Most people know about China’s controversial “nine-dash line” in the South China Sea. But very few know that it actually started with eleven dashes.

What happened to the other two?

Let’s deep-dive into the history that became one of today’s most consequential geopolitical flashpoints.

The South China Sea (or simply SCS) covers an area of 3.5 million square kilometres, often regarded as the ‘maritime heart’ of Southeast Asia. The sea connects the Pacific Ocean in the east to the Indian Ocean in the south. Its littoral countries include China, Brunei, Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Taiwan, Thailand, and Vietnam.

Before the twentieth century, the South China Sea was broadly regarded as a ‘maritime commons’. The shared water’s resources were open to all. Chinese merchants, traders, fishermen and pirates had, however, been active across much of this region for centuries.

11 Dash Line

In 1947, the Nationalist government of China drew an 11-dash line on a map of the South China Sea. The Ministry of the Interior prepared the map. The map was titled “Location Map of the South China Sea Islands”. The ‘U’- shaped map named many islands and claimed historical rights over almost the entire South China Sea.

Similar writing appeared earlier as well, including on a 1935 map published by the Republic of China’s Land and Water Maps Inspection Committee.

Why did 11 become 9?

Then came 1949; the People’s Republic of China was established, and Mao Zedong was elected as Chairman. The new communist government wanted to gain political leverage over its neighbours. As a gesture to show solidarity with their communist neighbours in North Vietnam and to maintain cordial friendly relations, China removed two dashes inside the Gulf of Tonkin in 1953.

Just like that, eleven became nine.

However, the maritime border between the PRC and Vietnam in the Gulf of Tonkin was eventually formalised by treaty in 2000.

Why did 9 become 10?

Then came 2013; China surprised everyone by adding an extra dash. This time, it was east of Taiwan.

Thus, nine had become 10 on the map. The story did not end here. In August 2023, China’s Ministry of Natural Resources released its official map, again explicitly showing the 10-dash line.

Why does this matter? Because the line was never a fixed, precise maritime boundary. Its shape and number of dashes have changed over time as the geopolitical scenarios evolved.

A line that moved from eleven to nine and then back to ten is now at the centre of one of the world’s most consequential maritime disputes.

Why this history matters today:

The nine-dash line remained largely a historical map for decades. But from 2009, it suddenly acquired much greater significance.

In May that year, Malaysia and Vietnam submitted claims to the UN Commission on the limits of their continental shelf. In response, China sent notes to the Secretary General asserting its unquestionable sovereignty over the South China Sea islands. The exact reading is as follows:

“China has indisputable sovereignty over the islands in the South China Sea and the adjacent waters and enjoys sovereign rights and jurisdiction over the relevant waters as well as the seabed and subsoil thereof (see attached map). The above position is consistently held by the Chinese government and is widely known by the international community.”

The submission was accompanied by a nine-dash line on the South China Sea.

Malaysia and Vietnam protested China’s claim. Within the next two years, Indonesia and the Philippines too raised objections. However, China responded to the protest with a similar message, this time without any dashed map.

What had once seemed like a series of unexplained dashes on an old map had now become a live source of competing maritime claims.

And this is where the real question begins: What exactly does the nine-dash line represent?

Is it a claim to sovereignty over the islands? A claim to the waters within the line? Historic rights? Or something else?

The ambiguity itself became part of the problem.

What Exactly Does China Claim?

This is where the nine-dash line becomes complicated.

China has consistently maintained that it possesses sovereignty over the islands and other features of the South China Sea. But the fact of the matter is that these lines on the map have never been defined as a conventional maritime boundary.

This distinction is important. A maritime boundary normally separates the waters of two states having clearly defined coordinates. The nine-dash line does not function in such a manner. It encloses a vast area of the South China Sea. The precise nature and extent of the rights China claims within it have remained a subject of considerable debate.

The issue eventually moved from diplomatic exchanges to international arbitration.

In 2016, an arbitral tribunal organized under the United Nations Convention on the Law of the Sea (UNCLOS) issued its ruling. The ruling was more nuanced.

The tribunal found that China had no legal basis for historic rights to resources beyond the maritime entitlements permitted by UNCLOS. It did not decide sovereignty over the islands themselves or delimit the maritime boundary between the countries.

China’s Response

The 2016 ruling did not end the dispute. In fact, it added another dimension to the existing conflict.

China had refused to participate in the arbitration from the beginning. Beijing argued that the Philippines had unilaterally initiated the proceedings. The initiative from the Philippines was in direct contradiction to the earlier commitments between the two countries to resolve their disputes through negotiation. China maintained that questions of territorial sovereignty and maritime delimitation fell outside the tribunal’s jurisdiction.

When the ruling was announced in July 2016, China’s position remained unchanged. Beijing declared the ruling “null and void”. China neither accepted nor recognized it.

