Power competition between nations can be likened to a game of chess, with Washington and Beijing as the kings maneuvering on the board. Unlike the game itself, however, other pieces— smaller nations— are traded based on the advantages each “king” can offer.
Some of those smaller nations are more important than others, but they all hold some weight when it comes to ideological tensions between governments. The stage is set like this: Washington is attempting to hold onto its unipolar control of the international order, while Beijing is challenging that order with the notion that the United States is in a state of decline. This is not a new cold war, but a challenge to the status quo. A similar fallout to the Cold War will—and is—occurring, and the rest of the world must inevitably choose a side.
India is a unique player in this struggle, capable of pushing either the U.S. or China ahead and shifting the balance of influence. The trajectory of Prime Minister Narendra Modi’s economy is a central concern for determining which side India will align itself with. Recent economic setbacks have raised concern among American policymakers, who are closely monitoring India’s next moves.
As part of Beijing’s grand strategy, China has implemented the String of Pearls theory, using naval expansion to gain control of the waters surrounding India in an effort to strengthen its influence and push its agenda in the region. In response, India has deployed its Necklace of Diamonds theory, enhancing its naval capacity to deter China’s aggression.
Even though reports indicate India’s fiscal deficit is below 5 percent of its GDP and declining, there is an issue in the country’s manufacturing sector weakening and a lower rate of corporate investing. This comes as the Indian federal budget will be presented on Feb. 1, outlining the economic results of the last year and important indications of the coming one.
Meanwhile, consumption in India has increased, but wages have not risen enough to keep pace with growing personal costs. Nearly half of all household spending goes toward food, and inflation in that sector has remained just below 8.5 percent. Food store prices and other household expenses like this are negatively impacting India’s economic growth trajectory.
Lastly, while the government in Delhi has reported a decline in the unemployment rate, the private forecaster Centre for Monitoring the Indian Economy projects it to be higher. This discrepancy could suggest Modi is manipulating unemployment projections to present the world with a stronger economy than truly exists.
These structures are weakening India’s position as China advances its mission to outlast the U.S. power structure and gain international influence. China’s strategy has been shaped by debt-trapping tactics, where Beijing provides loans for infrastructure projects to countries with poor credit. India needs to stabilize its growth and improve its own credit to deter this strategy Beijing is using to gain influence abroad. When those nations default or seek to restructure the loans, China leverages the situation to impose its own political and economic policies.
One example of this is the Hambantota International Port project in Sri Lanka, which was financed by China. The Sri Lankan government was unable to pay the loan taken for the project, and now, despite previous assurances that the port would be used solely for commercial purposes, China has deployed naval vessels there.
Given Sri Lanka’s proximity to the Indian coast, this mobilization represents a direct threat to Modi’s independence on the world stage. For India to not be vulnerable to Beijing, it must retain its economic strength and resist the temptation of taking Chinese-based loans for new projects. Also, in its pursuit of independence, collaboration with the United States would be a significant step, especially with Modi and U.S. President Donald Trump set to meet in February.
The chess match between China and the U.S. is far from over, and India should be perceived as a rook in the middle of the board, undecided on its allegiance. Maybe the answer does not lie in picking a side and falling into the depths of this zero-sum game, but in building a stable economy that allows India to reclaim as much independence as possible from this chess game.
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