The Hindu Business Line : Ten ways that China and India will (and won't) change the world

That China and India will provide huge market opportunities, but remain relatively poor is one of several pairs of contradictions that form the substance of David Smith's The Dragon and the Elephant.

The West worries continually, "What will we do when China and India do everything?" It also wonders whether China would be `a benign presence, as Japan was in the 1980s', and whether India would `turn the economic tables on its old imperial master, Britain, in the way America did'.

David Smith takes up these questions and more in The Dragon and the Elephant (www.vivagroupindia.com). "The story of China (the dragon) and India (the elephant) did not suddenly emerge," he writes in the intro. "In the 1990s, when the dotcom boom competed for the headlines with the 1997-98 Asian financial crisis, neither China nor India received as much attention as they should have done."

The world sat up to notice China's growth, when at the end of 2005 the country's National Bureau of Statistics revised the GDP data after suddenly discovering "nearly 17 per cent of additional economic output in telecommunications, retailing and real estate, and also in a range of low-level service industries such as the restaurant trade and garages." As a result of the revision, China "had achieved 27 years of rapid economic growth, at a rate averaging about 9.5 per cent a year."

In the final chapter Smith lists `ten ways China and India will (and won't) change the world'. One, they are the biggest thing to hit the world economy. He cites a view of Richard Freeman of Harvard University — that in 2000, as a result of the collapse of communism, India's turn from autarky, China's shift to market capitalism, the global economy encompassed 6 billion people. If that is the yin, the yang is that the two countries are not as big as they seem. Reason for this seemingly perverse argument is the population burden — the `long and inefficient tail' of both India and China. "Much of Chinese business consists of barely reformed state-owned enterprises no more capable of taking on the world than were their East German equivalents." And, in India, the IT and outsourcing sector employs "barely 0.1 per cent of the population. Only just over 3 per cent of Indians are in organised employment." Three, the two countries will stretch the world's resources. "When the biggest energy consumers gathered in Monterrey, Mexico, in October 2006 for a ministerial discussion about global warming, China, the world's second biggest energy user, and India, in fifth place, sat at the top table."

Bad news, therefore, for the planet? No, the two countries will not destroy the planet, assures Smith, because there is hope that India and China would opt for environmentally sustainable growth, and "teach the advanced economies a lesson," as Lester R. Brown would say. "Already, China's world-leading solar industry provides water heating for 35 million buildings, and India's pioneering use of rainwater harvesting brings clean water to tens of thousands of homes... "

Further predictions that come in neutralising pairs are: China and India will flex their diplomatic and military muscles, but they won't start a new Cold War; they will provide huge market opportunities, but will remain relatively poor; they will hit turbulence and trigger protectionism, but won't change the rules of globalisation.

Will it be China vs India? Look at the duo as partners rather than competitors, advises Smith. "The potential for that partnership is formidable. The risks of disappointment, however, remain."

Compact work about two giant economies.

Human rights wronged

Foreign investment and buzzing factories are what China is usually talked about in contemporary business literature. "This, despite the fact that China executes approximately 5,000 to 12,000 people annually (more than the rest of the world combined), many of them belonging to ethnic minorities, led out directly from their `trials' (often presided over not by a judge, but by a state official who has little or no legal training) to the execution grounds, making any appeal process impossible."

Thus write Daniel Fischlin and Martha Nandorfy in The Concise Guide to Global Human Rights (www.oup.com). "There are over 65 crimes punishable by death including tax fraud, bribery, and vandalism. There is mounting evidence that capital punishment in China is becoming a lucrative business in the trade of human organs, and that the victim is killed in a medically controlled way to cause the least impact on the targeted organ, usually sold to a wealthy foreign patient awaiting the transplant in a nearby hospital."

Elsewhere in the book, one reads about human trafficking, where César Chelala is cited from `How China can show its human rights face', thus: "Every year, thousands of Vietnamese women and girls are transported to China. Most are made to believe they will find good jobs and marriage prospects there. Once they reach China, however, many end up as beggars, forced labourers or prostitutes... According to Vietnamese authorities, more than 20,000 women and children have been transported to China in the past 10 years for forced marriage or prostitution."

According to projections AIDS may infect `close to 10 million Chinese by 2020, thus potentially creating the largest HIV-positive population in the world.' The terrifying scenario demands countermeasures on a war footing, but shockingly China has been allegedly "blocking Web sites with information about the prevention of AIDS, and imprisoning staff working in AIDS organisations."

China is perceived as `the world's most aggressive censor of the Internet', banning Web sites that use words such as Taiwan', `Tibet', `democracy', `dissident', and `human rights'. For this, China uses `technologies developed by companies such as Cisco Systems', apart from the 30,000 human Internet monitors. Disturbingly, China "already has the highest number of imprisoned journalists in the world — at least 42."

Understandably upsetting.

Alternative property regimes?

Both India and China have pursued land development policies, with stark differences. In India, the focus has been on individual incentives through credit and market support, while China has been `promoting centrally controlled collective mechanisms.' Amita Shah discusses the practices in one of the essays included in Participatory Pathways edited by Rajiv Balakrishnan (www.pearsoned.co.in).

Shah lauds FLC (farmland capital construction) as the most outstanding feature of agrarian transformation in China. "This essentially involved development of land and water resources through a variety of measures such as clearing and shaping of land, including clear felling of forests, preparing drainage and waterways for controlling floods, rejuvenating irrigation systems, manuring and other measures for harvesting rain water."

What helped FLC succeed was scale; it was undertaken on a collective basis. However a constraint that China faces is the lack of private incentives to look after the community land and water resources. "Should India explore new options for ownership and control of land and water resources through alternative property regimes?" wonders the author.

She rues that at present WDPs (watershed development programmes) in India tend to bank heavily on public investments, without any further efforts to calibrate a private investment that follows. "Chinese experiences with regard to regulated decollectivisation in recent times might help in blending the two," suggests Shah.

Recommended reads to add value to your China gyan, even as you are pushed to shun toothpaste from behind the Great Wall.

http://BookPeek.blogspot.com

D. Murali