Spotlight

New Delhi, 12 January 2025

China In 2025

STRATEGY & CHALLENGES

By Dr. Maciej Gaca

(Centre For Intl Relations, Poland).

In 2025, China will be balancing between strengthening its role as a superpower and escalating tensions. From Beijing’s point of view, South China Sea, Taiwan and North Korea as flashpoints have one thing in common: they are valuable and at the same time risky. The logic of China’s actions is classic offensive realism, i.e. striving for dominance, which increases its security but at the same time provokes rivals to react. 

As Royal United Services Institute notes: “China in Indo-Pacific is a player that must calculate every move in the context of global reactions - from the US to its closest neighbours." 2025 will be a key test of whether Beijing is ready not only to consolidate its internal power, but also to boldly shape international order. This is the moment when Xi Jinping's vision - coherent, yet marked by tensions between ambition and reality - will be confronted with the most difficult challenges of modernity. 

Xi Jinping speaks of “a nation that has risen, grown rich and grown strong”. Today, the Chairman of the Communist Party of China single-handedly defines the key directions of the country’s actions. “We must focus on a long-term vision, while flexibly responding to challenges that the world brings us. Our goal is to build a modern socialist state that is both an economic and technological powerhouse, and an unwavering pillar of stability in international arena,” he said during CPC’s 20th Congress, 2022. 

2025 looms as a moment of truth for Chinese economy, which must balance long-term reforms with pressing crises. China must address challenges of income inequality, changing consumer habits, and demographic decline, which are increasingly limiting its growth potential. Yet Beijing continues to pursue global technological dominance, investing in artificial intelligence and green technologies. The coming months will be a test of its adaptability. 

The real estate sector, which used to account for up to 25% of China's GDP, is now a symbol of deep structural problems. The debt of giant companies which exceeded 2 trillion yuan in 2024, has led to a domino effect, threatening financial stability of local governments, which have largely relied on land transactions for their revenues. China National Bureau of Statistics says 30% of their revenues came from this source. 

With housing prices falling by 12% and demand falling among younger generations, many local budgets are on brink of crisis. Beijing is facing a difficult choice. On one hand, government cannot allow further bankruptcies in this sector, which could destabilize the entire economy. On the other - further financial support programmes, although necessary, only increase the market's dependence on state intervention. 

For years, China has been trying to reduce its dependence on exports and infrastructure investment, focusing on developing domestic market. However, income inequality, deepening because of the pandemic, has significantly limited society's consumption potential. Only 30% of Chinese households saw their disposable income increase in 2024, while cost of living, including education and healthcare, is steadily rising. 

China treats development of artificial intelligence as a strategic priority, with plans to achieve global leadership by 2030. According to Stanford AI Index 2024, Chinese investment in AI research currently accounts for 40% of global spending. Key areas include facial recognition technologies, natural language processing, and industrial process automation. However, these pose serious ethical and social challenges. Human Rights Watch points out that AI technologies are used for mass surveillance, especially in regions inhabited by indigenous ethnic groups of Uyghurs and Tibetans. 

In face of US sanctions restricting access to advanced semiconductors, China has accelerated development of its domestic technology industry, particularly in field of integrated circuits. Potential for Chinese companies to become more competitive in global technology supply chain is not ruled out. It’s expected that by 2025-end, China could reduce dependence on imports of advanced integrated circuits by 15%. In lithium-ion battery sector, China is set to double its production capacity, becoming a key supplier for the global electric vehicle market. 

In 2025 aging of society and shrinking of population is a major problem. In 2024, the population decreased by 850,000; and forecasts indicate by 2030 people over 60 will constitute 28% of population. Consequences will be - from a reduced workforce to a growing burden on healthcare/pension systems. Beijing is considering raising retirement age and reforms for increasing birth rate, but previous initiatives have not helped. 

In 2025, China will try to combine the role of a mediator in key global conflicts with continuing its policy of competition with the West. In Russian-Ukrainian conflict, “Beijing will avoid actions that could weaken Russia as an ally in fight against the West.” For Beijing, the war remains both a threat and an opportunity. China will continue to attempt mediation, which allows it to present itself as a global leader responsible for international stability. 

