India-China Nov-Dec Inside Pages final

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Vol 1, Issue 2, Nov-Dec 2010

Two wings of a bird

Editor Prashun Bhaumik

Life is full of surprises. I’ve grown up in Calcutta where a thriving Chinatown has always held my fascination from a young age. The narrow streets dotted with colourful temples, the reds and gold adorning the house fronts, Chinese newspaper offices where wrinkled hands laboriously calligraphed the weekly newspaper in red ink, the rows of shoe shops on Bentinck Street and of course the inviting smell of Chinese food.

I still remember the early morning breakfast of bread buns, hot soup and dumplings in bustling central Teriti Bazaar. And then there was New Years in Tangra where the New Chinatown had to slowly move because of being edged out of the city. The Lion and Dragon dances, the food, the fireworks.

And all these years later I find myself editing a chronicle on India-China.

As I said life is full of surprises.

Chinese scholar Tan Yun Shan once wrote to Rabindranath Tagore after one of his visits to Shantiniketan: “India and China are naturally a pair of sister countries. Their similarities and their associations are great, numerous, and intimate. Looking over the geography and history of all the nations in the world, we find there are not any other two nations that can be compared to our two countries. Our two countries, both situated in the bright and glorious continent of Asia. India to the south-west and China to the north-east, spread out lordly in different directions but yet are linked up at the main line, just like the two wheels of a carriage or the two wings of a bird, and, even better to say, like the two hands and feet or the two ears and eyes of a person.”

The two countries have a glorious past but there is need to know more about each other. India-China Chronicle is a step in that direction.

Its launch by diplomat-turned politician Shashi Tharoor marks a journey which I hope goes a long way to bridge the people of these two great nations.

Two years ago I met Nina Wang on the famous Silk Road as far away as in Syria. A sprightly attractive anchor for China’s CCTV6 Nina surprised me by her cute little Raj Kapoor cameo by singing Awara hoon with her Chinese lisp. The two nations do share civilisational links. We only need to strengthen them.

Today China is full of dichotomies: It is rich; it is poor. It is developing; it is developed. It is a country in search of itself. China is constantly remaking itself – defining itself into a new, great power. Its people are proud yet humble. They build large skyscrapers. They buy designer clothing. They produce massive quantities of products to export to the world.

China’s bold and vivacious entry into the global economy is at the center of most discussions about trade, international business, climate change and foreign policy. Its track record of double-digit growth is the envy of the world. But behind the news about China’s economy is a story about human struggle, dislocation, upwardly mobile entrepreneurs as well as internally impoverished migrants.

In short, it is a story about modern societal change. We have dealt with some of these in the current issue. Happy reading!

Editorial Board Abid Hussain Mani Shankar Aiyar P.S. Deodhar Dilip Cherian Amir Ullah Khan Parama Sinha Palit Chen Si (China) Editorial Team Anchit Goel Aanchal Kumar Harshie Wahie Irfan Alam Manju Hara Sumelika Bhattacharyya Swaralipi Maity Design Manoj Raikwar Printed and Published by India China Economic and Cultural Council K-19 (GF), South Extension-II New Delhi- 110049 address for all correspondence India China Economic and Cultural Council K-19 (GF), South Extension-II New Delhi- 110049 Telefax: 011-46550348 Printed AT Print Vision Private Limited Print Vision House, Lane opp. Central Bank of India, Ambawadi Market, Ahmedabad- 380006 Tel: 079-26405200/26403320 E-mail: sales@printvision.in All Rights Reserved. Reproduction in whole or in part without written permission is prohibited.

All advertising enquiries, comments and feedback are welcome at icec@icec-council.org The information contained in this magazine has been reviewed for accuracy and is deemed reliable but is not necessarily complete or guaranteed by the Editor. The views expressed in this digest are solely that of the writers and do not necessarily reflect the views of the magazine.

CONTENTS

4 Feedback

Foto feature

50 A New Beginning

Some glimpses into the launch of the IndoChina Chronicle in New Delhi.

FOREIGN POLICY

6 Two heads better than one

The basic task for countries like China and India in international affairs is to wield a foreign policy that enables and facilitates their own domestic transformation.

CULTURE

52 Chandni Chowk to China

Beyond The Great Wall

21 Shanghai Express

India and China, two of the world’s oldest civilizations, are so near, yet so far from each other. Can Bollywood and other cinemas of India, ambassadors of India’s culture and emblems of our soft power, take India to the Chinese?

