Power without responsibility? The rise of China and India

16 September 2010

As the Asia-Europe Summit gets ready to meet in early October, what are the implications of the rising power of Asia for progress on tackling poverty, inequality and climate change?

Praful Bidwai shared these reflections in the run-up to the Asia-Europe People's Forum (AEPF8); download the booklet with reflections also from Susan George, Ben Hayes and Walden Bello.

How do you think Asian and European governments view each other strategically as we approach the Asia Europe Meeting in October?

I think the Asian elites are looking for recognition and a higher profile, because their countries are now among the main drivers of global economy thanks to their sustained relatively high GDP growth. European elites recognise this. During the great recession which still continues, the Chinese and Indian economies didn't slow down significantly and have recovered remarkably rapidly. This is partly because of strong domestic and regional demand based on large markets. It is also partly because they are not as deeply integrated into the global capitalist system as the European economy. For example, their financial sector is largely autonomous and fairly tightly regulated so it can be shielded from a slowdown.

This crisis has highlighted what has been in progress, which is that the global power balance is shifting to Asia. There is general recognition that Asia is in the ascendant and Europe is in decline. So the European elites want a stronger relationship with China, India and significant middle powers like Indonesia, Thailand and Malaysia as a way of retaining their own relevance and power. The ASEM process is driven more from within Europe than Asia. For Asia, it is not that Europe is irrelevant but that Europe has not asserted its own autonomy enough from the United States.

So any relationship with the EU will be a replication in some way of their relationship with US. This has been clear in Europe's response to the economic crisis, which has been one of very hesitant Keynesianism without disturbing any of the neoliberal arrangements of banking, industrial policy or the overall macroeconomic framework.

How do you understand the rise of India and China? Does it have emancipatory potential for those committed to a more just world?

Asia is not uniform in terms of its economic and social models. Malaysia, for example, has set quite ambitious targets on health and education, far beyond India’s and China’s. Even in Thailand, there is strong support for egalitarianism. The 'red shirt' protests there had a lot to do with this healthy populism, calling for affordable healthcare for example. It was an assertion that people wanted more than free markets and growth.

But the elites in Asia are, generally speaking, not looking for alternatives in any substantial way; but rather space for greater autonomy in the global system, for changes in North-South relations in areas such as trade. Even in these areas, it is strange how timid the Indian and Chinese elites have been up to now in changing the balance in the International Financial Institutions and other structures – for example their percentage of votes in the World Bank and IMF have gone up only marginally. It is egregiously odd that Britain and France still have more votes than China.

How do you think nations like China and India envisage using this greater autonomy or power in the global system?

Sadly, there is hardly any debate on these questions. Recent changes in global power relations have enabled India to get away with a lot – its ownership of nuclear weapons, for example, has been “normalised” even though it involved a breach of the global non-proliferation regime and even though India has signed no agreement on nuclear restraint or disarmament.

But there is no debate on how to use India’s growing power. India used to have a certain coherent perspective in the early years after independence, with its commitment to the Non Aligned Movement and decolonisation. Gandhi and Nehru asserted that they did not want to imitate the major imperial powers, arguing that India should exercise a certain moral influence on the world, demanding a more equal, peaceful and freer international order. This led to India taking a leadership in the decolonisation movement and being one of the strongest advocates of the New International Economic Order in the early 1970s. That coherence is now completely lost. Any statement that India now makes related to this past—and it does invoke that legacy from time to time—has no soul.

India should be promoting not itself, but the interests of the Global South and its peoples.

China and India don't talk about these issues either to each other or in larger forums such as the East Asia Summit. They occasionally talk the language of greater global equality and balance, but don't set a good example. For example, India has been very shy on cancellation of the debts owed by poorer countries to itself.

What about Indian and Chinese transnational companies? Do they differ in any way from European and US transnational companies?

As regards Indian transnational companies operating within Africa, where they are rapidly growing,, there may be a slight difference – in terms of recruiting more Africans, perhaps outsourcing or farming out less to contractors – but otherwise they are no different. They are in the same extractive industries, driven by the same search for maximising profit.

There are some state companies, the Oil and Natural Gas Corporation, for example, which do behave a bit differently than private sector companies. They often try and encourage joint cooperative projects – not just building refineries but training Africans to build and run them in the future, for example. But I am not sure these healthy trends will survive the fierce competition for oil and gas.

Are China and India good models to follow in terms of delivering for ordinary people?

India's economic rise means nothing to the Indian people, who have gained little from it. We have had the two highest-growth decades in recent history, but have seen virtually no reduction in mass poverty, malnutrition, or improvement in the quality of public services. In some respects the poor have become even poorer and there is certainly greater deprivation in terms of dispossession of land, decrease in peoples' access to natural resources and growing vulnerability to climate change. The bottom 50% in India survive on less than $1 a day. The UN Development Programme’s new Multidimensional Poverty Index has not shown any improvement in India. Inequality has grown like never before.

Instead of genuine inclusive development, we have a horrible criminal crony capitalism, where the government gives hundreds of billions in tax write-offs to companies but is very reluctant to spend anything on health and social welfare. The only noteworthy social scheme which is meant to help the excluded is an employment scheme for poor rural families that guarantees 100 days of manual labour every year at minimum wages. Even this programme has not been fully implemented, as the government has been reluctant to add funds to extend it across the country. So India can't be a model at all.

