Look out, world: Here comes booming India

Published 12:00 am Thursday, August 4, 2005

China has replaced the Soviet Union in our lexicon of villains, and the age-old American preoccupation with the growth of this Asian giant has metastasized into full-fledged paranoia. But the truth is much more sanguine.

India, not China, is the coming giant of the 21st century. And India, unlike China, has no history of imperialism or inclination to global domination.

This year, for the first time, India passed China in economic growth. Its gross domestic product (GDP) shot up by more than 8 percent and now amounts to more than $3,000 per capita, on a purchasing-power-parity basis. China’s GDP, about $5,000 per capita, is still larger, but not for long.

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The key to China’s coming failure and India’s growing success is Beijing’s dependence on manufacturing exports for its wealth and New Delhi’s focus on its service sector. China exports more than $500 billion of products to the rest of the world, including more than $125 billion to the United States (we sell China only $25 billion each year – this is not a typo). Because of its low-wage economy and massive manpower, China can undercut the rest of the world in labor costs and produce goods for less than anybody else can.

But this race to the bottom of the global economy will be won not by the lowest-wage economy but by robots. In the coming decade, the growth of robotics will end most manufacturing employment. Manufacturing will go the way of farming – a few percentage points of the global work force will produce all our products, just as it now grows the bulk of our food.

China’s impoverished workers will lose out to American and Japanese robots, and the source of its economic growth with likely wither in the coming decades.

India assured its future power by switching away from the socialist economic model in the early ’90s and has moved closer to a free-market system each year since. With the fall of the state-oriented Congress Party, the government has pushed free-market economics ever more forcefully.

India’s economy is firmly rooted in the service sector. Almost half of its GDP comes from services, spurred by almost $4 billion of investment by American companies. Because of its English fluency, India is in a position to tap into the growth of the U.S. and U.K. economies and to provide low-cost, high-quality services, particularly to the high-tech market. Try calling any computer help line and listen to the accent on the other end of the phone.

English will trump Chinese as the language of the global economy, and services will exceed manufacturing in the information age. India, not China, is equipped to exploit both of these developments to fuel its rapid progress. India’s middle class, now numbering more than 300 million people, will develop purchasing power to sustain rapid growth from its internal market in the near future.

And India is not imperialistic. It has never focused on aggrandizement or gaining regional power. With the visit of India’s prime minister to the White House, we should focus on its increasing ascendancy and celebrate the fact that we will, indeed, have to deal with an Asian giant, but it won’t be China. The huge state sector that weighs down the Chinese economy, the lack of English fluency and the communist aversion to permitting free access to the flow of global information all militate against its following the Indian model.

India will likely make a great global partner for the United States. In a recent Pew research survey, Indians expressed warm feelings for the United States and gave us a positive rating relatively unique in the world. A recent book, The Anglosphere Challenge by James C. Bennett, stresses the pivotal nature of English fluency in the information-age economy to come. The growing role of India is testament to that observation.

Dick Morris was an adviser to Bill Clinton for 20 years. Look for Dick’s new book “Because He Could” about Bill Clinton. Copyright 2005 Dick Morris, All Rights Reserved. Distributed by Cagle Cartoons, Inc. www.caglecartoons.com Call Cari Dawson Bartley at (800) 696 7561 or e-mail: cari@cagle.com email for Dick Morris is dmredding@aol.com

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