This created an intriguing gap between international law and geopolitical reality. An international tribunal had issued a ruling, but one of the most powerful countries involved rejected it.

And this is perhaps what makes the South China Sea so complicated. The dispute is no longer only about what the law says. It is also about who can enforce that interpretation on the ground or, more accurately, on the water.

The 2016 ruling, however, did not end the controversy. China rejected the award and continued to assert its claims in the South China Sea. In subsequent legal and diplomatic arguments, another formulation increasingly entered the debate—the “Four Shas”: the Pratas, Paracel and Spratly Islands, and Macclesfield Bank.

But what exactly are the Four Shas, and does this formulation change China’s legal case?

That deserves a separate discussion. Stay tuned.

Introduction

History occasionally presents nations with rare opportunities that can alter their economic destiny. Some recognise those moments and transform them into decades of sustained prosperity. Others, despite having similar opportunities, fail to achieve the same outcome. The difference often lies not in the opportunity itself, but in how prepared a nation is to exploit it.

The second half of the twentieth century offers several remarkable examples. Japan rebuilt from the devastation of war. South Korea emerged from poverty to become a global industrial powerhouse. Singapore transformed a resource-poor island into one of the world’s most competitive economies. Their political systems, cultures, geography and historical circumstances were vastly different. Yet each converted a moment of opportunity into lasting national strength.

Today, the ongoing strategic competition between the United States and China is once again reshaping the global economic landscape. Supply chains are being reorganised, investments are being redirected, and countries are searching for trusted partners. Many believe that India stands at the threshold of a similar opportunity. Before asking whether India can seize this moment, it is worthwhile to understand what history teaches us about the nations that succeeded when such opportunities presented themselves.

Why Japan Rose from the Ashes of Defeat

In August 1945, when two atomic bombs fell over Hiroshima and Nagasaki, Japan’s industrial bases were ruined, and cities had been devastated and reduced to rubble. The scarcity of food, inflation coupled with American control made things look very difficult. Had anyone been in Japan during that period, it would have been beyond imagination to think that Japan could revive economically.

Despite all these difficulties, within two decades, Japan became an economic powerhouse, a benchmark for global manufacturing. Japan rose to the world’s second-largest economy. This transformation appeared magical, but it can be attributed to the deliberate choices made by the national top leadership and people of Japan.

Japan’s natural resources were limited; therefore, human resource potential was maximised. The Education system was given tremendous focus, and resultantly, the literacy rate was maintained exceptionally high. The Universities and vocational institutes were producing a workforce capable of mastering advanced technologies and continuously improving industrial processes.

Japan followed a unique economic model popularly known as the ‘Developmental State’ Model or globally popularised as ‘Japan, Inc’. Engineered by the Ministry of International Trade and Industry (MITI), Japan’s blended capitalist mode of competition with strict state-level control and direction. Management tools such as Kaizen, lean manufacturing, near-zero defect, Toyota Production Systems, etc., which are being taught in almost every management curriculum, are the product of the Japanese ecosystem. ‘Keiretsu’ model of networking and cooperation among industries played a very crucial role. Strategic sectors such as steel, shipbuilding, automobiles, and electronics were selectively chosen with the focus to make a national impact. All stakeholders such as Government policy, financial institutions, and private industry worked in sync to ensure that the domestic market was protected from foreign competition. Women joined the industrial working force. Drastic measures were taken towards land and labour reform. Overall, the environment was made conducive to Japan’s economic growth.

Japan focused on becoming the best in the world in terms of the quality of its product. Rather than competing solely on low wages, Japan chose to compete on quality. With times, ‘Made in Japan’ became synonymous with quality, reliability, and precision.

Though Japan focused on the growth of the domestic market, it aimed for global competition in mind. Companies such as Toyota, Honda, Sony, Panasonic, Canon, and Nikon became globally trusted names. Exports became the engine of economic transformation.

Japan’s post-war recovery offers a profound lesson. History reminds us that even after complete devastation, it is possible to bounce back to the top provided a nation gets all its wings aligned strategically in the desired direction. Japan was revamped by sustained improvement in the quality of its institutions, high-level education, policy consistency, and an unwavering commitment to excellence.

The story of post-war Japan is ultimately a story of resilience, institutions, and the power of national purpose. All credit to the Japanese who worked relentlessly with a single-minded agenda of making Japan Great once again. Japan’s story highlights that geopolitical opportunities matter, but they yield lasting results only when matched by national preparedness.

Economic miracles are probably the cumulative result of decisions made over decades.