China is largely similar. Poverty there is less wretched and widespread due to the land reforms of the 1950s and 1960s and the state's provision of public services, which for example means that there is almost complete literacy in China compared to India where a third of the people are illiterate. However the pattern of growth they are following now is similar to India in its failure to make a difference to many of China's poor. In China, it is also combined with a lack of civil rights, political freedom and the freedom to unionise. China’s growth has been ecologically deeply destructive and unsustainable. The Three Gorges Dam is typical of this, leading to the displacement of more than 2.5 million people.

For the elites in the Global South, the sheer lure of 8 and 9% growth in China and India is very tempting. But we need to realise that these patterns of neoliberal growth are also ones of jobless growth. In India, economists people used to speak derisively of our 'Hindu rate of growth'. This was an average growth of 3 to 3.5% that we had for a number of decades—regardless of the economic policy regime (the assumption being that little has changed in Hindu society for ages). Yet even in this period we had a two per cent rise in employment every year. Now with more than 8% growth, we only have an increase of jobs of 1.2 to 1.3%.

What do you think of China and India's position on climate change?

It is very ambivalent and driven primarily by short-term interests of maintaining high GDP growth. Up to now their position in global negotiations has been articulated within the G77 plus China grouping within the UN Framework Convention on Climate Change (UNFCCC). The two significant agreements that have been signed internationally, the Kyoto Protocol and the Bali Action Plan of 2007, have one positive feature: identifying and assigning responsibility broadly along North-South lines.

Identifying historic responsibility is important but it needs to be modified to take into account at current and future emissions. During the process of negotiations, China overtook US as the world’s Number One emitter of greenhouse gases. India has overtaken Japan to become Number Four. And both countries' emissions are rising much faster than global average. So we have to bring these emitters into the net at a future date, and get them to reduce their emissions intensity per unit of output.

However China and India resisted any attempt to be brought into the restraint framework, saying their average per capita emissions are much lower than Europe and the US 2 tonnes in India; 4-5 tonnes in China compared with 10-12 tonnes in Europe) and that they need climate space to tackle poverty and for development. But this is hypocritical because it means little in a society which is so sharply divided between rich and poor.

In fact the Indian rich are very similar to the rich in the North in terms of emissions. The main contribution to rising emissions in India is coming from the Indian rich – with their insatiable appetite for luxury goods. Car consumption in India is growing at 30% a year, while it is falling in the West. Air conditioner sales are 50% higher in India than a year ago. Yet this is in a country where half of all households have no electricity connection.

The Indian and Chinese elites both hide behind their own poor in resisting the demand for restraint on emissions. And at the same time, they hide behind the rich in the North.

What about India and China's role during climate negotiations?

In the climate talks, India and China played a cynical game. They expressed solidarity with the Global South. But they also stabbed the developing countries in the back by forming the BASIC group at Copenhagen (with Brazil and South Africa). BASIC secretly negotiated a deal with the US. The scandalous result was the Copenhagen Accord which sets no obligations, no emissions cuts, no targets, no time-bound goals and no roadmap.

Together with 21 other countries, the US and BASIC tried to impose the so-called Accord on the rest of the world community. The only numbers that appear in the Accord are promised assistance which is a fraction of what is need - $10 billion a year compared to at least $1000 billion dollars a year that many say will be needed for poor countries to deal with the expensive business of adapting to climate change, and transitioning to low carbon economies. The Copenhagen Accord played into the hands of those countries, especially US, who want no commitments at all, affirming Bush Senior's infamous statement at Rio in 1992 that he was not willing “to negotiate American lifestyles.”

China and India thus have a deeply contradictory, hypocritical, and duplicitous position on climate change.

How do you think we can move to a debate where equity is at the core of climate negotiations?

I think we need an approach that embraces historical responsibility, current and future emissions, and the question of foreknowledge that you are causing harm. I discuss six approaches in my recent book: An India That Can Say Yes: a Climate-Responsible Development Agenda for Copenhagen and Beyond. I certainly don't believe that Cap and Trade is the way forward because of its reliance on the market. We can't allow a precious thing such as the earth's atmosphere to be held hostage to speculation.

One possible way forward is the idea of Greenhouse Development Rights. This cuts through the North-South divide, as it works from a threshold of development, looking at what is needed to meet basic needs of all with human dignity, which roughly works out in Purchasing Parity terms at an average of $7500 per person per year. Those above the threshold are obligated to pay, whether in the North or the South. If you are a rich Indian elite like Ambani, Mittal or Jindal, you should not be able to hide behind poor people. Similarly the poor in US shouldn't pay for the rich in their country.

A second approach is looking at how much global carbon budget is left and then dividing it up more or less equally among all the world's peoples with some qualifications – for example, the least developed countries must have more room to expand if they can't meet their development objectives or because they need financial support for transition and adaptation. This approach puts a special emphasis on helping marginalised and vulnerable communities, for example shepherds, forest-dwellers and rag pickers, and rewarding them for conserving biodiversity and reducing emissions.

If we are to come up with a solution that is acceptable for as many people as possible, we need an approach that embraces equity internationally and domestically. Beyond this, we need a whole series of other steps based on cooperative efforts to develop renewable energy, low-carbon technologies, sharing of positive models of urban transportation systems such as those in Colombia, and of course preventing any patents that block the sharing of these key technologies. ASEM could actually play a constructive role in this but I fear they are not imaginative enough.