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Pakistan Surpass India in Emerging Economies Rankings by World Economic Forum

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The World Economic Forum ranked India at 62nd position in the list of emerging economies, while arch-rivals of India i.e. China and Pakistan were ranked at 26th and 47th position respectively. According to the Inclusive Development index shared by the World Economic Forum, Norway continues to be the worlds Number 1 inclusively advanced economy, with Lithuania as the Number 1 of all emerging economies in the world. The Forum announced these rankings during a meet to release the annual index that was attended by PM Modi, President Trump and other leaders.

What does the Index measure when ranking the Emerging Economies?

The index is measured after assessing several parameters, including standard of living, the sustainability of the environment and the measures taken to protect the coming generations from going into a mounting debt.

At the annual meeting, the World Economic Forum encouraged the leaders to shift to inclusive development and growth models. It also stated that using GDP as a measure of growth only leads to inequality and short-term realisation of goals.

Emerging Economies Ranking by The World Economic Forum

Last year, India ranked at number 60 amongst the 79 emerging economies, while China was at number 15 and Pakistan at 52.

The 2018 index, measures the progress made by 103 emerging economies based on 3 parameters:

  1. Growth and Development
  2. Inclusivity
  3. Equity in terms of inter-generation

This has further been divided into a measure of 29 economies that fall under the ‘advanced’ group and 74 economies as ’emerging’. Although India ranks low, it is one of the top 10 emerging economies that shows an ‘advancing’ graph. Of the 29 advanced economies, only 2 have shown an ‘advancing’ graph.

Since 2012, China has been ranked on top of the list of emerging economies in GDP and growth of labour productivity. The ranking, however, has been greatly affected by poor performance in terms of inclusivity, as reported by the World Economic Forum.

India’s Emerging Economies Trend

  • India has been categorized as an ‘advancing’ economy
  • In the Inclusivity parameter, India ranks at 72
  • In the Growth and Development Parameter, India ranks at 66
  • In the equity for inter-generation, India ranks at 44

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Asia Pacific

Africa emerges as a new battle ground for India and China for trade, commerce war

India sees this initiative as an effort by China to flex its economic muscle and extend the reach of its influence. “However, India’s engagement with Africa is not limited to trade and commerce.

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Post the border clashes, India and China are striving to create a robust influence in Africa through humanitarian aid and investments. However, with the countries adopting different outreach strategies, analysts suggest that competition between India and China is unnecessary as there is room for both to make their presence felt. 

Why China’s $200 Billion ‘Gamble’ On Africa Has Failed Miserably?

According to Maria Siow, a China-based journalist and analyst, India’s renewed focus on Africa is a result of China’s growing footprint on the continent, not just in terms of trade and commerce, but also Beijing’s rising maritime interests.

China’s Belt and Road Initiative aims at connecting Asia with Africa and Europe through land and maritime routes which would enable regional integration and growth in trade and commerce.

Recently, Chinese Foreign Ministry spokesperson Zhao Lijian said during a press conference that a total of 44 African countries and the African Union Commission have signed cooperation documents with China on the Belt and Road initiative.

India can ‘no longer’ choke China at the Strait Of Malacca as Beijing finds solution

“It is a vote of confidence in China-Africa cooperation from our African brothers,” he added.

India sees this initiative as an effort by China to flex its economic muscle and extend the reach of its influence. “However, India’s engagement with Africa is not limited to trade and commerce.

The Indian diaspora, for instance, has been a major force in several African nations’ pursuit of prosperity and political participation,” said Swaran Singh, a professor at the Jawaharlal Nehru University’s School of International Studies.

JF-17 vs Rafale: Why Pakistani JF-17 Thunder Poses A Serious Threat To Indian Rafale Fighter Jets?

India and China stand far apart in terms of the size of their economies. India’s US$2.7 trillion versus China’s US$14 trillion which acts as a roadblock for New Delhi to make further inroads in African nations.

According to United Nations trade data, 39 African countries imported more than US$71 billion worth of goods from China in 2017 and only US$21 billion from India.