Moscow’s success in maintaining annexed territories could strengthen China’s narrative of Taiwan as its integral part, while Russia’s defeat could weaken Sino-Russian strategic partnership. However, China’s attempts at mediation may have limited success, as its interests are seen as one-sided and focused on increasing its own influence rather than achieving international stability. 

In relations with the US, inauguration of Trump as US President will open a new stage of tension in Sino-American relations. The expected tightening of trade and technology policies will force Beijing to seek alternative markets and intensify cooperation with countries of global South, including in Africa and Latin America. This is already being noticed in the case of relations with India, despite unresolved border disputes and rivalry in virtually all areas. 

The Indo-Pacific region, and especially South China Sea and Taiwan, will be a key area of ​​Chinese geopolitical rivalry in 2025. Beijing’s actions fit perfectly into the framework of American political scientist John Mearsheimer’s theory of offensive realism: “In an anarchic world, every power seeks to maximize its strength, because only dominance ensures relative security.” China is intensifying its military and political presence in the region. 

For Beijing, South China Sea is strategically crucial - control over this area allows not only the projection of military power but also securing of trade routes through which 30% of world trade flows. The US, Japan, Australia and Philippines have responded by increasing their military presence in the region. “The South China Sea is a geopolitical melting pot where any escalation risks escalating into open conflict.” In 2025, similar actions could lead to incidents that, although unintended, could escalate into a larger crisis. 

Taiwan is not only a historical issue for China, but also strategic. Control of the island would mean gaining a key position in Indo-Pacific and a significant technological advantage, given Taiwan’s dominance in semiconductor production. Beijing is pursuing a hybrid strategy, including cyberattacks, disinformation campaigns, and diplomatic isolation of Taipei, while also intensifying military maneuvers around it. However, Beijing is likely to avoid open conflict, knowing that intervention by the US and its allies would be almost certain. 

In 2025, relations with North Korea will be shaped by closer cooperation between Pyongyang and Moscow. North Korea’s arms deliveries to Russia, which began in 2024, have undermined Beijing's traditional dominance in relations with Kim Jong-un's regime. Russia's growing influence in relations with Pyongyang puts China in a difficult position, forcing it to revise its regional policies to avoid marginalisation in the region. 

In sum, 2025 will be a time of difficult choices and even more difficult reforms for China.---INFA

(Copyright, India News & Feature Alliance)

No. 5 Vol. XLIV                                    Not To Be Published Before 8 New New Delhi, 8 January 2025

Open Forum

India’s Billionaires Flourish

COMMON MAN YEARNS ATTENTION

By Dhurjati Mukherjee 

Amid growing concern over the New Year somewhat being difficult with inflation affecting the common man, subdued investment and disturbing global geo-political situation, the wealth of Indian billionaires surged 42 per cent to over $905 billion during the last financial year, positioning it as the third largest base behind the US and China. A report by Swiss Bank UBS stated that the number of such billionaires more than doubled to 185 in the last decade and their combined wealth rose a whopping 283 per cent. Can this be attributed to the pro-rich economic policies favouring the business class by the Modi government, as repeatedly alleged by Opposition Congress? 

Remember, former Prime Minister Late Dr Manmohan Singh had cautioned that the gap in rising income and wealth inequalities, “if not matched by a corresponding rise of incomes across nations, can lead to social interest”. In fact, both Narasimha Rao and Dr Singh had at that time, dismissed any suggestion of conflict between Fabian socialism and free market reforms. 

Unlike India, billionaires in China saw their net worth eroded. And while global billionaire wealth slowed, India remains an exception. Further, financial analysts believe that India could witness an explosion in billionaire entrepreneurs over the next decade due to the policies pursued by the government, thereby contributing to further economic disparity between the rich and the poorer sections. 

Meanwhile, though the Indian government has vehemently denied the latest World Hunger Report, the country has been ranked 105 out of 127 countries in the study released by Concern Worldwide, Welthungerhilfe and Institute for International Law of Peace and Armed Conflict. It is indeed tragic that while billionaires are on the rise in a developing economy, the number of people battling hunger is rather large.   

