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China’s atrocities in Ladakh have been costly for India in terms of the loss of lives of Indian soldiers. The cost of the resultant Indian military movement has also been high. However, this unfortunate episode may have some important benefits for India. India needs to learn the right lesson from this chapter and perform a course correction in its economic and political policies.

First, we should now recognise that despite the friendly talk we may have to do publicly for diplomatic reasons, China is a new hegemonic power. It wants to be to Asia what the US had been to both the American continents. It wants to begin with the Munro doctrine - making Asia its undisputed sphere of influence and then aim at wider domination over time.

India should be clear-sighted about China’s intention to dominate India along with other Asian powers and settle its border dispute on its own terms when it is the sole dominant power in Asia. China’s domination of India will be painful just like Japan’s domination of South-East Asia was during the Second World War era. India cannot accept that.

India can prevent that only by becoming economically and militarily strong. Sweet talks mean nothing to the Chinese. The Indian economy can and must grow at 7-8% per year for the next three decades so that it can catch up and even surpass China by 2047. For that purpose, India needs hard work, efficiency and honesty in all sections of society and in both private and public sectors. It needs a bit more of the Spartan spirit of discipline and a little less of the Athenian spirit of argumentation. It needs a strong government like Japan, Korea, Singapore and China has had for several decades. It should end talks of sweet spots, demographic dividend etc. and internalise the threat posed by China to our azadi. It should be remembered that all East Asian success stories - Japan, South Korea, Taiwan, Singapore and China - mobilized massive national efforts for development by internalising an existential threat. Indians have to realise that we are living in a dangerous neighborhood and it is only by blood, sweat and tears that we can save our independence and way of life. We cannot depend on our good neighbours or distant friends. Self-reliance and concerted work by all sections of the society under a stable political leadership is the only way out. China’s mischievous behavior has come just in time to wake us up. 

Secondly, while being aware of the dangers of hegemony of the currently dominant powers, we should not be hesitant to learn from them just as Japan, Korea, Singapore,and China learnt from the US. This, however, need to be done with our roots kept firmly into the ground. China has done exceptionally well in achieving sustained high growth and building up its economic and military strength but has performed quite poorly in equity, cleanliness and transparency. We can learn a lot from China in the areas of prosperity and strength and avoid its policies in other areas. We can learn from China how a high level of investment (at least 40% of GDP) will be essential for growth at 7-8% per year and a largely state-owned and state-managed financial sector will be essential to provide large credits to the public and private sectors. This monetary influx will be necessary to meet the huge need of investment in social and physical infrastructure and from the lead sectors in manufacturing and even in agriculture. We have been hesitant about import-saving and cautious about looking at the Trojan horse of foreign investment in its face. After China’s misadventure, we should have no doubt about the importance of self-reliance in trade and investment. Import substitution with a clear target for export competitiveness in a given time frame has been the consistent features of all East Asian success stories and we can do well by following that path. 

Thirdly, we should wake up about the dangers of the Washington Consensus for our economic management. Monetary policy, fiscal policy, income policy and prices cannot be kept in silos and guided by the fear of inflation. Growth of the economy and employment generation have to become the prime concerns of economic management and different aspects of macro-management have to be determined in a comprehensive manner by the economic committee of the cabinet and not left only to the Reserve Bank of India (RBI) or the Ministry of Finance. Instead of demonising the government and the public sector, we should seek the right balance between the two and improve the quality of governance in the private sector as much as in the public sector.

Lastly, China’s recent behaviour has highlighted the need for adherence to international rules in economic as well as in territorial matters. Neither China nor the US should take international law in its own hands. India must work together with like-minded countries particularly in Europe and South-East Asia to work towards a genuine multi-polar world with effective multilateral institutions of finance, trade, food, health and culture which will aim at the rise of all with participation of all (sabka saath sabka vikash). India must begin to form international consensus against hegemonic powers of today or tomorrow.

If we can draw the right lessons from China’s misbehavior in Ladakh, we would have taken a strong step toward fulfilling the Prime Minister’s dream of making the 21^st century India’s century by becoming a Jagadguru for holistic development according to its own lights.

The author is a Distinguished Fellow of Niti Aayog.