“African governments are therefore aware that in spite of their rapprochement with India, China remains the most important – and at the government level, the most trusted – development and investment partner on the continent,” said Lin Minwang, the deputy director of Fudan University’s Institute for South Asian Studies.

CPEC Project A ‘Trillion-Dollar Blunder’, Pakistan Calls It ‘Outstanding Initiative’

Nevertheless, India has not made huge loans to African countries and thus avoided being a major part of the serious debt problems facing by many African countries today.

However, it is expected that India’s investment in Africa will become more valuable especially in Africa’s health care and pharmaceutical sectors. Sizeable investments have already been made in oil and gas, mining, banking, pharma, textiles and other sectors in African countries under the strategic initiative, “Focus Africa” by the Government of India launched in 2002.

Zhang Yongpeng, a senior research fellow at the Chinese Academy of Social Sciences’ Institute of West Asian and African Studies noted that even though India posed a challenge to China’s strategy in Africa, for instance in bidding for commercial projects, the economic threats were not daunting for now.

Trump Would Not Have Supported India In A Possible War Against China – US NSA

African nations are unwilling to choose between China and India because of the accruing benefits and investments from both nations. Also, the African governments are avoiding being dragged in conflicts, especially during the ongoing trade and diplomatic tensions between the US and China and the border tensions between India and China.

“India tends to have largely positive perceptions as a fellow Global South democracy. China can sometimes be more controversial, for example, due to the recent ill-treatment of Africans in Guangzhou,” stated Cobus van Staden, a researcher at the South African Institute of International Affairs.

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Asia Pacific

China-Pakistan Economic Corridor Economically & Logistically Unstable – Experts

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China’s ambitious plan to transport oil across the Himalayas in Pakistan under the China-Pakistan Economic Corridor (CPEC) might be “economically unsustainable” and actually benefit the US in the ongoing US-China rivalry.

India-China Border Tensions Intensify As PLA Troops Occupy Heights, Build Fortifications & Install An ‘Enormous Signage’

China has pushed its way to conquer Pakistan’s construction sector with its multi-billion-dollar Belt and Road Initiative (BRI) offering it more than 40 projects. One of the ambitiously proposed projects includes an oil pipeline connecting Gwadar port to Kashgar in China’s Xinjiang province via the challenging and unstable region of Himalayas.  

Experts write — “Starting from sea level, it will have to cross the 4700-metre Khunjerab pass to reach the Chinese mainland, requiring heavy pumping equipment and significant power supply to keep the pipeline flowing.”

Pakistan Deploys Additional 20,000 Soldiers In North Ladakh On China’s Behest – Reports

Additionally, the author says that the region is prone to the periodic danger associated with earthquakes and landslides which adds to the regular costs of maintenance. The temperature also drops to as low as negative 30 degrees Celsius which would require heating technologies apart from the insulation.

Furthermore, the project is also believed to be economically unsustainable as a study formulates that it would cost approximately $10 a barrel to move oil from Pakistan to western China through pipelines, along with added $5 to deliver oil to demand centres in the eastern region.

Pakistan Deploys Additional 20,000 Soldiers In North Ladakh On China’s Behest – Reports

On the other hand, it costs just $2 per barrel to ship oil from the Persian Gulf to the east coast in China. The author says that “this translates to China losing roughly half a billion dollars per year through pipeline shipments.”

Meanwhile, China has been pressing the project, however, the Xinjiang province of China is already supported by a massive network of oil and gas pipelines from Kazakhstan and Russia. Many experts speculate that China’s interest in the project in Pakistan stands solely due to the Malacca dilemma that could work in favour of the United States.

India-China War: China Has No ‘Military Advantage’ Over ‘Battle-Hardened’ Indian Army – CNN

VS Reddy, a research assistant at the Nuclear and Space Policy Initiative of the ORF believes that “China has been pressing to complete the Gwadar port in Pakistan and build the China-Pakistan Economic Corridor (CPEC), allowing it to be connected overland to an Indian Ocean port.

Gwadar and CPEC allow China to circumvent the Strait of Malacca which can be blocked by rival navies in the event of a conflict termed as “Malacca Dilemma”. Many political analysts opine the Strait of Malacca situated between Malaysia, Singapore, and Indonesia connecting the Indian and Pacific Oceans could help the US gain advantage from an event of Chinese blockade in the region.