South Korea

South Korea was bankrupt post-Korean War in 1953. But within a few decades, they transformed their economy at a rapid rate popularly known as the ‘Miracle of the Han River’. How did they do it? It can be argued that the United States has been a constant support to contain communist influence spreading from North Korea, which otherwise would have easily taken South Korea. It is estimated that from 1946 to 1976, the United States infused around 72.6 billion USD and, besides that, opened the domestic market for South Korean products. The presence of the US military has led to a subsidised defence budget, which has led to diverting major funds into the development sector. Further, the Vietnam War was a boon for the South Korean economy. South Korean companies earned lucrative US contracts to supply goods, transport, and services required during the war.

But history has also shown that opportunity alone is not enough unless the country has resolve and gets prepared to exploit the opportunity.

Akin to China and Japan, South Korea too did massive land reform and invested heavily in education. Within no time, the country achieved full literacy. Emphasis was given to the technical curriculum towards producing a qualified workforce in line with the national priority of economic development.

The strategy was centred around state-led capitalism and export-orientated industrialisation. Large family-owned conglomerate businesses such as Samsung, Hyundai, LG, etc. were provided tremendous govt backing.

The production and industry trajectory was very strategically manoeuvred. Starting with light manufacturing and cheap textiles in the 1960s, heavy metal and steel in the 1970s, electronics and automotive in the 1980s, to finally high-end semiconductors from 2000 till now. The lesson is crystal clear.

The economic miracles are probably the cumulative result of decisions made over decades.

Singapore

If Japan rebuilt after defeat and South Korea rose from poverty, Singapore did something even more remarkable. It created prosperity despite having almost none of the conventional ingredients for it. Unlike Japan, South Korea and China, Singapore’s transformation was not driven by large-scale foreign aid. Instead, it attracted global capital by creating one of the world’s most trusted and business-friendly environments.

When Singapore separated from Malaysia in 1965, there appeared to be little to look forward to. With no natural resources, little fertile agricultural land, high unemployment coupled with a population of barely 2 million, Singapore depended heavily on foreign imports for meeting necessities. Many questioned whether such a small nation could survive on its own. Indeed, concerns over economic viability had been one of the reasons behind Singapore’s merger with Malaysia in 1963.

Singapore earned a name for zero tolerance for corruption. The Corrupt Practices Investigation Bureau (CPIB) was empowered to act independently, reinforcing Singapore’s zero-tolerance approach towards corruption.

Education, like other developed nations, was given the highest priority. English was adopted as the primary language. Economic Development Board (EDB) worked closely with MNCs, and academic curricula were redesigned. Foreign firms were viewed as partners for employment, technology transfer, and export growth. Popularly known as the ‘Singapore Model’, global companies trusted the govt. Investors were rewarded with multi-year tax holidays, and in turn they created massive infrastructure.

Singapore leveraged its geographical location at the mouth of the Strait of Malacca into one of the greatest economic assets. The Port of Singapore was modernised and subsequently became the global hub for logistics, transhipment and shipping.

Public housing became Singapore’s defining achievement. Today, around 80% of Singaporeans live in Housing Development Board apartments.

While the favourable geopolitics can accelerate growth, nations can also create opportunities for themselves. Sound institutions, policy consistency and long-term national purpose transformed a resource-poor island into one of the world’s most competitive economies. Ultimately, the national priorities and how all stakeholders are aligned to them determine the outcome.

Economic miracles are probably the cumulative result of decisions made over decades.

Common Pattern

The economic rise of Japan, South Korea, and Singapore reveals one striking common pattern. In each case, the existential circumstances, political systems, economic conditions, demographics, cultures, and geographical advantages were all different. Yet, each underwent a remarkable economic transformation. Despite these differences, there are common themes that are responsible for the transformations.

National Priorities. Each of these countries experienced economic development because they all treated prosperity as a national priority. They remained steadfast and focused on long-term goals, avoiding the allure of immediate gratification. Instead, delayed gratification through systematic and sustained policy consistency was the mantra for success.

Education. Within a relatively short period, all three countries achieved nearly one hundred percent literacy. Furthermore, they courageously revamped their college and technical curriculum to align with the technology needed for manufacturing and industrial growth. The engines of development, such as industries, education, manufacturing skill sets, capabilities, and policy guidelines, perfectly aligned with each other, driving development.

Manufacturing & Exports. In addition to building manufacturing capability, all of these factors relied on global competition and exports. Each country competed in global markets. International competition led to continuous improvement in their quality, production capability, and overall ecosystem.

Institutions, Govt & Pvt Stakeholders. All these countries that excelled economically from scratch have scored very high in ensuring ease of doing business. Government institutions and private enterprise were not viewed as adversaries. Instead, they complemented each other in achieving long-term national objectives.

Adaptability. Economically successful nations quickly adapt to the changing global circumstances. This is perhaps the most overlooked lesson. Japan moved into automobiles and electronics. South Korea emerged as a leader in semiconductors. Singapore evolved from labor-intensive manufacturing to finance and a global hub for logistics. Continuous adaptation remained central to their success.

