Editorial 1 : The Opportunity for China and India
Context: US-China Trade Conflict
Introduction: The US’s ‘Liberation Day’ marked the start of a trade and tariff war, causing global economic disruptions. China rejects US tariff policies as bullying, framing its resistance as a defence of multilateralism and developing nations’ rights.
Critique of US Tariff Policies
- Violation of International Norms
- WTO Rules: The US’s reciprocity and fairness rhetoric violates WTO principles, undermining the multilateral trading system.
- Unilateralism & Protectionism: Labelled as economic bullying aimed at suppressing developing nations’ growth and trapping them in low-value industries.
- Lessons from History
- Bretton Woods Collapse (1971): Demonstrated risks of US-centric financial dominance.
- Plaza Accord (1985): Highlighted how US policies can destabilize global economies.
- Great Depression Parallels: Unchecked US actions risk global economic regression.
- Risks of Appeasement: Countries making unilateral concessions risk emboldening US demands.
Shift in Global Economic Power
- Declining US Dominance
- GDP Share: US’s share of the global GDP, once peaking at roughly 50%, has since dwindled to about 26%.
- Trade Share: US’s foreign trade accounts for 13% of global trade volume, while the remaining 87% is conducted among over 190 other countries.
- Rise of Regional Alliances
- Key Agreements Without US Involvement
- Regional Comprehensive Economic Partnership (RCEP)
- Digital Economy Partnership Agreement (DEPA)
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
- De-Americanisation: The Financial Times has pointed out that if the US positions itself against the vast majority of countries that uphold free trade and support the multilateral trading system, the ultimate outcome will not be economic deglobalisation, but rather, de-Americanisation of the world.
BRICS vs. G7
- Economic Contributions: BRICS’ contribution to global economic growth exceeds 50%, nearly double that of the G7.
- In terms of purchasing power parity, the total economic output of BRICS has already surpassed that of the G7.
- Demography and Trade: BRICS states account for nearly half of the global population and 20% of the world trade.
China-India Synergy
- Shared Developmental Goals
- China: High-quality growth.
- India: Viksit Bharat 2047 vision.
- Economic Potential
- Market Synergy: A combined population of more than 2.6 billion could create a 1+1=11 multiplier effect.
- Global Growth Contribution: IMF projects 36% of global growth from China-India, exceeding G7.
- Collaboration Opportunities: China is inviting Indian exports, emphasizing fair competition.
Conclusion and Way Forward: There is a global need to uphold multilateralism and WTO-centric rules, resist US unilateralism to prevent economic destabilization and strengthen Global South solidarity for equitable development. Trade wars have no winners, dialogue must replace coercion.