Pax Indica: India and the World of the Twenty-first Century (21 page)

Forget ‘Chindia’—the two countries barely belong in the same sporting sentence.

What’s happened at the Olympics speaks to a basic difference in the two countries’ systems. It’s the creative chaos of all-singing, all-dancing Bollywood versus the perfectly choreographed precision of the Beijing Opening Ceremony. The Chinese, as befits a communist autocracy, approached the task of dominating the Olympics with top-down military discipline. The objective was determined, a programme (Project 119) drawn up, the considerable resources of the state attached to it, state-of-the-art technology acquired and world-class foreign coaches imported. India, by contrast, approached these Olympics as it had every other, with its usual combination of amiable amateurism, bureaucratic ineptitude, half-hearted experiment and shambolic organization.

In China, national priorities are established by the government and then funded by the state; in India, priorities emerge from seemingly endless discussions and arguments among myriad interests, and funds have to be found where they might. China’s budget for preparing its sportspersons for these Games alone probably exceeded India’s expenditure on all Olympic training in the last sixty years.

But where China’s state-owned enterprises remain the most powerful motors of the country’s development, India’s private sector, ducking around governmental obstacles and bypassing the stifling patronage of the state, has transformed the fortunes of the Indian people. So it proved again in the Olympics: the wrestlers, boxers, runners, tennis players and weightlifters who made up the bulk of the Indian contingent, accompanied by the inevitable retinue of officials, returned with just two bronzes among them, while India’s only gold—in shooting—was won by a young entrepreneur with a rifle range in his own backyard and no help from the state whatsoever. Young Abhinav Bindra was, at twenty-five, the CEO of a high-tech firm, a self-motivated sharpshooter who financed his own equipment and training, and an avid blogger. He is, in short, a twenty-first-century Indian. At one level, it is not surprising that he should have won India’s first individual gold in any Olympics since a transplanted Englishman competed in Indian colours in the 1900
Games. India is the land of individual excellence despite the limitations of the system; in China, individual success is the product of the system.

Certainly, in absolute numbers, the Chinese are way ahead. Their export of electronic goods now tops $180 billion a year. One out of every three shoes exported in the world is made in China. They make 75 per cent of the world’s toys. Foreign direct investment is at the level of $70 billion a year (for comparison, India gets $19 billion). Shanghai alone has nearly 4000 skyscrapers (more than all of India, and exceeding Los Angeles and Chicago combined). China has built an estimated 60,000 kilometres of expressways in less than two decades and will soon outstrip the total length of the US highway network. Per capita income has risen nearly tenfold since 1978 to over $6000, and the number of people living in absolute poverty has dropped from 425 million two decades ago to 26 million today. The population is almost totally literate; life expectancy is reaching developed-country levels. In 2009, China overtook Germany to become the world’s third largest economy, behind the United States and Japan; in 2010, Japan was overtaken. It won’t stay number two for long.

Against this, though, are a number of factors suggesting that not everything is rosy in China. Economic growth has occurred at breakneck speed, but that means some necks have been broken: the human cost of development has not been negligible (population displacement, farmers thrown off their lands, villages flooded by dams, mounting pollution, low-wage labour in appalling conditions, widening disparities between the rich and the poor, an absence of human rights and few checks on governmental abuses). The Chinese have seen great and rapid improvements in their Internet access, but Beijing employs some 40,000 ‘cyber-police’ to monitor politically undesirable activity on the Web.

Equally important, China’s success has not just been China’s: a disproportionate share of the benefits goes abroad, to the foreign companies that have set up factories in China. It has been estimated that of the $700 American price of a Chinese-made laptop, only $15 remains in China. Only four of the country’s top twenty-five exporters are Chinese companies, according to Robyn Meredith, who adds that in practice ‘Made in China’ really means ‘Made by America [or Europe] in China’.

The Chinese financial system also leaves much to be desired. Where India has been running sophisticated stock markets since the early
nineteenth century—and Indians are so skilled at doing so that they got the Bombay Stock Exchange up and running within 24 hours of the terrorist bomb blasts that nearly destroyed the building in 1992—China is new at the game, and not particularly adept at it. The financial information provided by China’s companies, especially those in the large governmental sector, is notoriously unreliable, and standards of corporate governance are low. There are no world-class Chinese companies with sophisticated managers to match Tata or Wipro or Infosys. China’s capital markets are weak and its banks inefficient: the Chinese banking system carried an estimated $911 billion in unrecoverable loans as of 2006, mainly to government firms.

In his book
Capitalism with Chinese Characteristics
, Professor Yasheng Huang of the Massachusetts Institute of Technology (MIT) argues that the Indian private sector is more efficient and entrepreneurial than the Chinese private sector. State-owned enterprises still account for half of China’s economic assets. China has yet to master the art of channelling domestic savings into productive investments, which is why it has relied so extensively on FDI. India, on the other hand, is exporting FDI to member countries of the Organisation for Economic Co-operation and Development (OECD); in other words, India’s entrepreneurial capital and management skills are better able than China’s to control and manage assets in the sophisticated financial markets of the developed West.

And the world has yet to develop any confidence in China’s legal system (where a contract still means whatever the government says it means). In other words, it still lags behind India on the ‘software’ of development—not just technical brainpower or engineering know-how, but the systems it needs to operate a twenty-first-century economy in an open and globalizing world. The Chinese state is undoubtedly stronger and more efficient than the Indian, but the Indian private sector is not only miles ahead, it is compensating for the inadequacies of the state, whereas in China the state sector can still stifle the private, and both sides know it.

