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  • 28Jan

    Which emerging economic bloc is the closest competitor to China?

    With the rapid rise of the Chinese economy – now the world’s second largest national economy in the world – many experts and analysts outside China are beginning to wonder if there is a real, potential competitor to China in the horizon. Many amateurs tout countries like Brazil, India or Russia. Others think that China can never surpass the United States for facile reasons.

    What is the real competitor to China in the near future, and why cannot these much vaunted other competitors live up to the challenge?

    Potential competitors – Brazil, Russia or India?

    For both Brazil and Russia, the economic race against China seems to have been lost. Not only is China’s economy about 4.5 to 5 times as large as Brazilian or Russian now, China’s population is about 7 to 9 times larger than either of these two countries. Moreover, both Brazil and Russia enjoyed the some rapid growth on the back of their resource exports alone, which appears to be a rather feeble economic strategy.  

    With India, apart from much publicity in the Western press and subsequent inflow of investments and active promotion and aiding of its economic growth, the economy has simply failed to match China in any major indicator over the last few decades. Not only is China’s economy much larger (about 4.5 to 5 times larger), but it also continues to grow much faster – thus widening the gap even further. It was said that “India is merely a geographical expression. It is no more a single country than the Equator.” As an artificially held-together country, it fails to generate the same national ethos and collective historical shared experience nor do its citizens possess the necessary academic, intellectual, cultural or physical abilities to compete with China on a level footing. All in all, its prospects look very bleak too.

    The European Union and The United States

    Shanghai is the largest Chinese city by population.

    Shanghai is the largest Chinese city by population.

    In 2014, China is officially the second largest national economy after the United States. However, the gap is closing so fast that, it is estimated within another three to four years, China will surpass the United States, and then, the European Union (a supranational organization) in short order.

    What economic bloc can challenge China?

    There is only one economic bloc that can potentially challenge and surpass China. This economic bloc would include a current population of 1.6 to 1.7 billion, greater than China’s 1.3 billion and growing faster than China. This economic bloc also spans an area much greater than China or Russia (the world’s largest country).

    Beyond that, one reason that countries like India finds it hard and will continue to find it hard to challenge China is that component economies of China like Macau or Hong Kong today have life expectancies and GDP per capita higher than or equal to those in Western countries like the US or the UK. This experience helps the Chinese policymakers and citizens who visit Macau and Hong Kong from the Mainland set benchmarks for themselves. There is no Indian counterpart to Macau or Hong Kong – highly developed, functional, wealthy economies with high life expectancies and very high Human Development Indices (HDI).

    OIC members

    It is only in the OIC (Organization of Islamic Conference before, Organization of Islamic Countries now) that one finds a competitor that fits the bill. Its total population surpasses that of China and is growing faster. Member states like Qatar, Brunei, the UAE, Kuwait, Bahrain, Oman, Saudi Arabia, Malaysia, Lebanon, Maldives, Kazakhstan and Turkey have either high or very high HDI indices, life expectancies, GDP per capita and generally high living conditions.

    Many member states like Iran conceal much potential, which can be unlocked once decades of continued Western sanctions and embargo are lifted. After continuous sanctions and violence due to the illegal invasion in 2003, Iraq has now been growing by leaps and bounds, often at double digit rates.

    Almost all the ingredients of continued, decades long economic growth are in place – high population of youth, fast growing consumer markets, enormous natural resource endowments and location along the most strategic waterways of the world. More importantly, there are unique ways of conducting trade and banking, politics and natural resource exploitation that this bloc (OIC) can present to the world.  

    Islamic banking has already become a buzzword in many non-Muslim economies from London to Hong Kong, while Muslim majority Dubai and Kuala Lumpur remain important global centres of global Sukuk (Islamic bond) issuance. These are unique elements that none of the much hyped emerging economic powers can provide – a new economic model, a new way of doing business and banking.

Discussion One Response

  1. August 31, 2014 at 11:03 am

    Their has been much research is islamic states and cultures fail to innovate and achieve sustainable growth. It’s obscurantist religion prevents scientific inquiry and the dependence on oil saps the incentive to work hard.

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