Why India Can’t Be The Next China, And Shouldn’t Try

They have nothing in common other than populations of a billion plus. China is a one-party autocracy that mobilised its homogeneous Han and Mandarin-speaking majorities behind a decades-long campaign of radical reform. India is a diverse multi-party democracy that will always struggle to rally its hundreds of ethnic and linguistic minorities behind any single goal.

China began loosening their control over the economy in the late 1970s. They freed rural Chinese to till their own land or leave the interior provinces in search of work. They created economic zones free of heavy bureaucratic control in coastal cities, where new jobs flourished.

Many were forced to find new livelihoods in the burgeoning private sector, which was responsible for the subsequent decades of double-digit growth

India has never risked anything like mass firings and large-scale migration to promote growth, in large part because its democratic leaders fear voters would punish them for the short-term upheaval and pain.

India has tinkered with free-market reforms, but only under pressure from economic crises, not as a steady long-term strategy like China.

It will not lead to the easing of land acquisition laws or labour market rules, or the downsizing of state companies – the kinds of reforms that unleashed years of miracle growth in China, and in Korea, Japan and Taiwan before it. Instead, the manifestos offer dole-outs that will leave the overburdened state less money to invest in roads, ports and electricity plants.

The world’s most populous nations are evolving along very different paths – China toward freemarket communism, India toward state-dependent democracy. The contrast can be quite striking.

Consider how China created a cashless society by freeing its tech giants to create the software platforms that made it possible; within the last few years cash has virtually disappeared as a medium of exchange in big cities like Shanghai or Beijing. Modi tried to promote the same goal by state fiat; suddenly withdrawing all big bills overnight in late 2016. The result was not a sudden shift to digital forms of currency; it was a shortage of the old kind that is still weighing on the economy today.

Does this suggest that India would have been better off under an autocratic government? Not at all. For every authoritarian success story, like China, there are multiple failures like Cuba, Venezuela or North Korea. China got lucky with good leadership. It is an exceptional case, not a model for India and other developing economies to copy.

India is more a continent than a country, its states more varied in language, culture and ethnicity than the nations of Europe. Its economy is best-managed one state at a time, by a democratic leader close to local conditions, not by an authoritarian regime at the Centre.

As recently as five years ago, the hope for China was that economic freedom would lead to political freedom, but that dream has been dashed by the tightening of the communist party rule under President Xi Jinping. The hope for India, which became a democracy when it was still very poor, was that political freedom would lead to economic freedom, but that dream has been undermined by a long line of statist prime ministers.

There is still reason to believe in India’s economic prospects, but hope won’t come from prime ministers in Delhi, it will come from dynamic chief ministers in state capitals. These figures often double as leaders of their own regional parties. Right now the conventional wisdom is that Modi and his party are likely to return to power but with fewer seats in the Parliament, which would leave him more dependent on regional leaders.

That would not be a bad outcome. India is better off accepting its exuberantly diverse and democratic nature, and giving its state leaders more authority to govern themselves, than trying to be the next China.

They do not need to have much or even anything in common for India to supplant China. Indeed, one might say not particularly appropriately: “Vive la Difference!” One is autocratic and all-controlling whilst the other is the world’s largest if not completely perfect, democracy.

India’s diversity is a strength and, I suggest, a longer-lasting one than homogeneity imposed by terror and fear.

I believe that after Modi, the race wars will be as unimportant as they were for many years before Modi; but, if the price the Uyghurs are paying is what is required to make 1,438,651,932 people identical, I celebrate the lower level of racism even now in India (population 1,378,309,367).

India’s economy evolved in a less regimented way yet got into the top six not much later than china in terms of GDP.

We have been told for years that China needed to achieve double digit rates of growth to maintain civil order. Now that their growth rate is not much above zero, it will be interesting to see how hardy the regime really is.

No, India never needed to take those “risks”, which is a matter for celebration and not negative criticism.

Even if India has not tinkered with free-market reforms, it still got there, as I said earlier.

To speak of the easing of land acquisition laws or labour market rules, or the downsizing of state companies, allegedly “the kinds of reforms that unleashed years of miracle growth in China” is to insult our intelligence. This is a command economy like no other. Everything that the CPC does is intended to regiment the people. India has not had to do that to get into the top five of the nations of the world.

A cashless society is not a pre-requisite for industry to move from china to India. Transparency and democracy is.

The writer and I are agreed that the Chinese system is not model for India to copy.

China is a behemoth with many tribes in the same way as India. Since each state is competing for business, it is not a weakness if it is true that its “economy is best-managed one state at a time”.

I agree with the remaining paragraphs – which do not make an argument for India not being able to rival China.