China’s economic success since 1978 has been linked to its rise as a great power. China has been the fastest-growing economy since the reforms first began there. It is projected to overtake the US as the world’s largest economy by 2040. Its economic integration into the region makes it the driver of East Asian growth, thereby giving it enormous influence in regional affairs. The strength of its economy, together with other factors such as population, land mass, resources, regional location, and political influence, adds to its power in significant ways.

Development in Chinese Economy

Soviet Model Economy: After the inception of the People’s Republic of China in 1949, following the communist revolution under leadership of Mao, its economy was based on the Soviet model.

• To create a state-owned heavy industries sector from capital accumulated from agriculture. 
• As China was short of foreign exchange that it needed to buy technology and goods on the world market, China decided to substitute imports by domestic goods.
• Openness of Economy: China ended its political and economic isolation with establishment of relations with the United States in 1972.
• Four Pillar of Modernizations: Premier Zhou Enlai proposed the ‘four modernizations’ (agriculture, industry, science and technology, and military) in 1973.
•  Open Door Policy: By 1978, the then leader Deng Xiaoping announced the ‘open door’ policy and economic reforms in China.
• Globalization and Privatization: The privatization of agriculture in 1982 was followed by privatization of industry in 1998. 
  • Trade barriers were eliminated only in Special Economic Zones (SEZs) where foreign investors could set up enterprises. 
  • In China, state played and continues to play a central role in setting up a market economy.
• Surge in Foreign Trade in Investment: New trading laws and creation of SEZ led to a phenomenal rise in foreign trade. 
  • China has become the most important destination for foreign direct investment (FDI) anywhere in the world.
• Unequal Development: While the Chinese economy has improved dramatically, not everyone in China has received benefits of reforms.
• Unemployment has risen in China with nearly 100 million people looking for jobs. 
  • Female employment and conditions of work are as bad as in Europe in the eighteenth and nineteenth centuries.
  • Despite these disparities, China has become an economic power to reckon with regionally and globally.

India – China Relations

India and China were great powers in Asia before the advent of Western imperialism. China had considerable influence and control on the periphery of its borders based on its unique tributary system. There was limited political and cultural interaction between the two nations.

Post Independence Relation

• Similarity and Hopes: After India regained its independence from Britain, and China expelled the foreign powers, there was hope that both would come together to shape the future of the developing world and of Asia particularly.
• Sino-India War: The conflict of 1962, in which India suffered military reverses, had long-term implications for India–China relations. 
  • Diplomatic relations between the two countries were downgraded until 1976.
• Shift in Chinese Policy: After the change in China’s political leadership from the mid to late 1970s, China’s policy became more pragmatic and less ideological.
• Border Disputes Resolution: A series of talks to resolve border issues were also initiated in 1981.
  • Rajiv Gandhi’s visit to China in December 1988 provided impetus for an improvement in India–China relations.
• Trade Relations: Bilateral trade between India and China has increased from $338 million in 1992 to more than $84 billion in 2017.
• Strained Relation: Recently the relationship between the two countries has taken a downslide. 
  • Border disputes, China-Pakistan Economic Corridor (CPEC), and China’s support to Pakistan in UN against India’s move to counter terrorism are some of the factors for it.

Alternative Sources of Power

Japan

• Resource Dependence: Japan has very few natural resources and imports most of its raw materials.
• Economic Development: Japan became a member of the Organisation for Economic Cooperation and Development (OECD) in 1964.
  • In 2017, Japan was the third-largest economy in the world.
• Global Standing: It is the only Asian member of G-7. It is the eleventh most populous nation in the world.
• Historical Trauma: Japan is the only nation that suffered destruction caused by nuclear bombs.
• Global Contribution: It is second largest contributor to regular budget of UN, i.e. almost 10%  of total.
• Military Expenditure: Japan’s military expenditure is only 1% of its GDP, it is the seventh largest in world. 

South Korea

• Division of the Korean Peninsula: Korean peninsula was divided into South Korea (Republic of Korea) and North Korea (Democratic People’s Republic of Korea) at the end of Second World War along  38th Parallel. 
  • Korean War during 1950-53 and dynamics of Cold War era further intensified rivalries between two sides.
  • Both Koreas finally became Members of UN on 17 September 1991. 
• Economic Miracle: South Korea emerged as a centre of power in Asia. Between the 1960s and the 1980s, it rapidly developed into an economic power, which is termed as “Miracle on Han River”. 
• Global Standing: Signalling its all-round development, South Korea became a Member of OECD in 1996. 
• Economic and Military Strength: In 2024, its economy is ranked 14th in world by nominal GDP and GDP (PPP). It is also the 4th largest economy in Asia. 
  • In 2022,  its military expenditure was fourteenth largest in the world. 
• Drivers of Human Development: It includes “successful land reforms, rural development, extensive human resources development, and rapid equitable economic growth.”
  • Other factors are export orientation, strong redistribution policies, public infrastructure development, effective institutions, and governance. 

Conclusion

China’s emergence as a major economic force starting in 1978 has changed its position in the world, thanks to deliberate changes and participation in a global economy. Although facing issues such as uneven growth and joblessness, China’s impact is still increasing. Historically intricate ties with India underscore regional dynamics. Meanwhile, Japan and South Korea exhibit distinct economic success and resilience models, both playing unique roles in Asia’s economic scene and global impact.