China and India – back to the future?

China and India together accounted for almost seventy percent of the global economy, for fifteen of the last twenty centuries.

However, we have witnessed a dramatic difference in economic growth between the two countries, especially in the last fifty years. The People’s Republic of China, a communist country, is now a USD 21.4 trillion economy and India, the world’s largest democracy, is now a USD 8.7 trillion economy.

This makes China and India the world’s largest and third largest economies, respectively, with the U.S. at USD 18.6 trillion (all three measured in terms of Gross domestic product at purchasing power parity, 2016).

But, what makes matters more interesting is the vastly different paths both, China and India have taken to grow, over the last fifty years.

 

China took a decidedly command-and-control approach to economic growth and managed to lift more people out of poverty than any country in history. India, with its multipolar politics and society, took on a mix of market-driven and state-controlled growth, with the state becoming a smaller and smaller contributor, over time.

 

While both countries share common traits like strong family ties and an affinity for education, India’s growth has come mainly from services and China’s growth mainly from manufacturing. The reasons are too numerous and complex to elaborate here, but suffice to say that a smaller government, an independent media, freedom of expression and innate entrepreneurial drive has worked wonders for India. Today, India is the only country in the world with which, the U.S has a services deficit. This process has been slow and not without its problems. But, the results are for all to see and the multiplier effect of this on India’s burgeoning middle class has created a healthy consumer-driven economy in sectors like real estate, to cars, air travel, telecom, media, automobiles and many more.

 

An interesting fact to drive home that subtle difference is that although China Mobile has more subscribers than any other mobile network operator in the world, it is an Indian telecom company, Reliance Jio, that is the only exabyte (one quintillion bytes) network in the world, carrying a staggering fifteen percent of the world’s mobile data traffic. This makes Jio the world’s largest mobile data network and pushes India to the top of the mobile data consumption rankings, ahead of the USA, China, Japan, and South Korea.

Where China has its state-owned enterprises, India has its independent, private sector stalwarts, some of whom have been in continuous business for more than a century.

China’s education, labour, land and fiscal policies are a world apart from India’s. India simply cannot achieve scale in manufacturing, as India has always been a country of artisans, not mass producers. These fundamental differences, combined with a free-floating Indian Rupee lend India to a more open, idea-driven economy, than a fixed-investment driven economy.

 

With this context, I travelled to Xiamen and Shanghai in China in the spring of 2018 to understand what makes our two countries similar, and different. Being an Engineer, I wanted to see for myself the impact of China’s systems-based policy that promoted urbanization, automation and speed, on an unimaginable scale.

 

And China impressed me beyond belief!

 

As my friends Wei Cui and Mingzhu Li pointed out to me throughout the trip, the rate of adoption of technology across sectors was spurred by the Chinese Government’s stated policy of raising the standard of living for as many citizens as possible, as fast as possible. Both, Chinese state-owned and private enterprises command my professional respect for the ingenuity, flexibility and discipline they have consistently displayed in executing massive projects in the roads, railways and ports sectors, among others. In the short week that I spent in China, I came away with a greater appreciation for China’s attributes of teamwork, seeking global solutions to local challenges and pushing the technological envelope at all times.

Although India has numerous firsts and “largest-evers” to its credit, China has made delivering complex projects aimed at public good, more of a habit than India has and I hope more and more Indians travel to China to witness the strides China has made, with their own eyes.

It was ironic that Ming, Wei and I enjoyed each other’s company through our time as classmates, even as the Chinese and Indian armies were engaged in a military standoff at the border, in late 2016! This was an aberration since India and China have the one of the world’s most comprehensive border-management agreement and not a single bullet has been fired from either side, for more than fifty years!

Moreover, Brazil, Russia, China, India and South Africa held the second BRICS summit in Xiamen in September 2017, just days after the standoff ended.

It is with this spirit of friendship and cooperation that I bid a sad goodbye to the numerous Chinese friends I have made at Tulane and thank Tulane for bringing us all together.

直到我们再次见面!