How Many Chinese Soldiers Were Killed In The India-China Clash At Galwan Valley / Ladakh?

“Since China’s economic growth is highly dependent on the sea routes for receiving energy along with other raw materials which it uses for cheaper productions which are later shipped back as finished products other continents, it could be a major blow to China,” tells Ragahvan Srivastava to EurAsian Times.

India has established a strong naval presence in the Andaman Sea adjacent to the Strait of Malacca and is regularly partnering with the U.S. and other countries in safeguarding it. “Such a presence can be translated into a formidable blockade. On the other hand, China has yet to showcase its capabilities and willingness to fight to keep this Strait open for its ships,” writes Vidya.

China-Australia Spat: Australia To Invest $270B In Defense Capabilities As Tensions Soar With China

Rahul Jaybhay / Vipasha Kaushal

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Economy

Indian Startups Ditch Chinese Investors & Move Towards Japan As India-China Ties Worsens

It is hard to estimate whether Japan will be able to match China in terms of investment and risk appetite as 18 of India’s 30 unicorns — private companies with a valuation of at least $1 billion — have a Chinese investor.

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With deteriorating ties between India and China, Indian startups are looking towards Japanese investors as the COVID-19 pandemic has left them high and dry. Experts wonder if Japan can match China in terms of investment and risk appetite.

With the ongoing lockdown and the fears of raging virus, businesses have resisted opening its operations fully which has led to ploughing back of past profits and earnings. While it is easier for long-established profit-making businesses to survive, though, for a limited period in such a situation, it can prove to be fatal for the startups with little or no profits to fall back on.

In April, the Indian government modified the Foreign Direct Investment (FDI) policy which would require the government’s approval for nations sharing a border with India to invest in the country. Such a move is aimed to curb opportunistic takeover, especially from China, when the country is still in the process of fighting the COVID-19 pandemic.

There is a rising sentiment against Chinese products in India due to the recent border clashes. After the troops of the two neighbouring countries clashed on the LAC in the Galwan valley leaving 20 Indian troops dead and an unknown number of Chinese casualties, people are pledging to boycott Chinese products.

“In the last 12 to 18 months, a lot of Chinese VCs or Chinese companies want to throw money at Indian companies, and that has inflated a lot of deals,” said Chua Kee Lock, CEO of venture capital firm Vertex Holdings. He further added that the decline in Chinese investment due to the new regulations means startup valuations in India will be hit harder than in other countries.

With growing ties between India and Japan, Indian startups are looking to get investors. “Japan, by any stretch of the imagination, is one of the top candidates [to enter India],” said Rakesh Mishra, founder of electric powertrain startup Entuple E-Mobility, during his presentation organised by National Association of Software and Service Companies (NASSCOM) to woo the Japanese investors.

“At this juncture, I won’t be interacting with any Chinese investors,” said Ajit Patil, a co-founder of DeepTek, a Pune-based medical startup. He raised several million dollars in funding from local investors and Japanese medical imaging company Nobori in May.

Toppan Printing, a Japanese commercial printing company joined a $15 million funding round for Medikabazaar, an online shopping site for hospitals making it Toppan’s first investment in an Indian startup.

“Many parts of Southeast Asia and India are ahead of Japan in going digital,” said Hiroshi Eguchi, who leads strategic investments at Toppan. “India is also attractive as a market,” he added.

However, it is difficult to estimate whether Japan will be able to match China in terms of investment and risk appetite. According to Gateway House, a Mumbai-based think tank, 18 of India’s 30 unicorns — private companies with a valuation of at least $1 billion — have a Chinese investor.

Another Japenese fund, SoftBank is one of the biggest investors in Indian companies like Paytm, Oyo and Ola with about $10 billion in investments.

“There are many companies that make large acquisitions but a better approach may be to find success through various investments,” said Takeshi Ebihara, general partner at venture capital firm Rebright Partners, said during the NASSCOM event.

Analysed By Smriti Chaudhary. Invaluable inputs from Nikkei Asian Review

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