Another finding which is no doubt a cause of concern is the fact that the average monthly earnings in rural India fell to Rs 8842 in 2023-24, down Rs 9107 in 2017-18. However, urban wages showed only a marginal increase from Rs 12,847 to Rs 13,006, according to the Periodic Labour Force Survey. But if inflation over the period is taken into account, the urban wages have also gone down. Added to this, the savings rate has fallen sharply, hitting a five-year low of 5.2 per cent of the GDP in fiscal 2024, according to the Reserve Bank of India. With discretionary spending shrinking, consumption patterns have shifted. 

While experts talk of the stability of the economy, it is surprising that the payment meant for midday meal cooks has remained unchanged at Rs 1000 per month since it was fixed way back in 2009. Adjusted for inflation, the value of this amount comes to around Rs 540 per month. The actual money they get depends on how much the state governments are willing to enhance and as most are reeling under severe financial stress, they choose not to pay attention to this segment of society. 

The economic disparity, the increase in unemployment and underemployment and the rising inflation may not be a problem for the upper echelons of society whose interests are largely of crucial interest to politicians and policy makers. Even the urban middle class, traditionally a driver of consumption, is under significant financial stress due to rising inflationary trends. India Ratings (Ind.Ra.) has rightly pointed out that consumption has been affected by factors like adverse weather, stagnant real wages and elevated household leverage. In analysing the results of the first half of the current fiscal, it has been found that eight of the 24 key consumer-facing sectors faced a volume decline. 

Preparations for the forthcoming Budget are underway, and industry associations are listing their recommendations. But nothing is known about the common man as this segment does not have a strong association to put forward its views. Besides, the unorganised labour force goes unrepresented while small peasants can never place their problems before the government. The same is true of tribals and people living in the backward regions of the country. 

Meanwhile, though much is spoken of public sector banks, Congress leader Rahul Gandhi recently alleged these banks are working as private financiers for the rich and corporate entities and were forced to prioritise profit over people, which cannot be denied as huge sums of money are being lent for business purposes. Though banks keep a small percentage for priority sector lending, the maximum money goes to finance big business.   

To further help the business class, indirect pressure was put on former RBI Governor Shaktikanta Das to cut interest rates in the Monetary Policy Committee, but he didn’t yield and as a result it is said he was not given an extension! Seen as being ‘a pro-business government’, boosting the growth momentum of this group, it has done precious little to target inflation, especially food inflation, which affects the lower stratum of society. In this context, it is worth mentioning that when Thomas Piketty and organisations like Oxfam have been talking about the need to tax the super-rich, India’s Chief Economic Adviser spoke against imposing a billionaire tax. His argument that this may stall investment has few takers.     

However, it needs to be pointed that despite poor performance of the present dispensation on several economic indices, such as lack of employment generation, rising inequality and decline in income of small and marginal farmers, the government has been spared of an electoral backlash. This perverse success speaks well of Modi’s diversionary and fractious politics. Moreover, the agenda of Hindu nationalism, which reportedly the previous regimes did not flog, has been pushed to cover up the somewhat distressing social and economic situation affecting the lower segments of society.     

Economists have rightly pointed out that a pro-business and trade-and-consumption driven scenario does make the economy grow but only to a limited extent and does not strengthen the grassroots. Consumption spending has been very low amongst the lower tiers of the population and even among a section of the middle class due to lack of income growth and inflation. All this has given rise to a very high degree of inequality with the wealth and prosperity of the rich and the upper middle class growing fast. The clout of this group has been growing and their pervading influence on the political class has made policies not conducive to the interest of low-paid working class. 