The common thread is difficult to ignore. Economic success usually results from more than just geopolitical chance factors or opportunity. Geopolitical opportunities may open a window. But in the end, conversion of opportunity into prosperity is attributed to the combined effort of long-term national resolve, strong institutions, investment in education, manufacturing capability, and policy consistency.

India’s Moment of Opportunity

As the strategic competition between the United States and China intensifies, countries are increasingly looking for trusted partners in global supply chains. For the first time in several decades, it appears that geopolitical developments have created significant opportunities for India.

However, from the examples of developed countries as brought out earlier, the lessons and the reminders are very apparent. Geopolitical opportunities alone can’t guarantee success and economic transformation. Japan rebuilt after devastation. South Korea rose from a state of bankruptcy. Singapore created opportunities for itself despite not having any geopolitical advantage. The economic rise of these countries has revealed that the foundation has to be strong. Their success rested on strong national resolve, sustained policy execution, investment in education and social reform, and a clear commitment to economic development. The underlying principle remains unchanged. External opportunities can only accelerate growth; they cannot substitute for domestic preparedness.

India’s circumstances are undoubtedly different. It has a vibrant democracy. Building long-term consensus around difficult economic reforms is naturally more challenging in a vibrant democracy. At the same time, a young demographic profile is a significant advantage for India. Whether this demographic advantage can be translated into sustained prosperity will depend upon consistent policy execution over the coming decades.

External opportunities can accelerate growth, but they cannot substitute for domestic preparedness.

The real question, therefore, is whether India can overcome its structural inertia and align all its engines towards sustained economic development.

History rarely repeats itself in the same manner. Yet it often rewards those nations that recognise the moment, prepare for it and act with clarity of purpose. Whether this becomes India’s defining economic opportunity will ultimately depend not on geopolitics alone, but on the choices India makes in the years ahead.

Introduction: From Engagement to Containment

China’s rise over the last four decades has been one of the most remarkable economic transformations in modern history. Hundreds of millions were lifted out of poverty. The country became the world’s manufacturing hub. Today it stands as the second largest economy. But this transformation did not occur in isolation. It was enabled by a unique geopolitical environment, strategic decisions by the United States and its allies.

In the previous two parts of this series, we explored how the United States and the West actively facilitated China’s rise and why India was unable to benefit from a similar opportunity during the first wave of globalisation.

This naturally raises an important question. If the United States spent decades helping China rise, why is it now trying to contain it? The answer lies in a fundamental reassessment of the assumptions that shaped American policy for nearly forty years.

Representative image showing transition from 1972 to present day

History Had Other Plans

China’s economy expanded at an unprecedented pace. The country became deeply integrated into the global trading system. For many years, it appeared that history was unfolding as American policymakers anticipated. Political reform, as it was believed, would eventually follow economic liberalisation.

But, that did not happen.

The first signs of divergence became visible in the late 2000s. Xi Jinping’s rise to power in 2012 removed any lingering doubts about China’s ambitions. Political power became increasingly centralised. The Communist Party further consolidated its influence. The Party tightened its grip over the state, the media, academia and civil society.

The private companies also came under under supervision of CCP. Major technologies were aligned with national priorities to strengthen China’s military capabilities. China has institutionalised Military-Civil Fusion more comprehensively than any other country. Under this strategy, the private companies and universities are required to share technologies with the People’s Liberation Army. This allows civilian innovation directly strengthening military capabilities. A very interesting example can be seen from the advancement in digital technology. Digital transparency is thought to be a tool for expansion in individual freedom. In contrast, China utilised this technology in developing one of the world’s most sophisticated systems of surveillance and social control.

Gradually, China adopted more assertive foreign policy. It increasingly relied on grey zone tactics in the South China Sea. It continues to expand its economic influence across neighbouring countries and the global south in particular.

These developments forced American policymakers to confront an uncomfortable reality.

The New Battlefield

Washington had spent four decades helping China become stronger. It now faced the difficult task of preventing that strength from altering the very international order it had sought to preserve.

Unlike the Cold War with the Soviet Union, this one is completely different. A unique situation where both opposing parties are deeply intertwined. American companies manufacture in China and Chinese firms depend on Western technology. Global supply chains had become inseparable.

Instead of pursuing outright economic decoupling, the United States began selectively restricting China’s access to the technologies and resources. The objective is to slow its progress in sectors with strategic implications.

Semiconductor

Semiconductors became the first major battleground. Everything from Artificial Intelligence and supercomputers to missile guidance system and autonomous weapons depend on advanced semiconductors. Restricting China’s access to cutting-edge semiconductor technology became a strategic priority for the United States. the United States dominates in chip design and IP rights. Companies such as Nvidea, Qualcomm and AMD capture almost 50% of chip market revenue. However, most of these companies outsource their manufacturing to foundries in Taiwan, South Korea and China.