Talking Alphabets

BOOK EXCERPT

26 Radical Strokes

56 The Giant Stir

Your first step into the Chinese script

BUSINESS

28 Sporting Spirit

In the next two decades, together India and China will account for a quarter of global output.

Excerpts from Raghav Bahl’s book on IndiaChina – Superpower? The Amazing Race Between China’s Hare and India’s Tortoise

FILM REVIEW

62 • Ghost Town • The Road Home

TRADE

The Yin & Yang of free trade

ECONOMY

39 Developed Defined CULTURE

Like Yin and Yang in Chinese science and philosophy defines every manifestation, so it defines trade relations between India and China.

46 The Loong & short of it

COVER STORY

8 INFOCUS

EDUCATION

China Contrast

Policy & Paradox China may have largely eliminated illiteracy and encouraged primary education but investment in higher education lags. China’s high levels of economic growth since reform have been achieved in spite of the existence of relatively few college-trained managers and professions. Imagine if it did? An exhaustive look at China’s education system and what ails it.

14

With great power comes great responsibility.

China is the second largest economy in the world.

While the West wants China to be part of the developed world, China is fighting shy. Why?

34

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China is proud of the Dragon as its national symbol and character. But unlike the western imagery, the Chinese dragon is milder and peaceful or in short Loong.

ENVIRONMENT

China’s best kept secret Guizhou is one of China’s lesser known provinces, and best kept secrets.

22

Why China is still developing Despite a dramatic increase of its GDP, China is still a “rising developing country” rather than a developed one.

42

f e e d b a c k Partners, not rivals Kudos for bring out an excellent magazine, the India-China Chronicle!

I came across your magazine and glanced through it. However the editorial “A Shared Vision” penned by Editor Prashun Bhaumik was read by me with keen interest. The very first sentence: India and China are “partners, not rivals” and together must serve as the engines for the 21st century, destined to be the Asian century....triggered me on to go through the entire magazine. And needless to say I enjoyed it thoroughly.

Thanks and cheers!

Kishore Dudani (IFS (retd) ministry of external affairs, New Delhi. Director, Sabero Organics, Mumbai

Magazine for keeps This is a very timely issue and makes for a great reading. It’s library material & will go into the China section of our institute library which is visited by a lot of SME entrepreneurs.

So far, this is the best magazine we have on China. Kudos to the editorial team & ICEC! Keep sending such good stuff.

Jagat Shah (Founder & Mentor Cluster Pulse & Global Network)

Tiger! Tiger!

“Two crouching tigers some hidden dragons” by Barun S Mitra was an interesting read. The article initiated from Copenhagen and progressed to tiger conservation. An untouched topic until now but it is of great relevance to both India and China. Inputs and the solutions provided by the author through which China and India could work out to further the cause were quite captivating. However, the true effort of this article would only be

Keep it up Congratulations to the ICEC for the special issue on India China 60 years of diplomacy! The Chronicle is unique as it incorporates the views of the ambassadors of both sides.

It very clearly puts out the past, the current and the possible future of Sino-Indian relations. The interviews in the magazine gave a clear picture of the Chinese insights into the Indian business and markets. Quite informative were topics such as “The Vedic Connect” and the Film/Book Review pages. Enjoyed reading them! Hope this continues in the forthcoming issues. Cheers!

Anushrita Singh |4| India-China Chronicle  November-December 2010

fulfilled if some steps are taken up for the conservation of the magnificent animal.

Jarred Vinze Reach out Sixty years of diplomatic relations between China and India and strong people-to-people ties. However, the fact is 60 years might have strengthened the diplomatic relations but not the people-to-people relations. Still there is huge ignorance and mistrust when it comes to the ordinary people of both the nations. Hope India and China take some strong efforts in this direction.

Yatin Rangaswami China guide ICEC has done a wonderful job in its new publication, the India-China Chronicle. This magazine is a true reflection of the growing similarities and exchanges between India and China.

The articles on Chinese culture, movies and language were very interesting and will serve as a guide for Indian entrepreneurs and MSMEs looking forward to learn about Chinese business practices and culture. I wish all the best to the team.

RK Das, SIDBI

INFOCUS | INDIA-CHINA | FOREIGN POLICY

Two heads better than one The basic task for countries like China and India in international affairs is to wield a foreign policy that enables and facilitates their own domestic transformation.

Shashi Tharoor

C

hina and India are two countries whose development will have a significant impact on the global system, which is why how we can cooperate becomes important.