And then there’s politics. Whatever you might say about India’s sclerotic bureaucracy versus China’s efficient one, India’s tangles of red tape versus China’s unfurled red carpet to foreign investors, India’s contentious and fractious political parties versus China’s smoothly
functioning top-down communist hierarchy, there’s one thing you’ve got to grant: India has become an outstanding example of the management of diversity through pluralist democracy. Every Indian has been allowed to feel he or she has as much of a stake in the country, and as much of a chance to run it, as anyone else: after all, our last-but-one elections, in 2004, were won by a woman political leader of Roman Catholic heritage who made way for a Sikh to be sworn in as prime minister by a Muslim president, in a nation 81 per cent Hindu. And our largest state was ruled till very recently by a Dalit woman, from a community once considered ‘untouchable’, whose caste and gender would have made her power unthinkable for 3000 years before democracy made it possible. She wasn’t promoted by the Brahmin elite in New Delhi; she rode to the top on the ballots of her political base, building her own rainbow coalition along the way.

Contrast this with Beijing, where political freedom is unknown, leaders at all levels are handpicked from the top for their posts and political heresy is met with swift punishment, house arrest or worse. During the 2008 Olympics, under international pressure, China designated a few areas where protesters could, in theory, peacefully gather; but you had to apply for permission to protest, which was never granted, and most of those who applied were arrested and detained, which meant that the authorization of protest became an excellent method for the security police to identify potential troublemakers without having to actually look for them. India’s politics means its shock absorbers are built into the system; it has endured major road bumps without the vehicle ever breaking down. In China’s case, it is far from clear what would happen if the limousine of state actually encountered a serious pothole. The present system wasn’t designed to cope with fundamental challenges to it except through repression. But every autocratic state in history has come to a point where repression was no longer enough. If that point is reached in China, all bets are off. The dragon could stumble where the elephant can always trundle on.

But let us not be complacent. India’s problems are enormous and there is still a great deal we need to do internally. Our teeming cities overflow while two out of three Indians still scratch a living from the soil. We have been recognized, for all practical purposes, as a leading nuclear
power, but 600 million Indians still have no access to electricity and there are daily power cuts even in the nation’s capital. Ours is a culture which elevated non-violence to an effective moral principle, but whose freedom was born in blood and whose independence still soaks in it. We are the world’s leading manufacturers of generic medication for illnesses such as AIDS, but we have 3 million of our own citizens without access to AIDS medication, another 2 million with TB, and tens of millions with no health centre or clinic within 10 kilometres of their places of residence. India holds the world record for the number of cellphones sold, but also for the number of farmer suicides (an estimated 17,000 in 2010, because when crops fail, farmers faced with a crippling mountain of debt see no other way out for their families than to take their own lives). We still have a great deal to do before we can meaningfully speak of ourselves in competition with China.

But if we can’t compete, can we cooperate?

As far back as 1947, even before India and several nations in Asia were yet to throw off the colonial yoke, when China was still in the throes of an uncertain civil war and when Asia got no more than a footnote in any chapter on global politics and economics, the fledgling Indian Council of World Affairs, under the inspiration of Jawaharlal Nehru, organized a visionary ‘Asian Relations Conference’. Many of the tenets of that endeavour are closer to being a reality today, since they prefigured the process of Asia’s economic integration and increasing interdependence. A hallmark of Nehru’s vision was his admiration for the ‘other great Asian civilization’, and his conviction that, together with India, China would lead the region in a new post-imperial Asian resurgence.

India and China are the most populous nations on the earth, with the arduous task of uplifting millions of our citizens and realizing social harmony and inclusive growth. Given the scale of our economies and the scale of the ‘catching-up’ required, this is likely to be a long-drawn-out process, in which China is clearly well ahead. Both of us, though, require sustained international cooperation and a peaceful security environment around us in order to fulfil this task. Currently, in a world
faced with a rare economic and financial crisis and tenacious new threats and challenges, our job has become all the more difficult. Therefore, as responsible nations with a stake in peace, stability and prosperity of the world, both India and China must strive to tackle the new challenges together while helping the global economy out of a recession that had nothing to do with us. The continued growth of our two economies has proved vital to the health of the world economy, and that in itself is a most eloquent proof of the prospects for the world and Asia of an emerging China and, increasingly, an emerging India.

The Government of India does not view China or China’s development as a threat. Indian leaders have always unembarrassedly spoken of the need to develop a friendly and cooperative relationship with China, as a country with which we cannot afford to have a relationship of antagonism. Long before the India–China growth story attracted global attention, we drew upon our joint civilizational wisdom to enunciate the principles of Panchsheel that demonstrated our interest in building peace and friendship. Our relationship has since evolved to a point where we now have a Strategic and Cooperative Partnership for Peace and Prosperity and an agreed ‘Shared Vision for the 21st Century’ with China. Indeed, our relationships have become so multifaceted, strategic and intricate that the nature of stakeholders in our relations has changed and broadened to include the wider civil society in both nations.

To repeat a point I have made earlier: the basic task for countries like China and India in international affairs is to wield a foreign policy that enables and facilitates their own domestic transformation. By this, as an Indian, I mean that my country’s engagement with the world must make possible the transformation of India’s economy and society, while promoting our own national values (of pluralism, democracy, social justice and secularism). What I expect from my national leaders is that they work for a global environment that is supportive of these internal priorities, and therefore of a relationship with China that would permit us to concentrate on our domestic tasks. China and India are both engaged in the great adventure of bringing progress and prosperity to a billion people each, through a major economic transformation. At the broadest level, India’s foreign policy must seek to protect that process of transformation—to ensure security and bring in global
support for our efforts to build and change our country for the better.