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00:00:10 - Sangeeta Gupta: Welcome to the Nasscom podcast. And this week we take a small break from just talking AI to move broadly, focus on technology and geopolitics, and deep dive into China, a fascinating economy, I guess. Today is Dr. G Venkat Raman, a professor of humanities and social sciences at IIM Indore. He's a Fulbright fellow from the John Mason University. He also calls himself primarily a sign of sinologist. I hope I got that right and in addition has a deep interest on the key theme of business ethics. Welcome Venkat for this podcast.
00:00:42 Dr. Venkat Raman: Thank you so much, Nasscom. Thank you, Sangeeta, for having me here.
00:00:46 Sangeeta Gupta: So you know Venkat, I want to start with a broader question, right? In the past, geopolitics has always been about very different dimensions. Today, technology is increasingly becoming a key of pillar of geopolitics. How do you how do you see this whole, you know, whether it's partnership between what that what is now we call friends, friend shoring or different economies that are more adversarial all on the basis of technology and you know, every nation's quest to become a technology sovereign nation. So is there a reversal of globalization that potentially technology is creating?
00:01:22 Dr. Venkat Raman: Very good question. To begin with, you know, the current problem with technology especially, you know, it has got amplified in the form of what we all know now is artificial intelligence. And about artificial intelligence, it is being said that artificial intelligence is, you know, not deterministic, it is probabilistic. So given that you know what will come out of the different algorithms, you know, no one knows actually. So the more access you have to data, the bigger access you have that more access you have to super computing methods.
What you can do is, you know, just play around different permutations combinations and see what is it that is possible. So if you look at, you know, the current context with the, you know, the US, China, you know, tech war, what people are saying. So given that AI is, you know, not deterministic, the supply of chips that you know, has has the tech tech supply chain has got disrupted. So the Americans feel that because the Chinese have already got first movement advantage on the 5G front, which has, you know, implications for militaristic use. So therefore the Americans don't want to take any chance whatsoever. And so therefore, there is a disruption of tech supply chains. They say that we wouldn't want to take any chance. We don't want to check, you know, allow a supply of chips which might be used by Chinese for military purposes.
Chinese say exactly the rivers. They say that, you know, we are not doing. But then there is a huge trust deficit. Now AI has added a new dimension. As I said, the possibility of usage of AI for civilian and military use both is something which the Americans, you know, are aware of and they cannot afford to take the risk to what extent it will be done. So the best way is to choke. To what extent it can choke China, that's a bigger question.
But yes, you know, I think part of the problem is, especially from the US-led Western, you know, perspective, how are the best, how's the Western world, both the multinational corporations and the state going to work with each other in alignment of their own interests because fundamentally multinational corporations work to maximize shareholder value, whereas the state, you know, the objective or mandate of the state is promoting national security. That is not much of a problem for China. That is a problem for USI.
00:04:16 Sangeeta Gupta: Think it's a fascinating subject because, you know, in the past, like I said, technology was just a sector. Today, technology has become fundamental to businesses, to economies and the aspirations of different societies, right? And I think that's why the whole quest for technology sovereignty is as we keep hearing about where, where do you see India playing in all this, right? Because US has it's own big tech companies who are doing very well. China as the state LED muscle, which is making sure that they provide the right infrastructure, incentive subsidies to help them grow. Where do you see India in all of this?
00:04:53 Dr. Venkat Raman: Well, India, you know, right from a beginning we have this policy of if you look at, you know, I give you an example of some time back, you know, how the world was going through a period of tension during the Cold War because of the nuclear arms race. So I think when the nuclear arms race was taking place, you know, the big powers, we're talking of arms control. They had the arms, they were talking of arms control. Well, there's a country like India said that, you know, let us talk about universal disarmament. So if I take a parallel from that, I think India has already made it very clear that we are more in favour of using AI for civilian purpose. So this is call for AI for all you know. So India is, I suppose, in a position 2 fronts. You can tell how does India look at AI on its foreign policy front?
How does India look at AI from its domestic purpose? Now from the domestic purpose, you know 2018 nineteen when Finance Minister Nirmala Sitaraman asked Niti Aayog to come up with a plan, AI development plan. And that way we are bit of a late starters.
I think given our financial constraints, it's very important for us to take a leaf out of our enemies book that is China adversaries book, not enemy adversary is the right word. Adversary is good, But how do we develop new forms of public private partnerships? How do we you know, ensure that the street alone, you know, for different reasons, which are very obvious, cannot alone, you know, bring in here. How do we involve, you know, the non state actors, that includes universities, that includes research institutions, that includes, you know, our private corporations? How do we mobilize, you know, support from multiple constituencies to to basically formulate and create a conducive AI ecosystem? So you know, down the line, you know, if you know time allows and in the point during our conversation, if we bump into that point, I will elaborate a bit. What did Chinese do, you know, to develop their AI promise now, Sachin, I just wanted.
