Expert View: Beware! A new world order is in the making...

The world is changing; China seeks to become the leader of the capitalist economy while the present leader, the US, is seemingly vacating its position. Terrorism is on the rise, and we are witnessing a hostile alignment encircling our nation. Are we ready for this new world order that is coming?

The world is witnessing some important changes particularly related to powerful countries. These are not changes such as global warming and climate change. They are not changes brought about by nature, but by people running big countries. The world globalisation leader has become a protectionist economy, with President Donald Trump announcing harsh tariff on the import of important commodities like aluminium and steel. There was Brexit, and the much revered European Common Market got affected. There was a verbal duel between North Korean dictator Kim Jong and Donald Trump with the mounting threat of nuclear war, and now the surprising news that the two leaders will meet to thrash out differences. In China, the old rules existing for 35 years have been changed to make Xi Jinping lifelong President, after Mao. Xi is on his way to become a most powerful person. Communist country China seeks to become the leader of the capitalistic economy, while the present capitalist leader US is in the process of vacating its position. China seems to be getting more expansionist. And terrorism is still on the rise, and our neighbour Pakistan is emerging as leader in this sector. Let us ponder over some of these issues.

Globalisation and the concept of a cooperative world economy is at threat. The US is abdicating its place as the global leader and coordinator. Friendly countries, allies and even smaller economies are busy rewriting their economic paths. They cannot blindly rely upon the US now. For the US, the new policy is America first, and it is least concerned with WTO policies or even UN policies, agreed to by all countries, on climate change. Multilateral trade agreements entered into by the previous US governments are being broken by the Trump.

Short-sighted policy

The new policy of the US is apparently shortsighted as the biggest economy of the world cannot grow in isolation. Inequality and problems in the world will affect it, as the US is what it is today through the confluence of mind and material from all over the world. The original inhabitants of the US were poverty stricken Red Indians. The protectionist policy now being adopted by the US will seriously affect it, as the old maxim cannot be ignored that poverty anywhere is a threat to prosperity everywhere. The new erroneous policy of the US will change the face and complexion of international trade.

The one country which is enjoying the situation is China. The second biggest economy of the world wants to usurp the position the US has been holding, and that is possible in the future only when US dithers. But the happiness of China may prove too premature as no country progresses economically unless the world progresses. The economy of China is export-oriented and its major buyer is the US. How can China progress if its major buyer is not purchasing or purchasing less from it? China these days is busy with new trade agreements with many countries, but this will not help China as long as US continues to be the biggest economy, and it will remain so in the foreseeable future. China will do much better if it grows on its intrinsic strength and not by exploiting the economic weakness of smaller countries, as we are seeing these days through its policy in Africa and Asia.

The recent policy change in China regarding the selection of the president is really historic. It will have many implications both for China and the world. Xi Jinping can now be President for life which may have both good and bad impact. He may turn out to be a benevolent dictator or a bad autocrat. We all know that power corrupts and absolute power corrupts absolutely. It is desired that he will do good both for China and for the world. He is a tall leader in his country as he is a nationalist and crusader against corruption.

The new policy of the US is apparently short-sighted as the biggest economy of the world cannot grow in isolation. Inequality and problems in the world will affect it, as the US is what it is today through the confluence of mind and material from all over the world

Expansionist China

But at the same time the world and particularly neighbouring countries have serious reservations about him over his aggressive expansionist design. He has converted islands in the South China Sea into his naval and army bases. Some atolls have been transformed into artificial islands in the South China Sea for defence purposes, complete with an air base. The South China Sea is the sea route used for maximum trade cargo of the world and the developing scenario there with Xi Jinping remaining President is really scary. The neighbouring countries earlier were hoping that after 2023 when the new President takes office in China, things will improve but now that wishful thinking is gone. The South China Sea policy of China is all due to Xi Jinping and now he will continue for his lifetime.

For India the lifelong presidency of Xi Jinping may not be very good considering his active involvement in anti-India policies. We have recently seen what happened at Doklam. We are seeing what China is doing in our neighbouring countries to encircle us with Chinese bases there. Pakistan is a close ally of China with huge investments by China in constructing roads and ports there. Pakistan has ceded part of our territory to China and China has gladly accepted it, disregarding our sovereignty on that land. Huge investment is also being made by China in Bangladesh, Nepal and Sri Lanka. Our friendly neighbours are now turning closer to China.

