China And Its Spectacular Progress
We can learn a lot from that disciplined nation
JAYANTA ROY
I was a frequent visitor to China from 1985 through 1995, with a gap when I served in the Commerce Ministry in India (1989-93). I just returned from a trip to Beijing and Shanghai. I realised that the acceleration in growth in China was spectacular in the mid-1990s, something that I had missed during my earlier visits. I was already a China admirer, but what I saw this time was unbelievable.
I was happy to see that there is a hope for a developing country to outstrip the giants, USA and European Union, in a reasonably short period of time. But I remain sad that India with the same capabilities is far from being in a position to run neck-to-neck with China. Our recent economic performance is remarkable, but we are a small global player, and nowhere close to China.
People have questioned the reliability of Chinese statistics. A widening gap in income disparities across regions in China has been highlighted. Shanghai, Beijing, Tianjin, Guangdong, Zhejiang are the top runners, whereas Guizhou, Gansu, Shaanxi, Sichuan and Yunaan are the laggards. On a scale of 1 for the top province (Shanghai), Guizhou comes with 0.09. But even the poorest province registered a positive per capita growth.
It has also been pointed out that China’s success can be attributed to following a communist regime, and that people in India are probably happier because they enjoy democratic rights. But as against our 300 million people below the poverty line, China has less than 80 million in abject poverty. China reminded me in 1986 of my days in Ceucescu’s Romania — sullen faces, same-coloured garbs and practically no influence of the external world other than the former Soviet Union. But this time round, everything has changed. Shanghai looks like a modern western city and Beijing like Seoul. After all, they have been on the growth turnpike for decades. Such growth makes people happy.
India and China were pretty similar in 1979. But since the late 1990s, the similarity vanished. The underlying economic factors are well known. China started reforms much earlier in 1978. China could tap foreign direct investment from Chinese in Hong Kong and Taiwan. What is not emphasised enough is a strong, determined reform in agriculture. I would add two additional factors. One is endogeneity of reforms; the other is tackling infrastructure problems head on at the very start.
Domestic forces of change caused the reform process in China; India received its reforms impetus from forces of external history. We can’t name one Indian economist associated with reforms who is a totally Indian product. All architects of reform are foreign-trained; most have spent time with the World Bank, International Monetary Fund and United Nations agencies. In China it was a team effort, and no foreign-trained economist was a major player in the team. China decided on decentralising its economy and integrating into the global economy on pragmatic grounds, not on advice from the Bretton Woods institutions. But the World Bank’s advice was welcome for strengthening their training institutions.
It was in this connection that I made my earlier trips to China. I was involved with training of mid-level officials of key economic ministries and select professors of reputed universities at the Shanghai University of Finance and Economics and at the Central Institute of Finance and Banking under the Ministry of Finance. These courses were on international trade and public finance. The participants had absolutely no clue what western economics meant. The senior bureaucrats were all white-haired and appeared to know very little about what was going on in the rest of the world. But they did follow the right model of growth in an interdependent world.
Beijing and Shanghai airports are state of the art. They are comparable to the best in the world and match the new Hong Kong airport. The duty-free shops match Frankfurt and Schipol for the sheer array of products on offer. The whole place is immaculately clean. Why can’t we have one airport like that in India? Why do we need endless committees and task forces to tell us what to do?
I was equally impressed with their roads, ports, buses, tourist vans and the business-like operations at the immigration counters. I did not see any customs official! On account of SARS, I did have to get my body temperature marked in the quarantine form before I could get my boarding card in Shanghai but it took a second since it was electronically done. All the signs at the airport are clear and followed a logical order. These small things reflect a disciplined nation that wants to get ahead. We obviously have a lot to learn.
The author is senior advisor, International Trade, CII, and former economic advisor, Ministry of Commerce. These views are personal
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