00:07:34 Sangeeta Gupta: To move to the next question, which is even that there's feeling in the COVID plus years, there's been a lot of talk of the whole China plus one strategy, particularly when it comes to manufacturing. And you know, we've talked about different economies, whether it's Vietnam or Indonesia, Thailand, India, all of whom are saying, can we, you know, can we become the alternate to China yet? I think if you think of look at data, right, China continues to be very, very predominant if not growing, right. So how do you do you see any decoupling happen or is it some some people will play on the fringes, but China continues to be the manufacturing leader that it is?
00:08:12 Dr. Venkat Raman: Oh yes, you see the the appetite which China had for, you know, FDI is not funny. And the moment COVID came, you know, suddenly it was helter skelter for many corporations and this China plus one strategy came. We need to understand that, you know, of different markets now, the Chinese domestic market, whether it is B to B or B to C, it has a huge appetite of late because of the downfall in the Chinese economy, you know, for different reasons. That's a different topic altogether. There are different interpretations whether the Chinese economy is, you know, on a decline, irreversible decline or it is, you know, just flat way or it will rise before it takes a break, etcetera, etcetera. Let's not get into that. But the point is that it is impossible to completely decouple from China.
And you know, one of the interesting research that has come out recently, it's a joint paper developed by a scholar based in Harvard Business School and another scholar based in Tuft School, where they argue that despite this trade was despite top of decoupling, you know, in fact trade has intensified. Right? Exactly. But it's not the other way around. And so for example, they say that, you know, 22% of imports to US in 2017 was from China.
In 2022, it became 17 percent, one 7%. So there is a decline of 5%. But does it actually mean that because of this decoupling initiatives and trade wars actually imports a countdown that they submit that no, the answer is no. And what they elaborate is say that, you know, this period of decrease in trade has actually coincided with something very interesting that exports from Vietnam, for example, has actually gone up, you know, to United States and in which items it has gone up, the same items which has it has gone up where in exports from China to Vietnam have increased exactly in In other words, what is happening is, you know, it is the Chinese products are being rerouted through Vietnams of this world to United States. So therefore, you know, if you have a very narrow definition of decoupling, perhaps yes, you can say that yeah, we are decoupling. So therefore, you know, even if you look at the current administration, Biden administration, which is outgoing, then they are stop calling it decoupling. They are calling it de risking, right? And and yeah, I mean, some parts of it, you know, if you see for example, you know, we are seeing reshoring, for example, reshoring is something which is not related to, you know, trade wars with arrival of Trump.
Even before that, actually, there were, you know, trends which showed that there is a gradual reshoring of sorts because Chinese were increasingly becoming very selective in choosing which sectors FDI is welcome, which sectors it is not welcome. Now increasingly scholars are looking at, you know, at the whole issue and trying to argue, which is very nascent stage of research. And I'm trying to get into this area where some argue that in fact China is so much deeply ingrained in this whole global supply chain. They say that in fact it is the world which is going to increasingly become part of this Chinese supply chain. It is the other way now, so.
00:12:04 Sangeeta Gupta: Right. It is a monopoly that is and and the cost factor, right. I mean in the last two years have not been a great period of global growth. So you can do reassuring, but it comes at a premium and the cost and you know can the states afford to do that? I just want to draw on one point that you mentioned, which was around policies and how, you know, China, which was had a very free market economy perspective attracting FBI today becoming a more closed economy. Even in the tech side, if you see some of the regulations they have done to even their own entities, right? Forget global companies, right? And in the AI world where there's already so much distrust, right? In some ways, how do you how do you see Chinese AI companies integrating with the world?
00:12:52 Dr. Venkat Raman: How do Chinese companies integrate, you know, as far as AI is concerned, the Chinese are seeking to do that exactly. You know, so for example, Chinese, no matter how stringent Xi Jinping is when it comes to foreign players in the tech sector coming and investing China in 2020 itself, 10% of R&D in AI related stuff, you know, which was initiated by, you know, the R&D labs, not sorry, the R&D labs of companies like Facebook, IBM, Microsoft, they all were located in China.
So Chinese are basically looking to reach out to the world and you know, in different ways trying to spread their, you know, AI footprint. If one can say so for example, how a company like TT, for example, you know, in Latin American countries, it operates and there is a huge data that comes out and the parent, you know, organization is there in China to it is at least that, you know, the data is, you know, exported back from this foreign country to the parent company where Beijing, you know, controls the whole stuff. And then that gives rise to hell of a huge data and through that data through some super computing, Chinese will have, you know, more robust AII models. So there are multiple ways in which actually the Chinese are doing and the most notorious of them all how they are seeking to take advantage is which is at least early this case of how the Chinese have been able to make a huge dent into the what is that called have have have basically engaged in cyber theft. And that is why this whole concept of cyber sovereignty.
So therefore, to different ways and means they are out there too. And again, it becomes easier for them, you know, for as I said earlier, because here the private players in China don't have any other mandate but to align with the state to promote the Chinese national security considerations or overcoming the century of humiliation or realizing the China dream. Whatever way you call it, the point is that there is a very good alignment between the state and the tech players here to promote, and whoever does not fall in line, you know they are basically the site.
