Indra’s Drishtikona (Viewpoint)

China vs. India - A British Historian’s Views

Posted : August 25, 2005 at 7:00 am [IST]

Anything that is written about India vs. China attracts me. Basically, the West has started recognizing the inherent strength of India even with all its weaknesses. Because of rapidly changing global scenario, things are moving fast for India. It started with a mention of India with China. Now some western celebrities have started talking more positively about India and putting their bait for India in preference to China too. Business Week’s Special Issue on China-India had shown some of the strengths of India. Chief Economist William T. Wilson of consultancy Keystone Business Intelligence India says, “I believe India has a better model than China, and over time will surpass it in growth.” A BusinessWeek analysis of Standard & Poor’s (MHP ) Compustat data on 346 top listed companies in both nations concludes, “Indian corporations have achieved higher returns on equity and invested capital in the past five years in industries from autos to food products. The average Indian company posted a 16.7% return on capital in 2004, vs. 12.8% in China.”

Paul Johnson is an eminent British historian and author. Recently, his views appeared.

By 2050 India will have the largest population in the world — 1.6 billion inhabitants versus China’s 1.4 billion, with India’s population being much younger. As for India’s economic potential, I regard that as almost infinite over the long term.

China has tended to concentrate unduly on old smokestack industries, with the object of gaining quick returns through cheap exports. Needless to say, this has had appalling consequences for the environment, which China will rue desperately in decades to come. China, with estimates of about 20 million convicts, is heavily dependent on slave labor, as well as on the labor of underpaid ex-peasants who are still pouring into the industrialized coastal belt.

China is not investing enough in high technology, with the exception of the military, and is thus making the same mistakes the Soviet Union made. The entire Chinese apparatus, political and economic, looks fragile to me.

India, however, with its educated strata fluent in English, is leapfrogging over the industrial epoch into the advanced communications era.
Bangalore, India’s capital of high technology and outsourcing facilities, is a city fully at home in the 21st century, whereas Shanghai, despite its spectacular skyscrapered skyline, is a phenomenon rooted in the 20th century.

India looks — and is — astonishingly old, but its futuristic sinews, though often invisible to the untrained eye, are becoming formidable. As things stand, India will soon have more English-speaking computer operators than the rest of the world put together, and it will be organically linked to all the advanced economies.
Given the climate of freedom that prevails in India, we can expect that it will be producing ideas, inventions and new processes of its own before long. China will not be able to match this until it dismantles its communist system — or lets it collapse.

To have a truly innovative economy, freedom of thought and expression must be encouraged. That is the most important lesson of the modern age. India has this precious tradition, as well as the rule of law, both of which are legacies (I am proud to say) of British rule. The rule of law is essential to long-term investment on the largest possible scale.

‘Time’ had published in June 2005 a special issue on China. Some data about China were interesting and astonishing too:

Percentage of the world’s ice creams consumed: 20%

Communist Party officials disciplined for corruption last year: 1,70,850

Percentage of counterfeit goods seized at U.S. borders from China: 66%

World’s ranking in automobile deaths: 1

Percentage of urban/rural Chinese with a college education: 5.6%/0.2%

Smokers: 350 million

Estimated rural Chinese who have never brushed their teeth: 500 million

Are these not interesting statistics? Every one can have his or her own inferences from these data about China.

- Indra

Category: Industry/Management |