The Unites States is limiting China by aggressive multi-layered export control measures. The United States has restricted shipment of advanced AI chips, Extreme Ultraviolet (EUV) lithography tools to Chinese companies. Global companies in Taiwan, South Korea and Netherlands use American technology or intellectual property. Under Foreign Direct Product Rule, these companies are barred from shipping these products to Chinese companies and its subsidiaries located outside China. According to Chip giant Nvidia, selling their top of the line Blackwell GPUs to Chinese firm are banned and illegal view stricter export control regime.

The Nvidia GB10 Grace Blackwell Superchip

Share of global semiconductor manufacturing

Artificial Intelligence: The Next Strategic Frontier

If semiconductors are the fuel, artificial intelligence is the engine they power. AI is transforming intelligence gathering, autonomous weapon systems, cyber warfare, logistics, missile defence and battlefield decision-making. China’s ambition to be global leader in AI is no secret. It was formally articulated in its New Generation AI Development Plan. The restriction on high-performance AI chips, GPUs and advanced semiconductor manufacturing capabilities by US have intensified since 2023. At present in 2026, the tighter export norms have also been imposed even on Chinese subsidiary companies outside China.

China on the other side is expanding its AI chip market and is projected to grow from US$6 billion in 2024 to US$51 billion by 2030. Estimate of Morgan Stanley suggests that China’s chip AI GPU self-sufficiency is poised for increases from 33% to 76% by 2030. Ironically, the very export controls designed to slow China’s technological progress have also accelerated its drive towards self-reliance.

Washington is attempting to limit China’s computing capability, but the pressure is pushing Beijing towards a faster, more self-reliant Industrial base. The same strategic competition is also visible in quantum computing, biotechnologies & advanced robotics, critical minerals, rare earth processing, next generation telecommunications.

Securing Critical Minerals

One of the United States’ most significant strategic vulnerability is its dependence on China for rare earth materials. China accounts for nearly 90% of all refined rare earth capacity globally. Reducing its dependency on China for critical mineral and rare earth is one of the very crucial containment strategy of America.

Fighter aircraft, missiles, drones, wind turbines, electric vehicles all are depended on high-performance magnets that are manufactured using rare earth minerals. Similarly, lithium, cobalt, nickel and graphite are essential for advanced batteries, electronics and clean energy technologies.

In order to break free from China’s dependency, the United States is investing heavily on ‘Mining to Magnet’ concept, rebuilding domestic infrastructure facilities and expanding its global partnership. Forum on Resource Geostrategic Engagement (FORGE) coalition is one of may such initiatives. The core strength of US is their leadership and edge in research. The United States is investing heavily in finding a way to extract high quality magnesium hydroxide from sea water directly from Pacific Northwest National Laboratory (PNNL). Further, the research into recovering rare earth elements such as dysprosium and terbium from electronic waste is also considerably promising.

These initiatives reflect a broader shift in American strategy. The policies are aimed towards reducing Chinas dependency on critical sectors and rebuilding resilient domestic capabilities in strategically important sectors.

Rare Earth Suppliers global share

Towards Resilient Global Supply Chains

The biggest vulnerabilities of globalisation were exposed during COVID-19 pandemic. The risks associated with concentrating global manufacturing in China was apparent. Medical equipment, pharmaceuticals, semiconductors and electronic components demonstrated that disruption of supply chain in one country can impact entire global economy. The United States was quick to realise that. For Washington, the pandemic served as strategic wake-up call. Consequently, in order to diversify manufacturing and reduce dependencies, policies such as China Plus One, friend-shoring and near-shoring emerged. The main objective of these measures was to make supply chain resilient, capable of withstanding any shock and not necessarily abandon China.

The strategic shift created a ripple effect in global manufacturing. Electronics production is gradually expanding into countries such as India and Vietnam. Semiconductor manufacturing and fabrication also got fresh boost in the United States, Japan, South Korea and Europe. Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, Inflation Reduction Act (IRA) are among the measures introduced by the US Govt to provide financial incentives in this direction.

These policy changes wrt semiconductors, artificial intelligence, critical minerals and resilient supply chains etc has a common pattern. It is reshaping of entire technological and industrial ecosystem. The common objective is to reduce strategic dependence on China.

In a larger context, the competition extends far beyond chips and manufacturing. Digital standards, payment systems, undersea communication cables, satellite infrastructure and the governance of emerging technologies are increasingly becoming the arenas that will shape the new global economic and strategic order.

Building Coalitions

In its effort to build resilient supply chain and reducing strategic dependence on China, the United States realised that containing China’s rise would not be possible alone. Today’s world is deeply interconnected. Different countries are dominating in different segments of global technology and manufacturing ecosystem. A coordinated strategy through trusted partners, therefore, became indispensable.