China and India are the two most populous countries in the world, together making 38 per cent of the world’s total population, with Indians set to outnumber Chinese around 2034. Together they account for nearly a tenth of global gross domestic product, a fifth of world exports and a sixth of all international capital flows. China and India are the world’s second and fifth largest economies in PPP (purchasing power parity) terms. China holds by far the largest foreign currency reserves in the world, at close to $2 trillion. India’s is around $300 billion.

We can say with some confidence that both countries will continue to prosper and pull more millions out of poverty than they have ever done; that they will compete effectively with Western corporations for business, purchase foreign companies and assets, expand their trade and overseas investments, invent and develop new technologies, and displace more economic weight around the world.

The basic task for countries like China and India in international affairs is to wield a foreign policy that enables and facilitates their own domestic transformation. We are both engaged in the great adventure of bringing progress and prosperity to a billion people each, through economic development. At the broadest level, our foreign policy must seek to protect that process of transformation — to ensure security and bring in global support for our efforts to build and change our country for the better.

This is why economic relations are important for both of us. Trade has increased twelve-fold in the last decade, to an estimated $51 billion last year; China has now overtaken the US Prime Minister Manmohan Singh and Chinese President Hu Jintao greet each other during an official welcome ceremony in Brasilia, Brazil

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as India’s largest single trading partner.

The two governments expect to cross the $60 billion mark in the current fiscal year (a figure that is 230 times the total trade between the countries in 1990, just 20 years ago) and Beijing has already spoken of aiming for $70 billion the following year.

In the past I have spoken of the complementarities that facilitate our cooperation, notably Indian software and services meshing with Chinese hardware and manufacturing. So Mahindra and Mahindra manufactures tractors in Nanchang for export to the United States. The key operating components of Apple’s iPod were invented by the Hyderabad company PortalPlayer, while the iPods themselves are manufactured in China.

Indian investments in China are nearing the billion-dollar mark. The trade imbalance is two-thirds in favour of China, but this can be addressed if China takes steps to reduce the non-tariff barriers for entry into its market that have been thwarting Indian companies.

But our economic cooperation need not just be in each other’s countries. Inevitably our search for markets, technology and resources to fuel our growth will be key drivers of our international relations. This is why we are both looking far afield, to Africa and Latin America, for opportunities.

Energy is an obvious area for cooperation. The US’ department of energy estimates that China’s oil consumption will rise 156 per cent and India’s oil consumption will rise 152 per cent by 2025. While both countries are seeking to expand their domestic production, opportunities for growth are limited, and both countries will become more dependent on imported oil, making them more vulnerable to irregularities of supply and price volatility. This makes the quest for reliable sources of supply and secure sea lanes of communication a shared interest. After all, both China and India are relatively new entrants into the global oil system.

They are facing fierce competition from much larger, more experienced, and arguably more resourceful Western oil companies. Cooperation between Indian and Chinese oil firms is essential.

Prior to 2002, India and China competed aggressively with each other to acquire oil and gas fields abroad.

Wisdom dawned, however, with improved energy cooperation starting that year, when India’s Oil and Natural Gas Corporation (ONGC) purchased a 25 per cent share of Sudan’s Greater Nile Oil Field, operated by the China National Petroleum Cooperation (CNPC). The experience has been positive and continued cooperation in the global energy sector, including some examples of joint bids and at least one successful joint acquisition, has occurred. The prospects for further collaboration, to jointly explore and develop oil and natural gas resources in third countries, are high.

To take another example: Our demand for food will inevitably rise as well, perhaps by 50 per cent in the next two decades, as a result of our growing population, their rising affluence, and the improved dietary possibilities available to a larger middle class. We will need to multiply our sources of food, including acquiring agricultural land abroad, in Africa and even Latin America. Lack of access to stable supplies of water is reaching critical proportions, particularly for agricultural purposes, and the problem will worsen because of rapid urbanisation over the next 20 years. We

will need skilful and creative diplomacy to ensure that interruptions in the flow of water across our borders do not bedevil relations with our neighbours or with each other. All this underscores that foreign policy is basically about fulfilling domestic objectives. Let us never forget that if we, the two largest developing countries in the world, succeed — when we succeed — in our national transformations we will be including more and more of our people in the great narrative of hope that has been the narrative of social and economic development in the West over the last 200 years.

In his recent book Rivals, Bill Emmott quoted an unnamed senior Indian official as saying, “Both of us (India and China) think that the future belongs to us. We can’t both be right.”

Actually they can both be right — it’s just that it will be two very different futures. And there can be room for both in the world of tomorrow. 

Shashi Tharoor is a former minister of state for external Affairs and member of Parliament from Kerala’s Thiruvananthapuram.