00:15:42 Sangeeta Gupta: And I think a lot of that is also because China, like you said, is a very large consumption market now. So for the local Chinese companies, while they're, they are, they didn't need the local market, they also have a very large global domestic market that that they can really thrive on. I know we need to run out of time at just a couple of last questions. Beckett 1 was about, I think if you just see the whole EV space, right, China was, is a leader there there both from a technology innovation perspective, the the already the adoption perspective, right? And now you're seeing these non Tarrant barriers coming up in different markets because there is worry about what happens to our local manufacturers. Now in this new world of geopolitics. Do you see more of this happening? And, and you know, are there any sectors where India will face such a risk? I know we may not be such a dominant player today but will there be any sector where India should be watching out for?
00:16:42 Dr. Venkat Raman: Oh, yes, You know, energy security has always been a huge, you know, factor when it comes to, you know, emerging economies like India and China. China has been successful in taking the lead in the renewable energy sector to the extent where it is, you know, more than significantly challenging the Americans themselves. Now, given the size that India, you know, that the population requirements, the popular, you know, the size of our demographics and our varied industrial needs, given the volatility of, you know, geopolitics around increasingly, I think countries like India need to look for renewable sources and reduce its dependence on oil and, you know, conventional energy sources. So, and, and from climate change perspective, about which, you know, we have been pretty vocal.
So we need to, you know, start investing on, on basically various ways to which renewable energy can be ways in which renewable energy can be explored. So India can, you know, India can basically explore opportunities with with a platform like world for example, you know, India and the US are both democratic countries. So both, you know, have a significant understanding with each other in terms of promoting science and technology. So I think domestically and on a foreign policy front, we need to start becoming a more proactive in terms of how we go about. Otherwise, the Americans are facing the music now on the renewable energy front in this same, you know, way. Perhaps, you know, we might also end up, you know, facing very difficult set of choices. So before, you know, we are flooded with or, you know, we are confronted with those kinds of difficult choices, I think it's very important that, you know, we start planning ahead.
00:19:04 Sangeeta Gupta: Very helpful. Now my last question, Venkat, is really around the US elections. We have a presidential election coming up and of course it's a very strong fight that is happening currently. Do you see either the Republicans or the Democrats, whoever gets elected, We don't know that. But how do we view them versus India and China, right? Will the adversary nature of the relationship with China continue? Will they want to do both sides, will want to do more with India or do you see the whole equation somewhat changing if one is elected and one is not?
00:19:39 Dr. Venkat Raman: You know, the problem with Trump, if he wins, is that he's very unpredictable. You know, people have said that he is someone who is, you know, deal maker. So the unpredictability of Trump's policies, you know, his first terms or trade wars and tech wars, What will his second term see? We don't know. Perhaps we might see AUS having a more open kind of an attitude towards China. I don't know, but and one may even see a more stringent policy. Now if Kamala Harris comes, let's see then also. Which it might be a question of magnitude of anti China sentiment in US, but I think the anti China sentiment overall is irreversible.
And so therefore one can say that there is a broad level of bipartisan consensus and definitely China is no matter which administration comes, you know they are not going to give an easy time to China. So we are going to see this US, China confrontation on in different domains for some time to come. Now as far as India is concerned, I think given the unpredictability, unpredictable nature of, you know, Trump most likely to come and given that, you know, Americans no matter what, finally they are entitled to and they will look after their own national interests.
China will look after its own national interests. I think it's very important for us to develop a certain kind of a policy where our foreign policy towards US is not something which is influenced by the China factor. Similarly, our relationship with China, we should not allow the US factor how US is looking at China and then, you know, try to study that and accordingly frame our policies. We should not be trying to do that. I think for our own national interest advancement, the best choice for us is to develop a certain sense of, for example, how India was able to take a very firm stand when the Americans laid sanctions on Russia and the Ukraine war. India said that, sorry, we have our own national interest to safeguard. So I there are a certain section of people in India who, you know, are very keen on having someone like Trump because Trump is very much anti China and say that that will be a shot in the arm for India.
I think I'm someone, you know, who, who doesn't advocate that kind of an approach. What Americans do with China, it is Americans problem. What Chinese do with Americans, that is the Chinese problem. I think we have you know arrived at a certain stage in our, you know, there is a certain status which India has and we are in a position to take certain stands based on the issues merit. So I think we should not try to you know factor in U.S. policy towards China when we are talking about Indian policy towards China. In other words, we need to, you know, have issue based stand and you know, people call it different names. So you can say that. Are you saying India should go back to non alignment? The non alignment is a name for none of us like today because it's very outdated. But then our policy has been independent, and we should continue to frame our foreign policy without having the American or the Chinese lens.
00:23:24 Sangeeta Gupta: I think very well articulated that India needs its own playbook. We don't need a China playbook, we don't need AUS playbook, we don't need a EU playbook. We need India's own playbook, which plays on India's strength, India's place in the global environment and of course, areas where India can build global leadership. Thank you so much for this very, very enlightening conversation. And we hope to connect with you again and have you back on this platform again soon. Thank you so much.
00:23:50 Dr. Venkat Raman: Thank you. Thank you, Sangeeta.