This explains the growing importance of multilateral engagement through strategic groupings such as Quad, AUKUS along with closer cooperation with Japan, South Korea and European nations. For example, the Netherland based ASML enjoys monopoly over Extreme Ultraviolet (EUV) lithography machines. SML is the sole global manufacturer of EUV systems, which use 13.5 nm wavelength light to print sub-7 nm circuit patterns. Likewise, Japanese firms such as Nikon and Tokyo Electronics are global leader in specialised materials and manufacturing of complex miniaturised components.

While the United States leads in semiconductor design, software and intellectual property, much of the manufacturing ecosystem lies beyond its borders. Effective export controls, therefore, depend as much on allied cooperation as on American policy itself. The shift is evident. Unlike the cold war, where alliances were primarily built on military capabilities, today’s partnerships revolve around technological leadership, industrial capability, economic resilience and resilient supply chain.

Picture of ASML Chip Manufacturing Machine (Open source)

Conclusion: What This Means for India

The strategic rivalry between the United States and China is reshaping the global economic and technological landscape. There appears to be a genuine global effort in diversifying supply chains. As countries seek trusted manufacturing partners, India seems to be in a far more favourable position than before.

While the geopolitical shifts may create windows of opportunity, real success would depend on many other factors. China’s rise for instance, was driven not only by favourable external circumstances but by sustained commitment to internal reforms. Continuous investment in manufacturing, infrastructure, education, research, exports, ease of doing business and long term policy execution are critical requirements. Ultimately, it is domestic capability that transforms those opportunities into enduring national strength.

For India, this is perhaps the most important takeaway. The world is looking for resilient supply chains and alternative manufacturing destinations. Whether India emerges as a major beneficiary would depend on its ability to build world class infrastructure, strengthening technological capabilities, enhancing capacities and encouraging innovation-driven policies consistently.

History rarely repeats itself in exactly the same way. Each time, it unfolds under different circumstances and produces a different outcome. The geopolitical conditions that once accelerated China’s rise are unlikely to be replicated for India. The ongoing strategic competition between the United States and China may well present India with a historic opportunity. The real question, therefore, is no longer whether the world is looking beyond China. The more important question is whether India is prepared to seize that opportunity.

For India, this is more than a geopolitical opportunity. But opportunity alone does not get executed. In the next article, I will explore the reforms, institutional preparedness, national priorities that could determine whether India witnesses this transformation or becomes one of prime beneficiary.

In my previous post, I discussed how West has been major force behind China’s advancement, what came to be known as Chimerica.

In this short post, I would very briefly touch upon, why and how India, world’s largest democracy was effectively sidelined by western capital during critical foundational years. Unlike China, India attracted far less Western capital and technology during the Cold War and the early decades of globalisation. India was left to rely much more heavily on domestic capabilities.

Contrary to conventional narrative that find fault in India’s stagnation in lack of internal ambitions, the reality is deeply geopolitical. India was subjected to asymmetric treatment for its Cold War neutrality. While China enjoyed the backing of global superpower acting as its venture capitalist, India was forced to build its economy entirely from scratch without any of support.

Let us take closer look at some of the contrasting features that led both the countries where they are today.

The Cold War Penalty and the Nixon-Indira Friction

During cold war era, especially in 1970s and 80s, in order to counter Soviet Union, US was closely aligned with Pakistan. India’s choice of Non Alignment Movement (NAM) coupled with its eventual strategic partnership with USSR made Washington deeply uncomfortable and suspicious. I believe, transition of India’s current foreign policy from traditional non alignment to position of “Multi alignment” and “strategic Autonomy” is a monumental shift. It definitely puts India in much stronger position by providing room for flexibility.

In 1972, while President Nixon was opening economic and diplomatic doors for Beijing. Little prior to that during the 1971 Indo-Pak, Washington was sending the USS Enterprise into the Bay of Bengal to intimidate India. Wall Street was never going to heavily invest in a nation that the Pentagon viewed as operating within Soviet orbit.

Geopolitics was only one part of the story. India’s own economic model prior to the landmark 1991 reforms was equally responsible. High tariffs, industrial licensing and severe restrictions on Foreign Direct Investment (FDI) limited the flow of international capital. This reality is in stark contrast with China’s aggressive post-1978 reform strategy.

USS Enterprise, File Photo available in open source

The Technology Denial Regime vs. Forced Tech Transfer

As discussed in my previous post, Western corporations willingly accepted “Forced Technology Transfers” taking place in China and handed over proprietary blueprints in exchange for lucrative market access. Contrary to it, India faced strict Technology Denial. India’s Peaceful nuclear test, Smiling Buddha and Pokhran II in 1974 and 1998 respectively, triggered immediate and punitive economic sanctions from United States and its allies. Access to critical dual use technologies, supercomputers and aerospace components were systematically cut off.