It needs to be reiterated that irrespective of whether the GDP growth is 5.4 per cent or above 6 per cent, the structural weaknesses of the economy remain, and it is distressing that there is virtually no endeavour by the political dispensation to overcome the challenges. It is erroneous to believe that with the present approach the economy can be ‘inclusive’ and strong for which the needs and concerns of the common man as well as that of the rural sector have to be given priority in the coming Budget.---INFA 

(Copyright, India News & Feature Alliance)

New Delhi

6 December 2025     

Round The World

New Delhi, 10 January 2025

The Indian Diaspora

ROLE IN FOREIGN POLICY

By Prof. (Dr.) D.K. Giri

(Secy Gen, Assn for Democratic Socialism) 

Over 3000 delegates from 70 countries arrived in Odisha for the celebration of Pravasi Bharatiya Divas (PBD). This is the 18^th edition of PBD taking place on 8^th & 9^th January in the temple city of Bhubaneshwar, with the theme ‘Diaspora’s Contribution to a Viksit Bharat’.

The President of the Republic of Trinidad & Tobago, Christine Carla Kangaloo was the Chief Guest of the event. Dr. Dev Pragad, the CEO and Co-Founder of the NewsWeek was the guest of honour at the youth PBD. Also, there were ministerial delegations from Mauritius, Malaysia, South Africa, and big delegations from countries like Oman, Qatar, UAE, UK and USA.

The Prime Minister flagged off the inaugural run of a special tourist train called Pravasi Bharatiya Express, meant for the Diaspora. It would depart from Delhi, covering multiple tourist spots in three weeks. President Draupadi Murmu addressed the Valedictory Session of the conference offering awards to 27 members of the Diaspora who have made significant contribution to the development of their host countries as well as to India.

Since 2014, New Delhi has been investing in the Diaspora to promote India’s national interest. The Diaspora has been one of the key drivers of India’s foreign policy mainly in the following aspects. In cultural diplomacy, Bodhi dharma says, “If you cut the roots of a tree, it dies”. Uprooting a tree from its habitat is the sure way to destroy it. Comparing it to a human being, the cultural roots of persons anchor their lives, influencing their thinking and behavior. That is how a Diaspora connects emotionally with the communities and countries of their origin.

Diaspora understands the cultures of their host countries as well as of the countries of their origin and therefore becomes a bridge to the cultural divide. The Prime Minister Narendra Modi has called Indian Diaspora the ambassadors of Indian values, spirit and culture. He urges the Diaspora to be a solid bridge between their countries of origin and the countries of their domicile.  

Second, Diaspora helps with lobbying and advocacy for India’s interest in their host countries and elsewhere. Diaspora has emerged as an important agency recognized as a ‘soft power’ in the field of foreign policy strategy. It acts as a catalyst for development of their countries of origin. For instance, in economic sphere, the Chinese Diaspora has been viewed by analysts as a propelling force in its emergence as an economic power. In the political sphere, the Jewish Diaspora has had a strong grip over the US and the European Union in shaping strategic relations with Israel.

Back home, the US-Indian community’s remarkable lobbying in cracking the Indo-US Nuclear Cooperation Agreement stands out as Diaspora contribution. On various occasions, Indian caucus on Capitol Hill and various other lobbying and advocacy groups have been instrumental in pushing India’s national and security interests. Diaspora helps building global networks by leveraging their transnational connections. They have played a key role in shaping public opinion and influencing policy decisions on their countries of residence.

On the negative side, the Diaspora has also been linked to security concerns in India. A few groups have been providing financial and material support to separatist movements in India. The Khalistani Sikhs in Canada is the prime example of such fissiparous elements in the Diaspora. The Kanishka Airline crash was the mastermind of the Canadian Sikh Diaspora. Likewise, the separatist movements in Kashmir and LTTE have received massive support from large sections of Diaspora. Diaspora funds radical civil society groups and militant organisations as a part of their support for sub-nationalism or other so-called grievances. Some Indian migrants to Gulf countries are indoctrinated and transformed to sleeper cells. They carry out and fund terrorist acts in India. SIMI and Indian Mujahidin are examples. The diverse Indian Diaspora becomes easy target for agencies like ISI, who uses them to destabilise peace and security in India. Headley and Tahavur Rana are well-known cases.

