Good morning, dear readers,
Nothing has changed the face of the world in the 21st century as much as China’s rise to become the second economic superpower after the USA. Is this development repeated now with India?
If not too much goes wrong, the subcontinent will move up to third place in the world in terms of economic output by the end of the decade – past Germany and Japan. Population growth alone is responsible for this. This month, according to UN statisticians, India will overtake China as the world’s most populous nation.
In our cover story, Handelsblatt’s Southeast Asia correspondent, Mathias Peer, takes us on a journey through today’s India. He paints a picture of a country that can only endanger its rise itself: through religious intolerance towards Muslims, extreme material inequality and the autocratic tendencies of Prime Minister Narendra Modi.
Whether India rises to become the third economic and possibly also political superpower alongside the USA and China is decisive for the fate of the world in three respects:
- Poverty: The number of people living in absolute poverty has fallen from 2 billion in 1990 to around 700 million. An impressive success, which is mainly due to the increasing prosperity in China. Whether the positive global trend will continue in the coming decades will largely depend on whether India achieves a similar economic miracle.
- Environment: Whether humanity even has a chance in the fight against climate change and other forms of environmental destruction will also be decided in India. To do this, it must be possible to steer the country’s growth into more resource-efficient paths – sun and wind instead of coal and combustion engines. But India will only be willing to do so once it has reached a certain level of prosperity.
- Geopolitics: India is by no means the natural ally that the West likes to see the country as. Nevertheless, a strong India as the third global power bloc could limit China’s influence – and secure an attractive sales market for western companies for decades to come.
The Indian development economist Jayati Ghosh sums up the third topic in the Handelsblatt interview as follows: “The West depends on India – because of China and because India offers a potentially huge market. The government in New Delhi is taking advantage of this.”
Narendra Modi: Under the prime minister, India could grow into the new economic superpower.
The US Federal Police FBI has arrested a member of the National Guard in the US state of Massachusetts in connection with the US secret documents circulating online about the war in Ukraine. The investigators apparently assume that the National Guardsman, who specializes in intelligence work, led a chat group on the Discord platform, which is popular with video gamers, in which the documents were posted. Among other things, they contain details of the US government’s assessment of the Ukraine war and an alleged leadership dispute in the Kremlin.
Certainly no secret information is that the West’s Russia sanctions are not working as they should. In a guest article for the Handelsblatt, the US economist Kenneth Rogoff now brings an explosive tightening into play: so-called secondary sanctions against third countries that continue to trade with Russia – such as China or India. Rogoff still thinks the risks of such an escalation are too great, but he calls for them in the event that Russia uses nuclear weapons in Ukraine.
In economists’ circles, it triggers similar horrors as the sign of the incarnate in a seminary: the inverted yield curve. When short-term bonds yield more than long-term bonds, it’s a sure sign that the bad guys of the recession are approaching.
At the moment it’s that time again in the USA. Two-year US government bonds yield around half a percent more than ten-year ones. This means that investors expect interest rates to fall in the medium term, which is typically the case in a weak economic phase.
Our finance editor Leonidas Exuzidis takes a closer look at the amazing historical predictive power of the inverted yield curve for the US, where an inversion of the yield curve has been observed prior to each of the nine recessions since 1960. In turn, almost every inverted yield curve was followed by a recession within the next 24 months. Only in 1967 was that not the case.
Conclusion: No reason to be alarmed – but possibly a reason to check your securities portfolio for storm resistance.
And then there is the CEO of Axel Springer SE, Mathias Döpfner, whose collected messages were leaked to other Springer executives of the “Zeit”. Senior Editor Hans Jürgen Jakobs described Döpfner’s outpourings in our editorial as “eruptively thrown away in male-bound, the world belongs to us prose”.
Reading example: “The ossis are either communists or fascists. In between they don’t. Disgusting,” wrote Döpfner, according to “Zeit” research, verbatim and in an idiosyncratic spelling. And: “The ossis will never become democrats. Perhaps the former GDR should be turned into an agricultural and production zone with a standard wage.”
Döpfner justified himself yesterday with a text that was published on the Springer intranet. “I have no prejudices against people from East Germany,” quotes the “Spiegel” from this letter. “But I have been disappointed and concerned for decades that quite a few voters in the new federal states have swung from the far left to the far right. The success of the AfD worries me.”
Well, that sounds a lot nicer. However, another Döpfner finding can be found almost exactly in the AfD’s Bundestag election program, namely the statement by the musicologist on climate change: “Environmental policy – I’m very much in favor of climate change. Warm phases of civilization have always been more successful than cold phases.” To cool tempers: there is no accusation of plagiarism. Döpfner was more there with the idea than the AfD.
I send you into the upcoming weekend with the ultimate Handelsblatt career tip. Whenever you want to send something electronically that you can’t explain conclusively, it should see the light of day – press delete instead of send.
Best regards
Your Christian Rickens
Editor-in-Chief Handelsblatt
