As the G7 summit showcased paradoxical policies in relation to China by the world’s leading democratic economies, one then sees US National security advisor Jake Sullivan’s fashioning of a new policy quite interesting. European leading economies have categorically refused the policies of “de-coupling” but proposed one of “de-risking” with China. This makes us, in India, both question the seriousness that European leaders have with respect to the rising hegemonic autocratic powers of China and the pressure they exerted on India to economically ‘de-couple’ from Russia. In all these, the policy of the ‘New Washington Consensus’ proposed by Sullivan is both interesting and innovative in US international policy making. The old Washington Consensus signified the American take on the economic policies of free movement of capital, opening-up of economies, globalisation & liberalisation, as the panacea for growth & development and the free-market theory of efficient production at the cheapest labour rates. This consensus was solidified with Bretton Woods institutions regulating global finance and the capitalisation of economies.
Sullivan’s new proposal not only departs from erstwhile American economic thinking about globalisation but makes a radically opposite approach to globalisation and international trade. Sullivan’s policy is at the heart of President Biden’s efforts to make America's economic and foreign policy deliver better results for the US middle class. The wholesome transfer of blue-collar jobs along with cajoling China to enter the rules-based international economic & trading order in 2001 with it being a member of WTO, has seriously undermined American interests and that of the rules-based order of which it strongly is a proponent. Sullivan has explained in detail that the American government will provide significant public capital for strategic sectors like semiconductors and green energy along with providing subsidies to capital-intensive industries for domestic industrial development. This essentially forms new Washington thinking on supporting strategic industrialisation and promoting American capital to invest significantly in the shores of America. During this massive rebooting of the US's economic agenda and development of a geoeconomic paradigm with geopolitical interests, India needs to converge and not let such opportunities pass by. India’s half-baked approach to Indo-Pacific Economic Framework needs to change. Sullivan lays out in detail that IPEF is about friend-shoring supply chains and not a mere trade pact which dogmatically follows tariff reduction. Delhi was one of the last entrants into the old Washington consensus by liberalising its economy and today its objectives of decoupling from China and building a national supply chain across sectors with significant production incentives to manufacturing giants converge with American new international policy ideas. Delhi’s reluctance to join the biggest trade pact, RCEP solely hinged on opening up all contours of the Indian market to the massive economic machinations of China. But with IPEF the objectives are not only to intertwine markets but build a reliable economic chain that can’t be used to bully nations into surrendering sovereignty or self-interests and provide a counter to China's cheap labour-intensive scalable manufacturing industries.
Indian policymakers have to understand that economic heft has to be built with American support because of manufacturing, although moving away from China is majorly going towards Vietnam, Malaysia & South Korea. To retain it within Indian reforms and incentives apart, some American pushing of MNCs is required. Apart from strategic sectors, the US still needs scalable, cheap manufacturing of labour-intensive products, and India provides the best destination for it. This geo-economic convergence perhaps requires more in-depth conversations than geopolitical strategic coming together of Indo-US polities. With Sullivan’s interesting New Washington Consensus receiving strong support from domestic audiences that see this as an increase in stable income & jobs for non-tech and non-finance workers, IPEF solidifying friend-shoring initiatives, and the overarching US capital behemoth identifying the Chinese challenge as one of both geo-economic along with geopolitics, India cannot afford to miss this golden opportunity to peddle an economic accelerator that could transform its economy domestically into job-generating one and propel India to China’s axis of humongous economic power status.
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