Ideas

Peace

In a world set to reach nearly 10 billion inter-connected people, power will come from creating peace, prosperity and freedom so that we can make breakthroughs in how we live together, and this requires a transformation in the very definition of power, and the purpose and principles by which it is exercised

GPC’s Macro Thought Leadership

GPC’s research focuses on the geostrategic changes in the world and the implications of for peace, prosperity and freedom. Our analysis seeks to find the patterns and identify the new forces that are the signs of our times and will determine the future of the world


The world is in a historic transition of great power hegemony, world order, population and resources which will change the very nature of civilisation. These transformations create discontinuities and a dynamic canvas on which the world’s future will be written

The 21st Century has been widely predicted to be the Asian Century, in which the continent, home to 60% of the world’s population, will become the world’s dominant economic, political and even cultural force. Within this continent of 49 countries, two will disproportionately impact the trajectory of the 21st Century on account of their scale and growth potential: China and India. The relationship between these two countries as well as the trialogue with the world’s current hegemon, the United States, will will be critical to shaping global economic and political trends for generations to come.

 

A modern India lifting a billion people out of poverty will need a large, modern and diversified economy to not only realize the aspirations of people but also to clothe, feed, employ and educate what will become the world’s largest population within the next five years and this will require an India that is open to the world and dedicated to unlocking the potential of its people and its assets

 

We bring our network of business leaders, entrepreneurs, influencers and thinkers who are at the frontline of change across to provide insights into the global issues that are rapidly changing the world and how they see an impact being made for good

 

We recognise the complex and rapidly changing nature of India’s markets and economy as it grows and expands internationally and have focused the firm’s thought leadership on detailed research to generate insights into the macro-environment, market strategy, investment opportunities and challenges to generate attractive risk adjusted returns

We live in revolutionary times. Increasingly political, economic and social volatility is driving change on a global level, creating both risks and opportunities for international investors. Greater Pacific Capital’s thought leadership and investing strategy placed it at the forefront of global change

Selected news that makes the difference

Prime Minister Modi Invites US firms to Invest in India

With the Indian government making increasing efforts to attract foreign investment, Prime Minister Narendra Modi invited US companies to invest in India's healthcare, infrastructure, defense, energy, farm and insurance sectors during the US-India Business Council India Ideas Summit.

Indian Economy Expected to Grow by 6.7% by FY22

A report by IHS Markit states that the Indian economy will rebound in the second half of 2020 as the impact of the Covid-19 pandemic recedes, and is projected to grow by 6.7% in the next financial year.

India Ranks third in Global Manufacturing Locations Among 48 Countries

India ranked third after the US and China in the Global Manufacturing Risk Index of most-suitable locations for global manufacturing in terms of cost competitiveness and operating conditions.

India Steps Up Efforts for Setting Up One Solar City in Every State

The Indian central and state governments have identified 60 cities across the country whose entire electricity needs would be met through rooftop solar power in order to improve India’s green energy credentials and increase efforts to become an integral part of the global supply chains.

India’s SaaS Revenue Set to Grow 6x to US$13-15bn by 2025

The pure-play India SaaS industry is projected to grow by 6x to US$13-15bn by 2025 driven by large demand for Indian companies from overseas markets, a strong push from the government and access to a strong funding pipeline.

Digitalization of SMBs Could Add Up to US$216bn to India GDP by 2024

Adoption of digital technologies by small and medium businesses (SMBs) is expected to add between US$158 and US$216bn to India's GDP by 2024, with 68% of Indian SMBs already on the path of digital transformation having digitalised various products and services

Spotlight on the key monthly news events shaping media coverage in India

Media coverage in India this month covered how various Indian state governments have begun re-imposing localized lockdown in different cities as India crossed one million Covid-19 cases, Google launching its US$10bn ‘Google for India’ digitization fund and the Indian central government passing an order restricting participation of Chinese Companies in public procurement bids.

 

India Reimposes Lockdown in Parts of the Country as Cases Surge Beyond One Million

 

As India's Covid-19 tally rose to over one million cases, various state governments begun to reimpose lockdown across different cities to control the spread of coronavirus. The governments of Maharashtra, Uttar Pradesh, Karnataka, Tamil Nadu, Assam, Arunachal Pradesh, Meghalaya and Bihar have all implemented strict area-wise restrictions for different durations. Media publications were largely critical of the decision to reimpose lockdowns across the country and weighed in on its implications for the Indian economy.

