By Tsuneo “Nabe” Watanabe

What is the impact of the rise of China and India on the international liberal order in 2030? The implication is profound enough to affect not only developing economies but Western politics.

There is good news and bad news about the impact of China’s and India’s rise on international order in 2030.  The bad news is that China may continue to be a potential game-changer to the international liberal order because of the undemocratic nature of its Communist regime and anti-Western sentiment among its ranks.  It would be very difficult for any Chinese leader to introduce democratic governance within 20 years unless the country experiences either (1) further miraculous economic growth combined with more equal distribution of wealth or (2) catastrophic damage to the current Communist regime combined with charismatic or smart party leaders able to introduce democratic rule instead.

Anti-Western sentiment has been shaped in the Chinese mind by the way history is taught, with a focus on China’s experience with Western and Japanese imperialism in the late 19th and early 20th centuries.  By the year 2030, Chinese leaders may struggle to identify a new source of legitimacy to pacify a frustrated population, as the current “Chinese dream” will no longer be attainable to many.  The Chinese dream is that economic growth will eventually make all Chinese people richer and happier.  But it is clear that economic growth cannot remain high forever.

In addition, the government will confront a rapidly aging society in which fewer workers will be responsible for taking care of an enormous elderly population.  At that stage, people’s frustration with socio-economic inequalities may become acute; it could easily transform into resentment against Communist rule.  The Chinese government may be tempted to exploit nationalism in the name of anti-Western imperialism.  Some ideologues may argue that many Chinese remain poor because of exploitation from the global economy, which they can present as a new form of Western imperialism.

The good news is that there is no imperialism or Western conspiracy in the current world.  Rather, there is strong evidence of a decline in relative economic advantage among developed countries such as the United States, Europe and Japan as well as a rise of emergent economic powers such as China and India.  Emerging economies have been successful not through imperialistic mercantilism but via liberal commercialism, which guarantees a level playing field for business competition irrespective of national origin – an outgrowth of globalization made possible by the liberal international order.  Burma’s current leaders seem to understand the possibilities of such an order and have decided to move toward democratization as a means of joining it.  Few world leaders dare to follow the North Korean model of autarky, which suffers the poorest economic performance and fuels permanent worry over potential revolts by desperate people disconnected from the global economy.

The bad news for India in 2030 is that its population, by then the world’s largest, may continue to suffer enormous socio-economic inequality.  It is also likely to be difficult for Indian leaders to transform the country’s socio-economic system rapidly given its deep civilizational roots.

The good news for India in 2030 is that its long tradition of democratic rule, despite continuing challenges to governance, should continue to exert a stabilizing effect on national unity.  The Indian people should enjoy rising living standards thanks to their country’s exposure to global markets.  Sustained economic growth under democracy will be a great asset in persuading other developing countries to deepen connections to the global economy while protecting human rights and rule of law at home.

India also suffered from Western imperialism as a colony of Great Britain.  Unlike China, however, democratic legitimacy is grounded in India’s experience in fighting for its independence, guided by the principles of founding fathers like Mahatma Gandhi and Jawaharlal Nehru.  This legacy has reinforced the stability of Indian democracy despite socio-economic difficulty.

How should we handle these two rises as we look to 2030? Despite their differences, the ascent of India and China will be important for the Western democracies insofar as they offer potential models for the international economic order and serve as engines of global growth.  Western democratic countries (including Japan) need to continue to persuade newly emerging countries how international liberal order is eventually beneficial for all.  Policy toward them should combine economic engagement with a military hedge against potential game-changers.

At the same time, Western leaders need to address their own domestic opposition, who suffer from economic globalization. They must find a way to alleviate damage to the weak and poor people in their nations from intensified competition from the global economy.  They will likely find it necessary to adjust their domestic political-economy models, shaped by the relatively smaller and less-connected world of the 20th century.

With such remedies, Western leaders can persuade their own disgruntled constituencies that liberal international order will still be a guarantor of their own wealth and peace in the 21st century.  If Western leaders mismanage domestic politics and popular antipathy towards globalization grows, the world could confront a genuine crisis moment.  By presenting new challenges to the liberal international order, the rise of China and India may provide the developed nations not only business opportunities but, more importantly, the opportunity to address shortcomings in our own politics and economies.

Tsuneo “Nabe” Watanabe is a Senior Fellow of The Tokyo Foundation.