It might seem like a far-fetched comparison but bear with me. Almost 149 years ago, on January 18, 1871, to be exact, the King of Prussia, Wilhelm I, was crowned Emperor of Germany. And where was the coronation?

At Versailles, Louis XIV’s magnificent palace on the Paris outskirts. The French had just lost the 1871 Franco-Prussian War and this was the ultimate way of rubbing France’s nose in its defeat. Germany had sent notice it intended to be the paramount power in Europe.

What’s the comparison we’re about to make? We’re now in an era which geopolitical strategists like Parag Khanna call the Asian Century. We don’t need to ask which country sees itself as Asia’s paramount power because it’s clearly China, our bully-boy neighbour which has decided strong-arm tactics are needed to establish it as master of all it surveys.

Will it change its tone if the Biden administration adopts less belligerent diplomacy? We can’t say. Joe Biden’s strategy will also take time to emerge. Kurt Campbell, Biden’s Indo-Pacific czar, is said to back cooperation with China but also says its rapid rise has destabilised the region.

Among the Chinese administration’s top echelons, there are said to be two opposing views on India. One believes India should be punished for tilting towards the US; the other feels it should be courted, says Manoj Kewalramani, China Fellow at the Takshashila Institute. It’s trying out arm-twisting tactics on Australia to see what impact it has.

Just this week, a TV report indicated China’s built a village 4.5 km on our Arunachal Pradesh border side.

The key question here is whether they’ve constructed on territory recognised and patrolled by us. Xi Jinping’s been open about China’s village policy which aims to resettle people on the border to serve as the first line of defence.

Imperial Germany was hemmed in by nine land-based neighbours and also feared Britain, that era’s great power with its mighty navy and empire stretching to India, Burma, Malaya, Australia, Canada and Africa. China’s surrounded by 14 land-based neighbours, of which India, Russia and Vietnam have armies that can take on the Chinese if forced.

China’s taken no chances. It announced a 2020 military budget of $178 billion although the Stockholm Institute for Peace Research reckons actual spending in 2019 was nearer $260 billion.

India can’t hope to spend on that scale and in 2020-21 its defence budget was around $68 billion. But we now face the extraordinarily expensive prospect of keeping troops in Ladakh’s icy heights and close to the border in Arunachal Pradesh.

Biden’s focus

Later Wednesday, Biden will be sworn in on the steps of the Capitol where rioters or insurrectionists, depending on your view, smashed their way through the building. He inherits a deeply divided America where the bungled response to Covid-19 has already resulted in more than 400,000 deaths.

Economists reckon the US economy has shrunk by 3.6 per cent and Biden will struggle to reverse the downswing. Biden hopefully will be a steadier hand on the tiller than outgoing President Donald Trump but he can’t be expected to work miracles. He must also first subdue Covid-19, a task made tougher by state-federal power divisions.

In sharp contrast, the extremely focussed Chinese are powering ahead, growing by 2.3 per cent last year, the slowest pace in four decades but way ahead of other major economies. In the last quarter, China logged 6.5 per cent growth.

The Chinese performance helped pull global growth back to respectable levels and now economists forecast China’s GDP will overtake the US’ by 2028 instead of the earlier predicted 2033.

It’s an exercise in the “dismal science” of economics to compare India’s performance with other countries during the pandemic year.

The IMF estimates India’s 2020-21 growth will contract by 10.3 per cent but economist Arun Kumar is way more pessimistic, forecasting it will shrink by a massive 25 per cent.

But the US, for all Trump’s macho talk, hasn’t enjoyed anything near a good year when compared to China. Even with Trump’s trade war, China’s US trade surplus widened 7.1 per cent to $317 billion in 2020. For the full year, China’s global trade surplus climbed 27 per cent to $535 billion, underscoring its standing as the global supply chain fulcrum.

Economic pundits pointed out they’d been right when they said it’s extremely tough to win trade wars in the modern world. And while the US has been closing its market to Chinese companies like Huawei, TikTok, chipmaker SMIC and others, the Chinese have signed a trade deal with the European Union.

Effect on India

The booming Chinese economy could hurt India in other ways. Commodity prices of everything from oil to iron ore, copper and nickel have soared during 2020. Copper prices, for instance, shot up 26 per cent during the last year mainly because of China’s rebuilding efforts.

China’s steel production climbed 5.2 per cent to hit the 1.05-billion tonne mark. (India’s the world’s second-largest producer at 111 million tonnes).

But it’s fair to say that China, as it grows mightier, will still be an insecure power, determined to show its neighbours who’s boss. It has an ongoing dispute with Japan over the Senkaku Islands or Diaoyu Islands as they are called in China. And it’s making extravagant claims in the South China Sea against Vietnam, the Philippines, in fact, all the way to Malaysia and Indonesia.

And not everything is going China’s way. It’s discovering its Belt & Road Initiative can’t be a really big winner in less efficient Asian countries. In Pakistan, for instance, its new power plants haven’t made an impact on the Pakistan economy as originally expected.

And the Pakistanis are being forced to build a wall around Gwadar Port to protect the Chinese and keep its own countrymen out. The cost of several Chinese rail and road projects are also being evaluated closely.

How can India play smart against China? First, it must make plans to strengthen the navy and its Andaman and Nicobar Islands base.

Nothing worries the Chinese more than its access to the Straits of Malacca. We also urgently need to patch up relations with Bangladesh, Sri Lanka and Nepal.

But all this will require some economic firepower of our own. Without that, we can’t win eyeball-to-eyeball confrontations. And we must always remember the example of Germany and its aspirations to dominate Europe. The 1871 Franco-Prussian war led, after 40 years, to the First World War and then, almost inevitably, to World War II.

We must build alliances and our economy in order to ensure we aren’t singed by the flames from a fire-breathing dragon.