The process of realignment has been accelerated. The tug of war between China and USA, which was started by President Obama, is now in final stages. President Obama launched Pivot of Asia policy along with Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) to contain China.
President Trump launched an all-out trade and technological war for the same purpose. President Trump shelved TTIP, TTP and adopted America first policy. President Biden is offering a mix of both the policies. He has also injected new elements. The QUAD is getting shape now. He is busy in building or reactivating the old alliances like NATO, G-7 to contain China. He is also focusing on India to urge her to play a more active role in the region.
It is pertinent to point out that India remained an integral part of all Presidents policies. It is not a matter of choice, but a compulsion. USA needs India; apart from strategic interests, it also has very strong economic rationale. First, there is huge difference in market size of China and USA. China is home to 1.4 billion people, with a potential to graduate around 600 million people into middle-class through the Vision 2035. HSBC holding’s study suggested that the process has been started. The middle-class of China will be 500 million in 2025, from 340 million in 2020. Besides, 300-400 million will be moved to upper class through the Vision 2035. In a nutshell, 1000 million would be shifting from one class to the other.
It will give a huge boost to domestic economy since it is an accepted fact that the shift in class is always accompanied by a new wave of consumption. It has been highlighted by experts that a US$ 20 increase in consumption of middle-class will generate activity of US$ 1.1 trillion. The enhanced consumption will also help China to become center of gravity by enhancing imports to meet the rising demand of people.
In contrast, USA does not have any such leverage, as the population of USA is only 330 million. Historical ally of USA, Europe, is not able to provide any such assistance. First, their population consists of 744 million, which is no way near to China. Second, they are also struggling to sustain their growth rate. Third, they are also trying to build relationship with China, as they cannot compete with China. So, USA has no option except to build relationship with India. It is deemed necessary to sustain the American growth on the back of Indian consumer market.
Second, the rate of return on investment in USA and West is almost near to maturity. So, the investment is unable to provide good returns. Investors are looking for markets, which can provide them healthy return on their investment. They are working to look for opportunities in Asia, Africa or in other developing countries. They are facing a tough competition in these markets as China has already started to invest in these countries since the last century. China launched Go Global policy in 1998. In 21st century, China launched multiple initiatives like Belt and Road Initiative, Asian Investment Infrastructure Bank, and BRICS Bank etc.
On the contrary, the internal size of Chinese also makes it profitable for China to invest within the country. Moreover, the rate of return on investment is also reasonable in China. That’s why many European countries are also looking to enhance their investment in China. Again, India is the only option for USA to invest directly. India is also hesitant to be part of BRI and that makes it a perfect candidate for long term partnership.
The situation urges Pakistan to comprehend new realities and come out of cold war era. First, Pakistan needs to understand the reality that in the new dynamics, USA is a strategic ally of India not Pakistan. It is evident in the case of Kashmir and so-called surgical strike episode. They are supporting India without giving any heed to human rights abuses and killing of innocent people of Kashmir.
Second, USA wants Pakistan to come out of CPEC and shelve cooperation with China. The strategy is, if USA cannot secure support of Pakistan against China, then USA must neutralize Pakistan by abandoning relationship with China. To materialize the objective, USA is trying to use carrot and stick policy. On the one hand, it is offering economic cooperation and on the other hand it is patting international financial institutes to pressurize Pakistan.
In this context, Pakistan needs to adopt a wise and well-informed policy. Pakistan should tell USA that it is not ready to accept the carrot and stick diplomacy. Further, Pakistan is not here to support baseless propaganda and any hegemonic war against China. Pakistan will only be available for peaceful, objective, and comprehensive cooperation.
In conclusion, Pakistan and China should prepare themselves for more pressure from USA. The best option to counter the pressure would be to work more closely. Pakistan-China should devise a joint strategy and long-term policy to counter the situation.