While Western firms transferred significant manufacturing know-how to China, India spent decades facing restrictions and was kept out of global technological ecosystem. This historic isolation resulted to the drive for indigenisation and Aatmanirbharta (self-reliance) as it had become the strategic necessity for India’s survival in the global stage.

The Infrastructure Bottleneck: Democracy vs. The Bulldozer

China’s manufacturing sector were supported by cheap credit from state owned banks as a result of a massive influx of foreign capital. Private Indian firms on the other hand faced punishingly high domestic interest rates, zero state aided land subsidies, and substandard fragmented infrastructure network. China’s authoritarian regime and command structure could acquire land quickly, build mega ports and suppress labor dissent. On the other hand, India’s vibrant democracy had to navigate with complexity of harsher environmental restrictions, weaker industrial support, local protests, slow state capital model and time taking bureaucratic processes.

The Contradicting Paths of Internal Transformation

Till 1970s, India and China stood at almost similar economic starting lines. However, China’s transformative choices in 1978 laid the groundwork for its explosive rise. Following the death of Mao Zedong in 1976, Deng Xiaoping fundamentally reshaped the Chinese economy through “Socialism with Chinese characteristics”. It was a system where pragmatism ruled over ideology. He famously popularised the phrase, “It does not matter whether a cat is black or white, as long as it catches mice.” This emphasises that its after all tangible economic results that maters more than communist dogma.

Under his leadership, the state prioritised modernisations in four sectors which are agriculture, industry, national defence and science and technology. From 1978 onward, China’s collective farming system was dismantled. The rural farmers were incentivised to produce surplus and generate individual profit. Simultaneously, the China embarked on rapid infrastructure upgrades building world class ports, railways and power plants. It created multiple Special Economic Zones (SEZs) where global capital tax concessions and cheap labor were exercised, integrating itself into global supply chains. Further, huge investments in mass literacy and basic public health made during the Mao era provided a healthy, capable workforce uniquely ready for mass industrialisation.

In stark contrast, India was much slower to reform its economic engine. Rigid bureaucracy, complex land acquisition challenges and chronic project delays became the norm. India maintained a highly restrictive economic environment, opening its markets to global forces only after the severe balance of payments crisis in 1991. For decades, the infamous “License Raj” system restricted business opportunities to a few influential people. Additionally, India’s labour laws were rigid compared to China’s, making it legally difficult for factory owners to scale their operations. These aspects ultimately discouraged businesses from growing into large scale enterprises.

The Path Taken: The Services Leap

Lack of deep water ports and massive manufacturing infrastructures, FDI that flooded China, India engineered a different kind of success story in the field of IT and Services. By leveraging the WTO’s General Agreement on Trade in Services (GATS), India built global standard software and pharmaceutical hub. But the harsh reality is that a services led model while creates job opportunity for college passed out educated middle class and provides a feeling of well being, it lacks the capacity to transform the broader economy of the country.

In a nut shell, it can be said that China’s model relied on a hyper efficient, state controlled mechanism that deliberately prioritised economic reform over political freedom. India, conversely, attempted to grow within a vibrant democratic and quasi-federal framework. In India’s circumstances, any major structural transformation naturally required painstaking negotiation, legal consent, and multi party consensus.

Next one in series

If you are finding this series interesting, stay tuned. I will follow this piece with a sequel exploring why the US is now actively trying to contain China, even though their economic relationship initially appeared so mutually beneficial.

Your feedback is genuinely appreciated!

Often, in academic discourse and public debate, we hear China’s progress held up against India’s, as if the two nations ran the same race. The more I dig into the geopolitical and economic events that shaped both countries, the more convinced I am that this comparison is deeply unfair.

In this post, I want to share why I believe China’s rise (the Chinese Communist Party’s rise) was engineered and supported in a structured way by the American establishment. I hope you find this interesting, and I’d love to hear your thoughts.

The Cold War Bet

During the Cold War, counterbalancing the Soviet Union was one of America’s central priorities. In 1970, under President Nixon, the US opened the door for China to enter global trade. The goal was to keep Russia in check by building an economic foundation with Beijing.

From 1990 to 2000, successive administrations deepened this relationship through favourable policies. The Wall Street and multinational corporations began investing heavily in China. The underlying belief, championed by foreign policy experts, was that economic liberalisation would eventually produce political liberalisation — a doctrine that came to be known as “Constructive Engagement.” After China’s accession to the WTO in 2001, there was no looking back for western support for Chinese growth.

Pic - 1972 visit by Richard Nixon to China

The Price of Profit

China’s vast labour force and consumer market were irresistible to American corporations. Under joint venture requirements, Western companies handed over blueprints, source code, and operational technology to their Chinese partners, a sophisticated form of Forced Technology Transfer.

