interests.

We have the capacity for global leadership in developing new pharmaceuticals and crop varieties, as we are the only country with both extensive endemic biodiversity and a world class endogenous biotechnology capacity. Along with global leadership in software led innovation, we should develop treatments and solutions for common problems with other developing countries, which will gain their respect also enabling productivity gains for us.

In climate change there is already a close collaboration with China. We have the opportunity, as we build our infrastructure, to make our two countries increasingly interdependent economically, to allay future concerns as we will continue to grow long after China’ s growth stabilizes.

A shared global vision will overcome both the rulemaking deficit and competition inherent in the rise of two Asian giants.

Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India.