A peep into the history of Diaspora and India’s foreign policy reveals that, during pre-Independence period, plight of Indians abroad was a major issue for the Independence movement. After 1947, there was a paradigm shift in Diaspora policy owing to the strategies of anti-imperialism, non-alignment, and economic self-reliance etc. Notably, Pt Nehru categorically announced that the ethnic Indians who chose to remain abroad would consider themselves as citizens of their host countries and should integrate themselves with the culture of their residences and fight for their liberation etc.

There was hardly any change under Shastri or Indira Gandhi. In fact, the latter became quite unpopular for her indifference to East-African Indian crisis in 1968-72. Later, under oil shocks and BOP crisis, there was a push for remittance-centric approach, especially for Gulf Indians. Rajiv Gandhi partly recognised the importance of Diaspora and offered his support in handling the Fiji Indian crisis in 1986. He engaged a technocrat like Sam Pitroda in realizing his vision of 21^st century. He also set up the Department of Indian Overseas Affairs.

The Sun shone brighter for the Diaspora under the NDA government led by BJP. The engagement of Diaspora had rapidly increased under Narasimha Rao’s economic restructuring in the wake of foreign reserve crisis in 1990s. The crisis was largely resolved due to substantial investment and remittances of the Indian Diaspora. However, it is the NDA government that made a huge shift in favour of the Diaspora to leverage them for promoting economic growth and fostering cultural nationalism.

The Chennai Declaration of BJP in 1999 demonstrates its position on Diaspora, “We believe that the vast community of NRIs and PIOs constitute a part of the Great Indian Family. We should endeavor to strengthen their social, cultural, economic and emotional ties with their mother country. They are a rich reservoir of the intellectual, managerial and entrepreneurial resources. The government should devise innovative schemes to facilitate the investment of such resources for India’s all-round development”.

Government of India under Narendra Modi has begun a good many Diaspora-centred initiatives. They include the appointment of a High-Level Committee on Indian Diaspora, launching the PIO card scheme, organising PBDs, giving away PBD Samman Awards, offering dual citizenship (OCI) and so on.

Indian Diaspora is by far the biggest in the world consisting of 25 million covering about 142 countries. It plays an important role in the global business and diplomacy and contributes to the growth and development of both their host and home countries. In fact, in terms of remittances, the biggest value associated with Diaspora, Overseas Indians have overtaken their Chinese counterparts. Indian Diaspora thus has been considered recently as a strategic asset. They are a microcosm of India. They have contributed in technology, philanthropy, set up cultural and educational institutions. They believe in giving it back to their home country. Indian Diaspora is treated across the world as a ‘model minority’ for their reliability, industriousness and loyalty.

One could argue that Diaspora policy and foreign policy go together. New Delhi, however, needs to do more to harness the full potential of the Diaspora. It can encourage the migration of semi-skilled and skilled Indians including in software industry to restructure Indian demography. A large number of Indians can be relocated in other countries which seek relevant human resources for the maintenance of their economies. Some additional thought for the good work on Diaspora. ---INFA

(Copyright, India News & Feature Alliance)

Economic Highlights

New Delhi, 13 January 2025

90-Hour Work Week!

ABSURD, GOVT MUST STEP IN

By Shivaji Sarkar

Two statements, one by Larsen & Toubro (L&T) Chairman SN Subramanyan saying there should be 90-hour weekly work, including on Sundays, for each worker and the other by Narayan Murthy of Infosys saying it should be 70 hours, rock the Indian political-economic scenario, reflecting corporate unwillingness to create jobs as 44 labour laws are virtually scrapped. The four Labour Codes that replaced the laws are lame duck.

What Subramanyan says means everyone must work for 15 hours a day, virtually double of the accepted Chicago model of eight hours. In other words, they should work for two continuous shifts to get paid for one. Murthy envisages a 10-hour daily schedule. They say it was needed to make the nation great at the cost of the life and toil of the youth. Both the statements are atrocious as it robs the people of a decent life of – eight hours of sleep and eight hours unto themselves for personal and social enrichment.

This raises also the complicity of the government or its compulsions to yield to corporate whims that care for profits but not the welfare of the workers. Surprisingly, none from the government shoots back to shut the mouths of the pampered chiefs. How in a democracy could the two could ignore the workers, who for years are having the worst of hours, wages and working conditions forcing them to work almost for all through the day and night, even from their homes. The companies use their home space for office work, disturb their peace but never pay them for using the space, electricity or other facilities. Some companies are even known to put up cameras to monitor them in the privacy of their homes.