Hostile encircling

The changing situation is not good for us and this activity will continue with the continuance of Xi Jinping. China is increasing its defence budget and this is a matter of increased anxiety for us as there can be situation where we can have war on two fronts, both on the eastern and the western sectors. Normal reasoning says that China should have more friendly relations with India as we are a big market and a peaceful country, but instead it has chosen Pakistan as its friend which is a country in utter turmoil. The only inference can be that China wants to encircle us as we are competitors in this region.

Recently, the world witnessed the real threat of a big nuclear war with North Korea testing its nuclear arsenal of deadly long-distance missiles and even hydrogen bombs and issuing a threat to attack Japan, South Korea and even the US. President Trump issued retaliatory threats of "finishing" North Korea. The world was waiting to see which country would blink first, but now a good anticlimax has taken place as the two leaders have decided to meet. North Korea has given indications that they will freeze their nuclear arsenal and also limit it. The new development is good for the world. The inference is that in international relationships there are no permanent friends or permanent enemies.

One natural question is, how is India dealing with the changes taking place in the world? India has adopted the policy of caution. India has not reacted to what Donald Trump has said about higher import tariff on steel and aluminium. India knows that China has bigger exports to the US while our total export to the US is just 2% of our export. India has also not said anything on reciprocal trade actions with the US. We have a very strong bonding with the US. Donald Trump has been helping us on various issues, particularly on the issue of export of terrorism from Pakistan. On the global front, the US has stood behind India. We have to maintain this good relation without rubbing Trump too hard on trade matters, especially since China will anyway do it as it has bigger trade with the US.

With China, we are dealing with each issue on its merits as we did in Doklam. We know that China may harm us and that it stands with Pakistan on issues relating to India, but at the same time our government always seeks China’s cooperation. We are strengthening our defence and our ties with countries who are not very close to China. Xi Jinping will remain president for life and we have to make ourselves constantly stronger to fight any situation emerging in the future. The stronger we become there will be less scope to fear from China, in spite of being encircled.

Changes will continue to come, some of which will be for the good while some may be bad. Countries which are strong will continue to grow despite some bad hiccups of change. So we have to enrich ourselves with resources. We have to grow as a military power with all modern equipment. We have to invest in the well-being of our citizens with better education, health facilities and improvement in all parameters of the human index. We have to be culturally rich, better in sports and in scientific innovations. We have to been seen as a powerful country in the world but with a difference, as per our ancient philosophy that the world is one family.

Neighbouring countries have serious reservations about Xi jinPing over his aggressive expansionist design. He has converted islands in the South China Sea into his naval and army bases. Some atolls have been transformed into artificial islands in the South China Sea for defence purposes

We have a role

Can we achieve all this within reasonable time? Yes, we can. The starting point will be raising resources, as for most endeavours we require money. Our present resources are not enough. China grew economically and that simultaneously helped it to become a military power as well. The problem with us is whatever resources we have even today are being lost in tax evasion, scams and frauds. Most of our people believe that it is their birthright to evade tax. We have just started a modern and efficient tax system by launching GST. Here also our innovative people have discovered loopholes and it has been reported by the government that there is a suspicion of leakage of Rs.3,600 crore, in just six months. Banks are required to advance loans so that the economy grows but here also there are several cases of reported frauds like in the case of Nirav Modi, Mehul Choksi and Vijay Mallya, where taxpayer money has been looted and these culprits have run away from the country, making recovery very difficult. Then we have a sizeable number of cases of scams and corruption where national wealth is robbed.

Our people have to change first and start thinking for the country to make the country strong to withstand any changes in the world. First come the people and then comes the government. We wish to be strong without changing our habits, which will not help us to become stronger to meet the changes of the world. Our country has all the intrinsic qualities and potential to transform ourselves and be a great power in the world. Let us make the beginning today. Changes in the world will come and go and a strong India will keep on being stronger.

by S K Jha

(IRS (retd) and former Chief Commissioner of Income Tax)