 

An op-ed in Indian Express criticized the decision of the state governments stating that while initial lockdowns by the central government had specific purposes of reducing the rate of transmission and getting health systems (both public health and hospital services) ready for a surge in cases, these objectives are missing from the newer versions of the lockdowns and curfews imposed by individual states. “The four lockdowns till May 31 have largely served the purpose. There is increased testing capacity, better provision of isolation, oxygen and ICU beds and ventilators. The public health and social measures such as wearing masks, hand-washing and social distancing are being better enforced… The “chasing the virus” approach in Dharavi, Mumbai and the repeatedly underlined approach of “test, trace and treat” strategies, implemented with renewed attention in Delhi after mid-June, are proof that a lockdown is at best a facilitating tool and its overuse may not be helpful… if lockdowns were to prepare the system, it has been more than four months since the first lockdown was imposed. If this period was not enough to prepare the system, what more can be achieved in a lockdown of another one, two or even three weeks... The response to COVID areas other than state capitals and metropolitan cities seems to be based upon the two pillars of lockdown and hospital readiness. At the first hint of a surge in cases, the local authorities seem to resort to a lockdown which may slow down the spread but may not solve the problem.”

 

Livemint focused on why India needs far better coordination among states given that the Indian economy is a complex web of inter-dependencies among these different states and the localized lockdowns imposed would have knock-on effects on supply chains across the country, adversely impacting the entire economy. “Spooked by swelling caseloads, however, state authorities have been falling back on the tried, tested but mostly failed strategy of confining people at home and halting almost all activity outside of it. A prickly patchwork of local lockdowns is firmly in place… Whether localized lockdowns are effective against covid-19 remains unclear, given the country’s patchy record on this front, but their adverse impact on economic processes is amply evident… The abrupt dislocation of a single link can cause havoc in other places and endanger value creation as a whole… At this stage, policy cohesion is a must. This may call for a big rethink of our national response to the covid shock. A proper analysis of the role of State interventions in stopping contagion flare-ups could help us rework our plans.”

 

An article in The Economic Times outlined how localized lockdowns being re-imposed across several states was negatively impacting the economy just as it had begun to revive over the previous month following the easing of restrictions from the initial lockdown. “The revival last month seems to have lost steam with localised lockdowns being re-imposed across several cities due to the resurgence in Covid-19 cases… Key economic indicators such as e-way bills, mobility indices, labour participation rates and electricity consumption are down in July so far compared with their levels over the same period in June.... Risk aversion among the public at large and local lockdowns by different states and cities have contributed significantly to the slowdown this month. Uttar Pradesh has mandated a closure of all markets on weekends, while Bihar has announced a full lockdown from July 16 until the month end... Even short-duration lockdowns in industrial pockets could hamper revival. Therefore, the reaction of various state governments to the pandemic will determine the pace of recovery.”

 

Google Launches US$10bn Digitization Fund in India

 

Google launched the ‘Google for India’ Digitization Fund with a commitment to invest US$10bn in India over the next 5-7 years through a mix of equity investments, partnerships, operations, infrastructure and ecosystem investments. The fund will focus on four key areas – affordable internet access, new products and services for Indian small and medium businesses, leveraging artificial intelligence for social good and support for rural economies. Media publications focused on what this commitment would imply for the Indian government’s increasing efforts to attract foreign investment and the digital ecosystem of the country.

 

An article in The Indian Express highlighted that a major global technology company’s commitment to the Indian market underlines the huge opportunity that exists, and signals the continuing global appeal of the ‘India digital story’. “The US tech giant Google announced plans to invest $10 billion in India over the coming five to seven years through the “Google for India Digitisation Fund”. Operationalised through a combination of partnerships, equity, infrastructure and ecosystem investments, the focus will reportedly be on bringing more high-quality low-cost smartphones to enable greater Internet access in the country, building new products and services in consumer technology, education, health and agriculture, and empowering small and medium businesses to transform digitally. The move signals a stepping up of engagement between Indian and US tech firms and underlines the continued attractiveness of the country’s digital economy, even in the midst of a severe global economic slowdown… For a government that has been aggressively courting foreign investment, the sheer size of the Google outlay will be heartening, especially at a time when the economy is in the midst of a deep slowdown... The government should do everything it can to deepen and widen this burgeoning market.”