This speaks volumes. Not only of the grim working scenario but also of grimmer loss of vacancies in the country, which actually exist. India is losing jobs in all sectors and workers are forced to accept inhuman conditions for survival. Statements of Murthy and Subramanyan also bare the corporate apathy of creating jobs. They are trying to conceal that they instead of doubling the staff, are burdening them doubly to deny jobs to almost another equal number.

The Labour Ministry should have suo moto made a move to prosecute Murthy and Subramanyan for creating an unhealthy condition that not only robs jobs but renders required people unwanted. It’s a move against the nation and the government that painstakingly wants to have more jobs for improving social and economic conditions.

It is a virtual move for negating the process of Budget 2024 that unveiled a comprehensive strategy built on nine foundational pillars — agriculture, employment, inclusive development, manufacturing and services, urban development, energy, infrastructure, innovation/research and development, and next-gen reforms.

Former badminton star Jwala Gutta has criticised Subrahmanyan for his comments, which quickly went viral, about wanting his employees to work on Sundays. Gutta pointed out that it is sad people are not taking mental health and rest seriously. She is right. How could a company boss speak against the interest of the nation. Since Manmohan Singh became the finance minister initiating liberalisation and globalisation, the country has been losing jobs. The unemployment rate reached 6.9 per cent in 1991 itself.

A new study by the International Labour Organisation (ILO) has just confirmed what we already suspected: India’s remarkable growth in the nineties, widely held as reform years, has been mostly a jobless one. In that period, the rate of India’s employment grew far more slowly than the rate of the economy.

Do Murthy and Subramanian want to have the country mired in a continuous jobless scenario? It appears that the two, may be representing many others of their ilk, want to disrupt Prime Minister Narendra Modi’s imminent full-fledged Budget aimed at elevating India’s economic growth to 7 per cent in the financial year (FY) 2026 from the expected 6.3 per cent in FY25, as an State Bank of India Mutual Fund report envisages. The budget is anticipated to introduce fiscal and monetary policy changes to boost demand and address the nation’s economic challenges. Are they trying to put the process off the rails!

The government has to move cautiously. It faces severe financial crunch. The borrowings are rising. It’s avoidable. The government could have put off many demolitions and reconstructions of railway stations, office buildings and the like to save billions a year. Instead, it could have gone on necessary repairs of the 150-year-old strong railway stations and the offices that were built mostly in 1960s. The benefit of these activities is not going to the people but only adds to the profits of a select groups of corporate. It is causing severe inflation, another indirect charge on the government’s own activities.

According to the Economic Policy Institute, corporate profits were a major factor in the initial rise in inflation. In the non-finance corporate sector, corporate profits accounted for more than half of the price growth between 2020 and 2021. Even in the second quarter of 2024, corporate profits could explain about a third of the growth in the price level since the end of 2019.

Corporate profits have grown more than 3.5 times faster than GDP growth in the past four years. However, employee salaries have not grown at the same rate as inflation. Ignoring the corporate profits has left the poor struggling to survive. Basic needs like housing, clean water, nutritious food, and healthcare are out of reach for many. Families are increasingly reliant on loans to meet essential needs. Devious methods through National Green Tribunal and Grade Response (Pollution) Action Plan are also robbing jobs and wealth like cars and tractors benefitting large companies.

The government has good reasons to intervene in these issues and correct the system. Each price rise is a drain on government finances as it remains the largest consumer. It’s also an occasion to tell the corporate to follow the basic labour rules and stop arbitrary retrenchment, mostly through forced resignations. A little arm-twisting could correct many scenarios and take the blames off the official system.

It could help if the government has an attractive political face and have more popularity. With a small stroke the government could not only correct the employment scenario but also cut on their phenomenal profits – both reasons are enough to raise the popular rating as well as rebuff a critical opposition. ---INFA

  (Copyright, India News & Feature Alliance)