A Critical Study in Contrast Between India and China
This book, coming from the pen of a noted journalist, examines the social and political conflicts that the market has unleashed and the success and failure of India and China in trying to contain them. The authoritarian nature of the Chinese state ensured that the struggle between growth and equity remained mainly economic. In India, on the other hand, the strong democratic system ensured the struggle between political parties and the business houses to capture political power so that policies to further their interests are enacted.
In recent years, several projections have indicated if China and India maintain their present rate of growth, they would soon dominate the world. There is a fear that West is losing its economic ascendancy and therefore its capacity to shape the post-Cold War international order, and China’s dream to gain great power status on the world stage will be reflected in its greater economic leverage over countries in the region and elsewhere as well as its steps to strengthen its military. The author in one chapter concludes that while China has built an impressive physical infrastructure, India has built a less tangible but more important infrastructure of managers and companies. India has much more transparent financial institutions and a much better developed and regulated stock market. While China has become the manufactory of the world, India is acquiring rapidly a comparable position in the emerging global services. Explaining India’s slow growth rate, the author views that the purpose of planning was not to allocate resources and set production targets for state-owned companies but to achieve the same results through an elaborate system of regulation imposed upon the private sector, which had the unintended effect of slowing down the growth rate. This resulted in soul searching within the government. Montek Singh Ahluwalia report in 1989 received serious attention of the government. Later, the government adopted a step-by-step phased sequence of reforms in different areas.
Referring to the innate conservatism of China’s reforms, the book points out how China opened the market for the private entrepreneurs and buried the notion of class conflicts, upon which the communist ideology had been based for five decades. The Tiananmen Square protests of 1989 forced a choice upon the reformers. The communist party had no choice but to push ahead with growth as fast as possible, and felt that compatibility with a market economy that had legalised gainers would sufficiently outnumber the losses to ensure political stability. It was also felt that party’s monopoly in all forms of power, i.e. legislative, executive and judicial, was not compatible with a market economy that has legalised the possession of private property. Then, there was move towards democratisation with Chinese characteristics. There had been efforts to separate the party from the government, the function of government from those of the enterprise and the administrative power from managerial power. The liberals wanted the system of accountability within the party to be supplemented by accountability to the people, which meant moving in stages towards a Chinese version of democracy. Late, in 2006, the concept of harmonious society was endorsed by the Communist Party of China, which includes following elements: democracy, the rule of law, equity, justice, sincerity, amity and vitality. During that period, corruption and extortion became entrenched with the passage of time.
During that period, India’s economic reforms, by contrast, have accelerated economic growth by dismantling the major part of a predatory, rent-seeking, intermediate regime. Also during that period, obligations to the rural sector clashed with obligations to trade and industry, the former being overlooked. As a result of reforms, poor have not only grown poorer, but their lives have grown more unsecured. The income gap in the non-agricultural sector has widened dramatically. In China, rings of corruption have developed in government offices from No.1 downward. In India, a new movement in the form of Naxalites and Maoists has grown during that period. It has seriously affected life in Bengal, Bihar, Jharkhand, Orissa and Chhattisgarh.
Finally, the author is skeptical about the inevitability of China and India’s rise in global dominance in the 21st century. He also examines the impact of US tacit abandonment of the dream of regaining unchallenged hegemony in the post-Cold War era and tracks the rapidly deteriorating relations between India and China.
Penguin Books India Pvt. Ltd., 11 Community Centre, Panchsheel Park, New Delhi-110017, India
By Prof KD Sharma