NEW DELHI — While I was in India recently, the first phase of an underground railway was inaugurated in New Delhi. At about the same time, in Shanghai, the world’s first magnetic levitation train was inaugurated between the airport and the city. This is a fitting metaphor for the two countries. China is outperforming India in almost every facet of national competitiveness — from attracting more than 10 times as much foreign capital as India and increasing market share in world trade to being courted as a responsible manager of world order.
While keeping costs as low and offering the lure of a market as big as India’s, China has attained levels of infrastructure closer to those of Southeast Asia. Some of India’s long-standing advantages over China are also eroding or becoming less relevant, including English-language competency, democracy and the rule of law.
Where China no longer allows ideology to get in the way of national interests, and its version of “socialism with Chinese characteristics” is starting to embrace capitalists within the fold of the Communist Party, significant pockets of Indians remain resolutely opposed to letting national interests prevail over ideologically defined principles. One of the architects of India’s liberalization said to me that India joined the World Trade Organization grudgingly, not out of conviction but because there was little choice left. By contrast, China has embraced the WTO as a key tool in imposing an external discipline for achieving domestic policy reforms that the national leadership sees as critical to economic success.
Conversations in the two countries throw up an interesting paradox. Many economic nationalists in India are fiercely opposed to foreign investment for fear of erosion of policy autonomy. Many Chinese see foreign capital entry as essential for buttressing and augmenting national sovereignty.
The level of foreign capital tied up in China gives the country an enormous lobby within the major economic powers to shield it from hostile foreign government policies, thus adding another layer of sovereignty protection. Foreign investment brings with it not merely the requisite capital to invest in productive enterprises, but also modern technology and management expertise to maximize efficiency and productivity.
Fifty years of socialist dogma and policies have left India with such a terrible infrastructure, legacies and mind-set that foreign investors are frightened off by the formidable obstacles to making reasonable profits — in a land where “profit” remains a dirty word.
Political and bureaucratic hurdles in India are many, labyrinthine and substantial; bribery is rampant at multiple levels in the chain of decision-making required to get government approval; markets are split from suppliers, with transportation networks that are far too inadequate and antiquated for linking them effectively; communications and electricity are risible for a country that claims to be an information-technology (IT) powerhouse; and the debilitating twin cultures of entitlements and subsidies constrain rewards for enterprise, initiative and merit, on the one hand, and the operation of the price mechanism on the other.
Democratic governance probably gives better assurance of long-term stability to India. But the instruments of state are still used far too much to serve the interests of the rulers even at the expense of citizens; remarkably for the 21st century, the state has an effective monopoly on radio; foreign scholars invited to academic conferences in the country need government approval; and so on.
In China, meanwhile, there is evidence of vigorous shoots of civil society from the bottom up alongside the continuing control of the single political party at the peak national level. It is possible to have robust discussions with Chinese interlocutors on an increasing range of sensitive topics that previously were taboo.
Electoral calculations in India also put a premium on sectarian interests overriding the national interests, and short-term political compulsions overriding any long-term strategic vision. My impression is that more Chinese than Indians believe that their respective political leaders act in the national interest rather than for personal or partisan gain. And by all accounts, the police can be as brutal and corrupt in one country as in the other.
The volatility of democratic governance also makes it exceedingly difficult for Indian governments to make decisions that are timely, final and forceful. So many different constituencies and interests must be appeased, so much time devoted to getting “consensus,” that what is necessary for national advancement gets progressively whittled down to what is possible for political survival in a fractious coalition. And the decision may still be reversed by a judiciary that has become increasingly ubiquitous in taking over the functions of the executive and legislative branches of government. For example, curbs have been adjudged on New Delhi’s dreadful pollution even as the backlog of strictly legal cases grows.
Meanwhile, as part of their longer-term strategic vision, Chinese leaders have been promoting English language and IT skills, backed by the necessary telecommunications and power infrastructure. The IT sector is a super-success story in India because, by its nature and speed, it managed to escape government control and regulation; the success may be replicated in China as a result of active government policy.
There are other indicators, each of moderate importance separately, but together adding up to a compelling brief in favor of China’s rising importance and India’s relatively minor-league status. Car sales in China have topped the 1 million mark, up 55 percent from 2001, making China one of Asia’s biggest car markets after Japan. China is now the world’s fifth-biggest tourist destination. By contrast, just 2.6 million visitors went to India in 2000, for a 0.38-percent world market share.
Does all this matter for foreign policy? Yes, as indicated by two unconnected recent events. In December, the United Arab Emirates, asked by India to extradite Anees Ibrahim, a prime suspect in the decade-old Bombay-blasts case, sent him instead to Pakistan. In the same month, the Indian chairman of Polaris Software, Arun Jain, was arrested when he traveled to Jakarta to try to resolve a commercial dispute with an Indonesian bank. He spent a week in detention before being released following intervention by the Indian government at the highest levels.
India has worked hard and successfully to confirm its image as a soft state that is all bark and no bite. It is impossible to imagine China being treated in such a cavalier manner by any country today. Reflecting all of this, more and more Asia-Pacific countries are moving to forge closer economic relations with China, including free-trade agreements. At this rate of relative progress in the two countries, I wonder how long it will be before India appeals to China for foreign aid — and gets it.
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