November-December 2010  India-China Chronicle |7|

Feng Xingyuan

A

The Yin & Yang of free trade

Like Yin and Yang in Chinese science and philosophy defines every manifestation, so it defines trade relations between India and China. |8| India-China Chronicle  November-December 2010

lthough trade relations between India and China developed fast in recent years, trade protectionism and potential military strife constitute a threat to the peace and well-being of the two great nations. Free trade is a key to attain these two goals. And it starts with the inequality of the two nations.

Inequality as the foundation of social cooperation India and China have many things in common: both are mega-states in terms of population and economy; both are stars in out-performing other nations in terms of speedy economic growth; both are proud of their own long lasting civilizations; both suffered from colonization or semi-colonization

by Western powers, and thus are very sensitive of preserving their “national dignity.” Further, both countries are still poor in terms of per capita GDP the ranking of both in economic freedom is also lagging. In the 2010 Index of Economic Freedom of the Heritage Foundation, India is ranked No. 123, while China No. 140, after India.

At the same time, India and China are also quite different: India is the largest democracy in the world, while China is an authoritarian regime; India is based mainly on common law, while China adopted continental law; India is advanced in elite education, while China emphasizes more on general education and education for all; most educated Indians speak fluent English, even more fluent than some British and American native speakers, while most Chinese don’t have this advantage.

Although both nations are quite different, the cultural connections have had a long history. For instances, during the 1st Century AD, during the Han Dynasty, Buddhism was brought from India into China. It became popular after its adoption to Chinese culture and conditions later on, while it vanished in India, the very country of origin.

We can add up almost endless points to the list of similarities and differences between the two nations. In short, India and China are not equal in many fields. People might hate, discriminate or exclude each other just because they

feel that they are equal, or unequal or different. Equal men regard easily each other as rivals. Unequal men might not accept each other because they might not identify each other as own fellows.

However, just as Ludwig von Mises mentioned in his famous book >Human Action, it is precisely the inequality of men that generates social cooperation and civilization. In relation to the relationship between India and China, we have to base our discussions upon this insight, especially in current period in which trade between two countries grows fast, but vulnerable to the protectionism which can be easily imposed upon each other.

Protectionism as hindrance to bilateral trade and investments The economy of India is the eleventh largest economy in the world by nominal GDP and the fourth largest by purchasing power parity (PPP), while China is the world’s second largest economy after the United States by both nominal GDP and purchasing power parity.

According to IMF statistics, India and China made 5.05% and 12.56% of the World GDP in terms of purchasing power parity in 2009, respectively. Put India and China together, their GDP makes 17.6% of the World GDP. If adding up further the size of all the ASEAN countries (4.04%),

their economy makes 21.65%, which is larger than the share of the GDP size of the US (20.42%) and that of the EU (21.19%). However, the value of trade between India and China makes only 2% of the total trade value of China, while that between the ASEAN and China makes 9.7% of the total trade value of China.

Apparently, there exists a scissors gap between India-China trade and the ASEAN-China trade. One of the main reasons should be the trade barriers between India and China. No one is to blame. However, one can attain the improvement of the trade situation in terms of Pareto improvement which means an improvement that leaves everybody better off by reducing or even removing the trade barriers.

The consolidated GDP size of India and China makes 17.61% of the world GDP, while that of ASEAN and China 16.6%. Taking the ASEANChina trade level of 9.7% as a base, India-China trade can reach 10.2% (=17.61%*9.7%/16.6%), so 8.2% up in comparison to the current level if catching up a corresponding level by reducing trade barriers. In this regard, the India-China trade has a great potential.

Fortunately, trade relations between India and China improved rapidly during recent years in terms of trade volume (exports plus imports), which rose from 7.6 billion USD in 2003 to 43.4 billion USD in 2009, at an annual growth rate of 33.7%. However, it went up to 51.8 billion USD in 2008, highest in its history, at an annual growth rate of 46.8%. Apparently, the global financial crisis and protectionism on both sides affected to some degree this turn.

The above mentioned gap is to be traced back by and large to the trade barriers existing in both countries.

