Integrating India Into The US-China Strategic Calculus

Dec 04, 2023

Blackrock, the world’s largest asset management company ($4.92 trillion under management as of June 2023), recently published a report that essentially said that the “strategic competition” between the US and China remains the top geopolitical risk facing markets worldwide. The report described the recent thaw in the relations of the world’s two biggest economies as “fragile.”

What do we say? It’s not easy being Washington and Beijing in 2023.

According to Bloomberg News, which reported on the study, quoted the report as saying, tensions between Washington and Beijing were labelled as a “high” risk in the BlackRock Investment Institute’s October geopolitical risk dashboard, with an attention score of 1.5, nearly doubled that of a possible major terrorist attack. “In contrast,” it said, “tallies for conflict escalation in the Middle East after the Hamas attacks on Israel and a war between Russia and the North Atlantic Treaty Organization were just -0.65 and 0.37.”

The reason for this is that,

“The U.S. and China have settled into a long-run, competitive posture,” geopolitical strategists led by Catherine Kress wrote in the report. “Both sides seek to stabilize the relationship, though any thaw would be fragile.” They specifically flagged China’s actions in the South China Sea and Beijing’s willingness to pressure Taiwan, saying that geopolitical events that historically had a short-lived market and economic impact are nowadays a structural risk.”

And then, there is the role of India in the US-China calculus.

In this context, when three top China analysts meet to discuss this very issue, we must sit up and take notice. Tanvi Madan of Brookings was joined by Taksahshila’s Pranay Kotasthane, and The Atlantic Council’s Trisha Ray to talk about India’s technology competition with China, and the interplay of the US-China relationship in this mix.

Pranay felt that there are three lenses to look at India-China relations on the technology side. “One is an ‘economic first’ approach, the second could be a ‘security first approach’ and the third could be a ‘strategic first’ approach.”

He said,

“According to me, what has happened is, in the last few years, starting 2018 and also Doklam, July 2017 and thereafter, the lens has primarily shifted from economic first to strategy first or security first. So, that has reigned true in a range of technology spheres, starting with telecom infrastructure, starting with apps, and also with chips. And we should remember that it’s not as though all of these are proven to have some backdoors, et cetera, but just the fact that there were military tensions that brought this primary concern, that how can you be dependent on a strategic adversary?”

On India’s concerns about the Chinese high-tech sector, Trisha said,

“It’s going to be a tricky pathway for India to evaluate its current dependencies on China… The most obvious one is, of course, telecommunications. This includes both control over networks, so that includes the content that goes through these networks. The ban on Huawei and ZTE was part of that. The second concern is the devices. Chinese handsets are a big concern as well. And the Indian government has acted to an extent on some of those concerns, because even if you don’t control the networks, if you can hack into a device, you have most of the information you really need to be a security concern.”

The podcast is a meeting of minds, really. You can listen to it here. You can also read the transcript here.

India’s 2050 Tryst With Nuclear Energy

The agenda for the United Nations’ upcoming 28th Climate Change Conference of the Parties (COP 28) promises more than the usual climate discussions. “This time, the spotlight will also fall on nuclear energy, and India must take advantage,” says Takshashila’s Saurabh Todi.

Saurabh says that in the event that will conclude on December 12, the UN Framework Convention on Climate Change (UNFCCC) is particularly important.

“Apart from the usual business, nuclear energy will be a central talking point during the summit. The US is reportedly set to lead the effort to advocate for significantly increasing nuclear power globally, with the aim of least tripling worldwide capacity by 2050.”

To be sure, nuclear power has been enjoying a renaissance lately, with several countries looking to build new reactors, relax financing rules for atomic energy, and invest in advanced reactor technologies such as Small Modular Reactors (SMRs).

For example, the EU Parliament voted this month to include 17 technologies—including nuclear energy—in the EU’s Net-Zero Industry Act, while Sweden announced its goal to significantly expand its nuclear power capacity by 2045. Canada, too, updated its guidelines earlier this year to allow atomic energy projects to become eligible for investments through green bonds. Countries that had been planning to phase out nuclear power, including South Korea, Germany and Japan, are now reconsidering. And over 60 nuclear reactors are now under construction in 15 countries.

India is no different.

“Nuclear energy offers the efficiency and reliability of thermal power without producing carbon emissions. As India’s energy consumption soars, nuclear power can help meet demand. To achieve its net-zero emissions goal, ensure energy security, and support economic growth, India must increase the role of nuclear power in its energy mix. COP28 would be an excellent opportunity to highlight this.”

You can read Saurabh’s detailed assessment here.

Does Pranay moonlight in Malayalam Movies as Fahadh Faasil?

This is not our question; this is what Balakrishnan Devarajan asked our very own Pranay Kotasthane in his latest episode of Shortcast Over Coffee!

You can write back to us on this strategically important question. India wants to know.

Our favourite All Things Policy Episodes of the Week

The State of Haryana passed the Haryana State Employment of Local Candidates Act, 2020 which provided 75% reservation to local candidates in all private sector jobs in the state which paid less than Rs. 30,000 per month. Recently, the Punjab & Haryana High Court struck down the law as unconstitutional for violating the fundamental rights to movement, settlement and trade, occupation and business.

Saurabh Todi and Shrikrishna Upadhyaya dissect the issue of local reservation in the private sector, the anti-migrant sentiment associated with such policies, and the reasoning and implications of the High Court verdict in this fascinating episode of All Things Policy. This is Part 1 of the local reservation law series.

Part 2 of the series features Shrikrishna Upadhyaya and Anupam Manur, Professor of Economics at Takshashila Institution, on the economic benefits of migration, the constrained economic freedom in India, and challenges with economic integration of Indian states. Anupam explains how demands for reservation are intrinsically related to unemployment and economic growth. Listen to it here.

Wait! There’s more…

Takshashila Director Nitin Pai has a column in Mint on the all-important climate change debate. Given that COP 28 is on, and, quite literally, the future of humanity depends on how we tackle this issue, it’s important to understand why social capital is important to achieve our ambitious goals. Read his piece here.
Nitin, the author of the bestseller Nitopadesha, was in discussion with Vivek Shanbag at the Bangalore Literature Festival held this weekend. Nitin spoke on the motivation behind his work and ‘prajadharma’ in a modern democracy. The book is a unique collection of stories from the animal world containing ancient and timeless wisdom on a citizen’s role in society, governance, markets, economic freedoms, and more. Get your copy here.
Takshashila Institution was represented by Carl Jaison and a team of researchers at the Bangalore Tech Summit 2023, held last week. We interacted with a diverse crowd of techies, tech entrepreneurs, tech enthusiasts, delegates, students, and of course, a bunch of tiny tots (a.k.a. tomorrow’s leaders).