Companies like Cisco, Motorola and General Motors privately complained about IP theft and state-sponsored counterfeiting. But the profits were too good to walk away from. So these same corporations lobbied Washington against punishing China, a textbook case of wilful blindness, where short-term gain quietly overrode long-term red flags.

Wall Street was just as deeply invested. Major US investment banks earned billions underwriting IPOs for state-owned Chinese firms on the NYSE. Trillions of dollars from American pensions and mutual funds flowed into Chinese stocks and bonds.

Chimerica

China used this influx of Western capital to modernise its defence capabilities, advance its technology, and cement the CCP’s authoritarian grip, all while building a manufacturing and export machine that generated massive savings, which were then funneled into US government debt. That capital, in turn, kept American interest rates artificially low, fuelling decades of cheap credit and consumer spending back home.

This mutual dependency has a name: Chimerica. The popular term has been coined by historian Niall Ferguson and economist Moritz Schularick in 2006. It’s a fitting term as it has double meaning. A Chimera, in Greek mythology, is a monster stitched together from mismatched parts implying that this economic union was always an unstable, unnatural hybrid, one that could turn dangerous or collapse under its own weight.

Today, the two economies remain fused. America depends on China for manufacturing and critical minerals while China depends on America for export revenue and capital markets. Even as Washington talks about “de-risking” or decoupling, Wall Street and multinational corporations resist because a real rupture would be economically catastrophic for everyone involved.

A Naive Bet

The doctrine of “constructive engagement” rested on a simple, almost naive assumption that economic liberalisation would inevitably force political liberalisation. When President Clinton signed the US–China Relations Act of 2000, Washington genuinely believed WTO membership would push China toward becoming a free-market democracy.

This belief had a name too, “Modernisation Theory”. The idea that economic wealth automatically produces a democratic middle class. Presidents from both parties, Bush, Clinton and Bush again, championed this “Integration and Convergence” strategy, believing they were winning an ideological battle. In hindsight, they were building a rival.

By the late 2010s, the cracks showed, fault lines started appearing. Chinese firms, having absorbed decades of Western technology, began outcompeting the very companies that trained them. Section 301 tariffs and the trade wars followed, as the West finally reckoned with what that “handover of technology” had cost.

The Twist

Here’s the irony: while Washington believed it was engineering China’s political future, the CCP was quietly engineering its own survival. China achieved what Western political scientists thought was structurally impossible. The marriage of explosive capitalist growth with total authoritarian control is what China stands for today. It absorbed trillions in Western capital while using firewalls, strict laws, and a vast security apparatus to make sure that wealth never translated into Western-style political freedom.

Where Does That Leave India?

If you’ve read this far, you’ll notice something: India never got these “freebies.” It had to walk a very different, far less smooth path, one I’ll write about soon.

So, what happens next? How do you think the US and China are planning their next moves and what does that mean for India and the global order? In this economic engaged scenario, what are the chances for military conflict between US and China?

In th next Article, I write how and why India was left out of China style growth.

Stay tuned, subscribe, and let me know what you think.

Related reading: The Two-Bucket Theory: Decoding the Global War Machine

I recently came across the Two-Bucket Theory, popularised by Dr. Ankit Shah, and found it to be an incredibly powerful lens for decoding global events. Some news headlines look wildly confusing on the surface, but when you look through this framework, they become as clear as day.

The theory posits that global superpowers systematically divide regions or cultivate adversarial neighbors to perpetuate their geopolitical dominance and feed the economic interests of the military-industrial complex.

To achieve this, nations are intentionally sorted into two distinct buckets:

• Bucket 1 (The Proxies): Nations that receive massive inflows of Western dollars, advanced weapons, and political support to act as regional proxy powers.

• Bucket 2 (The Targets): Neighboring nations that are heavily sanctioned, economically isolated, and painted as the perpetual villain.

The examples are all around us, though we often see them in reverse pairs. Look at how the balance is maintained:

• Ukraine vs. Russia: One receives endless military aid; the other faces unprecedented global sanctions.

• Pakistan vs. India: For decades, a healthy economy was forced to suffer from engineered regional instability. Wealth generated from defense procurements on one side directly tied into the aid or weapon flows of the other.

• Saudi Arabia vs. Iran: A wealthy energy giant pitted against a heavily isolated, sanctioned regional rival.

A Self-Sustaining Loop

A genius theory indeed and best part of this theory is that it is completely self-sustaining.

By continuously fuelling tensions between these paired nations, global powers ensure that countries in both buckets are forced to default into a permanent state of anxiety. This anxiety creates a non-stop, artificial demand for advanced military defense procurements.

The conflict is the product. The military-industrial complex is the beneficiary.

The more I study global economics, the more I realize how complex and at times paradoxical, it can be.