 

India Today focused on how India has emerged as an attractive destination for many Silicon Valley-based companies as the “technospheres” of influences are being redrawn following the escalating trade war between the US and China. “Google is invested in bringing the internet to those who surf on their mobile phones—a target audience of 500 million. Nearly 60 per cent of them prefer to surf the internet in their own languages. Google, which has researched the Indian language internet database and published the results on its website, predicts the user base to expand to 536 million by 2021… The race to capture the Indian market has been heating up. In April, Facebook, which has one of its biggest markets in India, announced a 9.99 per cent stake (Rs 43,574 crore deal) in Reliance Jio platforms. The two companies have already launched an online grocery service, JioMart, that gives users the convenience of placing orders using WhatsApp services… The trade war between the US and China has put significant pressure on US companies to look for alternative destinations. Just three days ago, Foxconn, the Taiwanese contract manufacturer that assembles iPhones, told a news agency it was planning to invest up to $1 billion in India. Pichai is ready to turbo-charge the trend.”

 

An op-ed in Bloomberg Quint outlined how reliable, affordable internet connection for hundreds of millions of Indians has resulted in India emerging as a battleground for global internet giants to consolidate their position and how digital commerce presents a new growth avenue for the country following inevitable pandemic linked losses. “Alphabet Inc. CEO Sundar Pichai is ready to realize India’s potential with the one way executives know best: a big fat check. The American search-engine giant said its Google unit plans to spend $10 billion over the next seven years on operations, infrastructure and investments as a “reflection of our confidence in the future of India and its digital economy.” American corporate leaders from Apple Inc.’s Tim Cook and Amazon.com Inc.’s Jeff Bezos to Facebook Inc.’s Mark Zuckerberg have all known that India could be the next big thing. Pichai, himself Indian-born, hasn’t sat idly by, either... Chinese FDI into India, at $6.2 billion, might not seem a cause for worry, but these investments are extremely strategic, giving Chinese firms access to the data of millions of Indians who are downloading apps or using smartphones. These investments thus bring up concerns over data security, propaganda, and platform control for India... India has not participated in China’s Belt and Road Initiative and has yet to take a final decision on allowing Huawei into the national 5G telecom market. But through these investments in start-ups, India may find its economy tied even closer to China’s, the report says.”

 

India Restricts Participation of Chinese Companies in Public Procurement Bids

 

Following the tense border standoff last month, India took further action against China prohibiting Chinese (and other border state country) companies from participating in tenders for government procurement without government approval. The order bars direct or indirect Chinese participation in strategic sectors such as power, petroleum, roads, rail, coal and telecom. Additionally, it also deters all state-run banks and financial institutions from funding any public sector or private sector projects with direct or indirect connections to China. Media publications focused on the implications of this order for India-China relations over the coming months.

 

An op-ed in The Hindustan Times explained why it was necessary for the Indian economy to decouple from China and how the order would reduce the penetration of Chinese commercial interests in India and deter private Indian firms from dealing with Chinese companies. “India’s order on Thursday, restricting purchases for large public projects (and even those being developed as public-private partnerships) from companies in countries that share a land border with it, citing national security concerns, is aimed at China… Thursday’s order will also bar, direct or indirect Chinese participation in strategic sectors such as power, petroleum, coal and telecom... It may even direct state-run financial institutions focused on the sector, Power Finance Corporation Ltd (PFC), Rural Electrification Corporation Ltd (REC) and Indian Renewable Energy Development Agency (IREDA), to withhold financing to such projects that are based on Chinese technology or equipment, he added... There is a proposal to impose a basic customs duty (BCD) on all imported solar cells, modules, inverters and their components. HT reported on May 11 that India could also extend anti-dumping duties and safeguards on at least two dozen Chinese goods amidst concerns that a flood of imports would kill domestic manufacturers.”

 

An column in The Hindu outlined that while India wanted to send a message that trade and investment relations would not return to normal if China does not agree to return to the status quo of April, it had limited options of doing so given China is far less dependent on India’s market than India is on Chinese imports. “India is considering a range of economic measures aimed at Chinese firms amid the border tensions… The moves could potentially cost Chinese companies billions of dollars in contracts and future earnings. … If India does have considerable leverage that could hurt potential revenues of Chinese companies, the problem for Delhi is China could inflict immediate economic pain should it choose to. In 2019-20, India’s imports from China accounted for $65 billion out of two-way trade of $82 billion, and the country relies on China for crucial imports for many of its industries, from auto components to active pharmaceutical ingredients (APIs)… The problem for India is its overall leverage with China is such that it cannot inflict serious pain on the five-times-larger Chinese economy as a whole, even if it could hurt individual companies… Whether the targeted economic measures will influence Beijing’s behaviour on the border will ultimately depend on China’s calculus and whether Beijing views any perceived gains from the current border stand-offs as outweighing the not insignificant economic costs of losing a key potential market.”

