The Congress vice-president would do well to ponder why China has outperformed India on every social and economic indicator
In his speech to the Confederation of Indian Industry (CII) on April 4, 2013, Congress vice-president Rahul Gandhi said his advisers had told him to “not go into the India-China cliché.” Mr. Gandhi should have paid heed to them. For the heir-apparent of a major political party — and a possible prime ministerial candidate — Mr. Gandhi, during his more than an hour-long interaction, came across as worryingly ill-informed about a country that is not only India’s biggest neighbour and single largest trading partner, but also set to emerge as possibly India’s most important, and difficult, diplomatic challenge in the next decade.
“There is no complexity in China,” he declared, going on to present an anecdote which, he suggested, reflected life in the People’s Republic. “A friend of mine who came from China, an Italian guy, was in shock,” he recounted. “He said, ‘I was in a bus in China. A bus hit a man. The driver picked up the man, put him on the side of the road and we carried on’.” “There is no complexity there,” Mr. Gandhi concluded. “Simple, [China] is.”
Mr. Gandhi used this rather strange anecdote to make the claim that as India and China were fundamentally different countries, their development experiences and growth stories could not be compared. Hit-and-run incidents are no more commonplace in China than they are in India, and arriving at a simple conclusion about a billion people based on the testimony of one foreign visitor would be a misguided venture in either country
“There are two types of systems, centralised and decentralised,” he argued. “China is a centralised system. They call it, the dragon. You can see it, it is very clear. It is big, it is powerful, it builds big structures that are visible.” India, he went on to say, was “a beehive.” His apparent argument was that unlike China’s centralised and organised development model, India’s growth story was entirely a bottom-up process driven by creative energy and the spirit of entrepreneurship, and not by the state.
The real lesson
There was much about Mr. Gandhi’s rather sweeping and simplistic characterisation of what he called the “India-China cliché” that does not bear scrutiny. The argument that a decentralised democracy slows development and hinders the delivery of good governance, and that China’s remarkable growth story over the past three decades was more the result of a strong one-party state than any other factor, has been made frequently — including by China’s own ruling Communist Party, as well as sections of India’s business elite with cases of China-envy.
This is despite the fact that the widely popular perception of China’s economic development being the outcome of an entirely top-down, State-driven, centralised process has been disproven by compelling evidence to the contrary. The ubiquitous caricature of China’s growth story — decades of double-digit growth and rapid State-led infrastructure development driven by Foreign Direct Investment (FDI) and a thriving export sector — is limited to the country’s experience in the 1990s. As economists such as Huang Yasheng of the Massachusetts Institute of Technology (MIT) and others have pointed out, China’s growth story began a decade earlier in the 1980s preceding the infrastructure boom.
As Mr. Huang has argued convincingly, growth in the 1980s was as much “bottom-up” as “top-down,” driven by rural entrepreneurs who benefited from the loosening of State controls, more liberal policies and decentralisation. China’s record of reducing poverty, Mr. Huang has shown, was the highest during the 1980s, when the number of poor fell by 154 million. The following decade of FDI-led growth saw a reduction in the number of poor by a relatively fewer 62 million. China’s growth in the 1980s was underpinned by investments in human capital — in boosting health care and education. That, according to Mr. Huang, is the real lesson from China’s growth story – not a superficial fascination with skyscrapers and high GDP.
India and China certainly have vastly different political systems. A strong party-state has, no doubt, allowed China to enact policies rapidly. Yet, one-party rule has also imposed huge burdens on China’s development. Mao Zedong’s disastrous Great Leap Forward of the late 1950s, which claimed more than 30 million lives, and the Cultural Revolution (1966-76), set China back by at least a few decades. Today, China’s political model is seen, even in Beijing, as stifling innovation and creative industries. No sensible person would suggest following China’s authoritarian model, which would have no place in India’s diverse and plural society — a stark contrast from China’s Han-dominated society which offers far from adequate protection to minorities.
Comparing social indicators
Mr. Gandhi was, however, wrong to dismiss out of hand the lessons from China’s growth story, and to simply attempt to explain away India’s development problems using questionable assumptions, rather than put forward new ideas or a vision for the future. Mr. Gandhi, correctly, mounted a passionate defence of India’s pluralistic and democratic political system. But implicit in his comments was the troubling suggestion that the expectations of people in decentralised, “beehive” India could not be held to the same levels as those in centralised, authoritarian China. Foreigners who were “driven crazy” by India’s chaos could succeed in doing business “even on the moon” if they succeeded in India, he said almost proudly, rather than suggest how he might perhaps help improve the environment for business and investment.
He would do well to ponder why China has done far better in providing its people with basic necessities, why China continues to outperform India on every social indicator; and most importantly, and why the gap between both countries has widened — and not narrowed — following a decade of the United Progressive Alliance’s (UPA) rule. According to the United Nations Human Development Report, China is far ahead of India on social indicators ranging from life expectancy (73.7 years against 65.8), mean years of schooling (7.5 years against 4.4), adult literacy (94 per cent against 74 per cent), under-five mortality (19 per 1,000 against 66) and maternal mortality (38 per 100,000 against 230).
Mr. Gandhi has, as yet, not put forward any concrete vision for addressing India’s many domestic challenges, let alone those on the external front. While he acknowledged China’s rising national power in his speech, he offered no ideas as to how India should respond to the challenge even as China continues to spread its economic and political influence, including in India’s neighbourhood.
Instead, he appeared almost content with a notion of “Indian power” that was reflected in the fact that “there are people doing yoga in New York, dancing around” and that “you go to a nightclub somewhere in Spain and there is Amitabh Bachchan on the screen, dancing around.” Mr. Gandhi would do well to pay closer attention to a country that India will have no choice but to engage with increasingly, as the world’s second-largest economy and a neighbour that cannot be wished away. The work of economists like Mr. Huang, rather than the unreliable testimony of an Italian tourist on a bus, might perhaps be a good place to start.