INTERVIEW WITH A.SUBRAMANIAN

CHINA FIRST MIDDLE-INCOME NATION ON COURSE TO BECOMING SUPERPOWER: ARVIND SUBRAMANIAN

The Economic Times, September 27, 2011

Arvind Subramanian's new book, Eclipse: Living in the Shadow of China's Economic Dominance, argues that China will elbow out the US in the next two decades as an economic superpower. No wonder then that he was asked to testify before the US Congress joint economic committee on US China relations a few days ago.

For his part, Subramanian insists that China will become the first middle-income country to become the most powerful nation in the world. The senior fellow at the Washington-based Peterson Institute for International Economics adds that India and other neighbours shouldn't worry because Beijing is unlikely to become a malign hegemon.

He anticipates that China will suffer a financial setback or two in the next two decades, but will not grow so low so as to stoke political discontent. While this former IMF economist expects China to slowly move away from the practice of undervaluing the renminbi, its currency, he is optimistic about India forging ahead despite many odds. India will go the China way, but many years later, predicts this IIM-A alumnus.

What are your views on accountability failures in China?
The public delivery systems may have deteriorated in China the way it happened in India. My book looks at how China, despite all these weaknesses, will be able to post decent growth in the next 15-20 years.

You predict that in less than two decades China will become the world's biggest economic power? How tough or easy was it to arrive at this conclusion?
I have actually constructed an index of economic dominance. I looked at history and all those variables that determine a country's power internationally. Then I narrowed it down to three variables, the country's GDP, its trade and the extent to which it is a net creditor or net debtor to the rest of the world. I combined these to create an index and projected it forward to 2030. Based on some very conservative assumptions and wellestablished methods, I concluded that China will be as dominant as the UK in the 1870s and the US after World War II.

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