India has just launched a new air craft carrier, the INS Vikrant. India now joins a small group of countries, including Russia, the U.K., the U.S.A., and France that has designed and built its own aircraft carrier. Not even China has built its own aircraft carrier. How will China respond and what does this mean for the balance of power in the region?
The balance of power in Asia between India and China is among the most important topics on the global stage. After the United States and Russia, India and China are often regarded as being the most powerful military powers in the world. Much of the strength of their armies rest on pure numbers. With over a billion people each, both countries could literally field armies numbering in the hundreds of millions.
ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
The United States is still the most powerful military in the world, by far. This owes to the huge technology advantage afforded to America. Still, China is on the rise and slowly closing the gap with Russia and the U.S. As such, the American government has been looking to balance power in the region by building up alliances with S.E. Asian states, India, and others.
India’s complicated relations with the U.S.
Historically speaking, the United States has actually had closer ties with China then India. While this may seem odd given that India is a democratic country and China is controlled by a communist party, India was actually aligned with the Soviet Union during the cold war. Meanwhile, China and the USSR were locked in their own cold war rivalry. While it’s often forgotten, the buildup on the Chinese-Soviet border was one of the largest troop build ups in history.
Relations for India and China started off on the right foot with India being one of the first countries to recognize the Communist Party as the legitimate ruling party of China. India’s close ties with the Soviet Union increased tensions between China and India. Both countries now have over a billion citizens each, and share expansive borders.
India also has fraught relations with China
India and China actually fought a border war in 1962. The war occurred over disputes over borders in the Himalayan mountains. When the Chinese began to build a road in the disputed region tensions increased. China began to build up forces, but India did not believe and actual war would break out. On October 20th, the Chinese launched a series of attacks and made a limited invasion. India lost badly, with the Chinese quickly overwhelming the Indian military.
The Chinese did quickly withdraw, but the overwhelming show of force embarrassed India and forced the nation to reevaluate its military preparedness. In the years since, India has worked hard to build up its military strength and readiness. Upgrading military technology has become essential, and India now joins a small group of countries capable of building its own aircraft carries, and while shortly be able to build its own submarines.
India planning to launch its own nuclear subs
Still, for every step forward, India takes a step back. Early Wednesday two explosions led to a fire that sunk a submarine in a Mumbai dockyard. The Indian government is still conducting its investigation, but some are speculating that the submarine’s batteries may have exploded. The submarine was a Russian built and serviced vessel, as are most Indian submarines. India plans to launch its own nuclear submarines, the Arihant-Class, in 2014.
The United States faces a difficult position in regards to India. The United States is trying to balance power against the Chinese, so India would seem like a natural ally. America, however, sided with Pakistan during the cold war and is still a major support. Pakistani-India relations are among the most tense in the world, and the two countries have fought several wars. With the United States trying desperately to stabilize Afghanistan, Pakistan must be kept in the fold.
India on its own will have trouble competing with China. While India is nearly as large in terms of population, it lacks the internal unity necessary to marshal resources to effectively counter China. This goes beyond the mere differences between the one-party system in China and the complex democracy in India. China has a unified history that stretches back thousands of years. Throughout most of history India, on the other hand, existed throughout most of its history as a collection of princely states.
Further, China is already moving to isolate India by building up an alliance with Pakistan. This last spring China and Pakistan jointly announced plans to build an “economic corridor” to link China and Pakistan. Among other things, the plan calls for a two hundred mile tunnel that separate the two countries. This move comes at a time when US-Pakistan relations have been slowly cooling over the war on terror.