 

Finally another op-ed in Livemint highlighted how this latest comprehensive ‘public procurement’ would give preference to local suppliers and promoting manufacturing as well as production of goods and services in India, with a view to both enhance income and employment “In a wider decoupling exercise, as part of India’ economic response against China, these firms defined as Class-I local supplier, having local content of ‘equal to or more than 50%’, will be the only ones eligible to bid for contracts that has a sufficient domestic capacity. It will be the nodal ministry that will “notify goods and services with sufficient local capacity." … Along with leveraging its growing market to ready an economic retaliation against China, India also wants to play a larger role in global supply chains. India has upped the ante against China by restricting companies from countries with a shared border from participating in bids for government procurement without approval from competent authorities by amending the General Financial Rules 2017… With mounting tensions along the India-China border, India’s ministries and departments have been turning the screws on Chinese firms. A case in point being the union power ministry’ strategy of erecting tariff barriers and other obstacles, including subsidising finance for promoting local power equipment makers and prior-permission requirements for imports from countries with which it has a conflict.”

Key insights and forecasts that show us what is to come

China’s Deepening Geopolitical Hole

China has increasingly begun to face international isolation following the UK's decision to ban Huawei from its 5G networks and its rapidly deteriorating relationship with the US.

China’s Fiscal Dilemma

The Chinese government is likely to face a dilemma between growth and stability during the second half of this year whereby China’s public finances could worsen significantly if it loosens fiscal policy but if it cuts expenditure to offset the revenue shortfall, growth will be lower, resulting in dire consequences. 

India’s Pivot to Australia

By inviting Australia to join the Malabar naval exercises and strengthening the military partnership of the Quad, India intends to send a strong message given the serious security challenges emanating from China’s growing aggression toward the four powers.

India’s Education Overhaul

With vast changes made to India’s education policy after 34 years, its adoption could result in a significant transformation of India’s education system, and create a foundation for an economy that must adapt to the information age. 

Is a China-US “Rivalry Partnership” Possible?

The mounting economic tensions between China and US is expected to have a bigger impact on China, making it difficult for the country to sustain some of its recent international economic ventures, such as the signature Belt and Road Initiative and its large-scale lending to many developing countries.

Sino-Indian Border Clashes: Implications for US-India Ties

The border clash between India and China has strengthened India-US relations with both countries looking to address concerns on trade as well as focusing on new areas of cooperation between their respective armed forces.

The China-India Contest in the Middle East

The shifting geopolitical equation for India vis-a-vis China reinforces the incentive for New Delhi to align more closely with the United States not only in the Indo-Pacific but also in the Middle East.

China’s Latest Crackdown in Hong Kong Will Have Global Consequences

Big tech firms are caught in the middle of a fierce tug-and-pull between Chinese authorities aiming to restrict internet freedoms in Hong Kong and liberal democracies that remain committed to preserving digital rights.

China’s Bhutan Gambit

China recently revived an old land swap deal with Bhutan in order to take control of the Doklam Plateau, which will allow China to gain strategic advantage in its border dispute with India.

The Key Events Driving Global Instability & Opportunity

Big Picture TEST Metrics for the US, India and China, August 2020

India’s PMI rose to 47.2 in June from 30.8 in May suggesting that India's manufacturing sector has begun moving towards stabilisation with both output and new orders contracting at much softer rates than seen in April and May. However, several states re-imposing localised lockdowns during the month could impact this recovery process. Demand remained a concern as both exports and imports saw a decline by 12% and 42% respectively over the same period last year due to reduced or cancelled overseas orders amid faltering global demand. No further change in interest rates was announced by the Reserve Bank of India following the rate cut in May.

The official China manufacturing PMI for the month increased slightly to 50.9 in June from 50.6 in May and higher than analyst expectations of 50.4, with factory activity growing as the government lifted coronavirus lockdown measures. Additionally, both supply and demand have slowly begun to pick up since several trading partners have re-booted their economy, with both exports and imports slightly increasing by 0.4% and 3.2% respectively over the same period last year.