According to the latest international demographic studies, the average age of the population in India in 2010 will be 28 as against 37 in China, 38 in USA, 45 in West Europe and 49 in Japan. Japan will be worst hit in terms of productivity due to its ageing population. The annual budget of the Japanese Government will be burdened so much by pressure of social security for the retired who are non-productive that not enough funds will be left for developmental programmes. That way India is also advantageously placed vis a vis China and with the passing of years, India will be getting more benefits to its productivity due to its strength of the younger population who will be increasingly technically qualified due to the revamp of the education system.

Prime Minister Dr. Manmohan Singh is presently in Japan on a state visit and he is expected to talk to his Japanese counterpart with confidence since India is now recognised as a high growth economy in a period of global financial crisis and internationally, Dr. Singh is playing a major role in finding out solutions for the economic crisis which has been accentuated by the wrong policies of the capitalist west. That way, Japan this time will be more in an accommodative mood and the Japanese Government may even seek India's help in persuading China to be more helpful to solving the currency crisis. Japan earlier wanted India to be a part of anti-China axis but India has refused to fall in line and India is taking an independent position. India has its own problems with China but it wants to deal with that bilaterally and India believes that in the coming years, India, China and Russia have to cooperate to ensure a strong and stable international economic order.

According to a study on economic balance of powers after the present global crisis carried out by Samsung Research Institute, on a long term, India has better prospects of growth at the rate of 6 to 7 per cent while China will be having 4 to 5 per cent growth from 2020 due to declining economically active population and slowing productivity growth. However, Chinese economy is so big that its limited growth will also enable it to replace USA in 2026 as the largest economy of the world.

The study makes it clear that the US hegemony over the global economy is declining and the data shows that the US's economic weight has fallen steadily since 2000. It was 32 per cent in 2000 and in 2007, it came down to 25 per cent. But during this period, the emerging economies have gained in strength. These economies, including BRICs, had a weight of 5.3 per cent in 1992 but it went up to 12.8 per cent in 2007. China showed especially fast growth and the average growth was 10 per cent since entering WTO in 2001. China has already overtaken Japan in 2010 to become the number two economy in the world.

As experts see it, global economy is expected to slow down due to ageing population and shrinkage in economically active population while the emerging economies will lead the global economic growth. Both the US and EU will have very low growth ranging from 2 to 3 per cent in the initial years and then later even 1 to 2 per cent as a result of the shrinking labour population. As against this, the economic weight of the BRIC countries will continue to rise 16.1 per cent in 2010, 25.1 per cent in 2020 and 31.7 per cent in 2030.

As regards the financial power, the study mentions that the financial power of Europe and the emerging economies will strengthen in the next decade and after as against the USA, and significant advancement is expected in sovereign wealth funds and emerging economies. However, the study points out that while absolute financial power the US enjoyed now will weaken, it will still have superior status. In fact, financial power will be divided in the post-crisis period between the USA and Europe while the impact of China's rapidly growing financial power will be limited to Asia.

Analysing the international monetary system, the study says that US dollar will remain the leading currency due to its abundant liquidity in financial market and network effect but euro will become a powerful competing currency resulting in a bipolar currency system in the world. After the present global financial crisis, restructuring in the international financial order will alter the US led global currency system. However, Chinese yuan will become a regional currency in Asia.

According to the study, the global weight of the commercial banks are migrating to EU and the emerging economies and there will be increasing influence of oil money in the middle east and sovereign funds mainly consisting of Asian capital. There has been a contraction of the US investment banking industry due to the financial crisis and therefore the US seeks a breakthrough by cooperating with European and Middle Eastern capitals. The US and UK will cooperate to maintain their vested interests in the international financial system

As regards the knowledge capital, the study projects that the US will maintain its hegemony in the scientific and technology sectors until 2030 and its main rival will be China which could jump to second position globally by 2030 in terms of technology development. Research and development investment of China will amount to US$ 300 billion in 2020 surpassing those of Germany and Japan. China will rise as an Asian technology powerhouse in terms of the number of papers, number of citations and competitiveness of universities. In some areas, China and India could surpass the US in terms of scientific knowledge.

The study underlines that the latest global financial crisis paved the way for China to shorten by more than two years the time necessary to catch up with industrialised countries including the USA. While the US and Europe lost two years for the global crisis, Japan lost four to five years. The status of the US as a world superpower is weakened while the emerging countries leap forward. Regional integration spreads from trade and investment issues to finance and currency, and China strengthens its position, through its economic power, in Central Asia, Africa and ASEAN. (IPA Service)