Much ado about nothing? World-historical implications of the re-emergence of China and India

Abstract

China and India's increasing prominence in the world economy has not been accompanied by an equally prominent role for them in world politics. The opening up of the two giant trans-Himalayan neighbors has allowed corporations to fragment production operations into part-processes and distribute them across the planet to benefit from wage and cost differentials. This has significantly impaired the strength of domestic manufacturing lobbies and of industrial labor and led to the hollowing out of manufacturing sectors and the widening of inequalities in income and wealth everywhere. New forms of industrial organizations emerging in China and India – hybrid state–private partnership arrangements and large diversified corporations – have not been conducive to creating well-paying jobs or the self-organization of workers that has thus far been the hallmark of industrial capitalism in leading states. This set the stage for a worldwide depoliticization of politics. In the West, though it was articulated differently given distinct political formations, the decline of industrial labor and the greater political organization of big business led to a rightward shift in politics with the Reagan and Thatcher governments. The influence of US universities was felt worldwide as they attracted students from all over. In both China and India, the rise of a substantial middle class whose interests were tied to their comperes in the United States led them to acquiesce in US domination on the world stage. In these conditions, the onset of a financial crisis in 2008 may have set the stage for the beginnings of a major transformation. China responded with a massive stimulus program that benefitted many resource-rich and energy-rich states. And China's continuing need for energy and strategic industrial raw materials lead to the possibility of greater confrontation with the United States over Iran and other issues while the growth of a domestic market lessens reliance on exports to the United States. Indian conglomerates have not only used the opportunity presented by the crisis to make major corporate acquisitions overseas but the looming US withdrawal from Afghanistan is also leading New Delhi to reassess its role in the region in the context of its rivalry with Pakistan.

Keywords:

• China
• India
• depoliticization
• economic growth
• world economy

Acknowledgements

An earlier version of this article was presented at the Tenth Conference on International Relations, Middle East Technical University, Ankara, Turkey, on 15–17 June 2011. Non-incriminatory thanks are due to Pinar Bedirhanoglu and other participants at the conference and to Sridevi Menon.

Notes

¹According to Motoko Rich (2011) there were 13.9 million unemployed and 8.4 million underemployed workers, while an additional 1.1 million had given up looking for work – or a combined under/unemployed rate of 16.1%. Put differently, only 58.1% of the US population is working, the lowest level in almost three decades.

²According to Peter Marsh (2011a), the United States, however, had a huge productivity advantage as it had only 11.5 million industrial workers as opposed to China's 100 million.

³India, China, and Russia abstained from the Security Council resolution that authorized air strikes to protect Libyan rebels while South Africa voted in favor of it (Aneja 2011a). Subsequently, India and several African states called for a halt to the bombings (Varadarajan 2011).

⁴Also see Palat (2008, 2009, 2010). A recent study indicates that many Chinese products destined for the US market will be replaced by domestically manufactured goods by 2015 as more companies invest in the United States due to good productivity growth and low wages – but that the United States is still destined to be the no. 2 manufacturing country (Marsh 2011b).

⁵Wages rose by 14% in Shanghai, by 18% in Guangdong, and by 28% in inland Chongqing in the last year (Meyerson 2011).

⁶In the first five months of 2011, estimates suggest that China invested less than a quarter of its new currency reserves in the United States, well below the rate in previous years (Rabinovitch 2011b).

⁷Though Germany still exports more to France than to China, by 2009 German companies were investing more in the latter than in the former (Ewing and Dempsey 2011).

⁸Constraints of space preclude a development of these points here, but see Giovanni Arrighi (1994), Walden Bello (2006), and Greta R. Krippner (2005).