Although the Indian economy seems to be more open than the Chinese, both are not sufficiently open. India’s exports to China stood at $ 11 billion while China’s exports to India were in excess of 27 billion USD in 2009. The trade gap is expected to be further widened and cross 20 billion USD in 2010. The sharp rise in the trade deficit with China was seen by the Indian government

November-December 2010  India-China Chronicle |9|

INFOCUS | INDIA-CHINA | TRADE

as a result from the trade barriers on the Chinese side. India proposed early this year a set of measures for increasing its exports to China, such as the removal of tariff and non-tariff barriers restricting import of power plant equipment from India and removal of restrictions on imports of basmati rice, fruits and vegetables, more imports of IT/ITES services from India, landing rights for Indian TV channels in China, and import of more Indian films, removal of procedural bottlenecks including time-consuming licensing procedures being faced by Indian drugs and pharmaceuticals etc. India threatened also with potential retaliatory measures if China fails to take adequate steps in

Learning from history and lessons from West Europe Relating to the mutual benefits of trade, there wasn’t lack of wisdom in ancient and modern time which both nations don’t seem to have learnt sufficiently. The ancient Chinese philosopher Mencius advocated the division of labour and the exchange between different trades. He saw the necessity of division of labour for good economic performance, or in terminology of modern economics, efficient resource allocation. Adam Smith’s classical economics is based on his analysis of the benefits from the barter and the exchange of one thing to another. In ancient Greek, the verb “katallassein”

vice versa. This applies also to the trade relationship between China and India.

The history of West Europe provides a good example of attaining peace and prosperity through competition and trade. It also seems that both India and China in general don’t learn sufficient from this part of human history.

The first lesson India and China can learn from Europe is thus peace through trade. Europe was a bloody place where World War I and II took place. However, the Marshall Plan and the European Community of Coal and Steel helped to bring the former rivals together, to concentrate on economic development and cooperation, and to make West Europe one of the

India and China have many things in common: both are mega-states in terms of population and economy; both are stars in out-performing other nations in terms of speedy economic growth; both are proud of their own long lasting civilizations. the following few months to reduce the deficit and move towards a more balanced trade ties. In July, 2010, the Indian government announced for so called “security” reason a list of embargo, which involved 26 companies, including 25 Chinese companies (such as Huawei, Lenovo, ZTE etc.) and an Israeli company Comverse.

This is a typical situation of a “prisoner’s dilemma” in which both sides chose the worst solutions by putting aside a win-win solution which should embody a reduction or removal of trade barriers on both sides, and more trade and investments with each other which implied more bilateral imports and exports.

or “katallattein” means not only “to exchange”, but also “to admit in the community” and “to change from enemy to friend.”

It seems that the Indian and Chinese in general perceive more of the negative side than the positive side of their economic relationships, which is understandable since the perception of negative side and that of positive side tend to be asymmetrical: People tend to perceive more strongly of the negative side than the positive side of the trade relations between the two nations. According to ancient Chinese philosophy, there are in everything elements of Yin (negative) and Yang (positive).

The Yin can be turned to Yang, and

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most peaceful places in the world. The rationale behind it is the so called functionalist perspective which is nothing else than the concept of “katallassein” – Trade brings about peace and prosperity. Germany was included within the European framework of economic integration, and the former rivals became partners in trade and politics.

Only the 1988 visit of Rajiv Gandhi to Beijing, under great domestic pressure and with enormous personal courage, marked the breakthrough of Indian-China diplomatic relations.

This move helped to secure to a great extent peace to both India and China and set a foundation for developing bilateral trade relations. But the bilateral

trade and investments are still limited.

In the current world, trade and foreign direct investments tend to turn relevant countries to a postmodern constellation of interwoven interests: There are you in me and me in you. In such a constellation, there will be no war of one nation against another, but wars of one nation against itself. For India and China, one should keep in mind that there are, and will be no excessive bilateral trade and investments.

In contradiction, there are too little trade and too few investments between the two great nations.

The second lesson India and China can learn from history of West Europe is related to the first lesson, however much more beyond it: Prosperity through trade, and trade through internal market. Around 60% of “foreign trade” takes place among the 15 old EU member states, thanks to the internal market in which the free movement of personal, goods, services and capital across borders of the member states is ensured.

What will India and China benefit from if there is an internal market among the two mega-states, and if it includes the ASEAN countries, Japan, Australia, South Korea, Taiwan, Hong Kong and more? It is possible since we now have good examples outside our region, but also good example such as ASEAN. And the ASEAN and the recent ASEAN-China Free Trade Zone set a good sound foundation for further developing and extending an internal market for the above mentioned countries. A larger free trade zone or a larger internal market can imply a 50%, 60% or even more of internalized “foreign trade” within the zone.

Turning disadvantages into advantages There is a large degree of complementarities in the economies of India and China. India’s development is characterized through the reliance on consumption rather than investment, on domestic demand rather than exports, on service sector rather than manufacturing, on high-tech industries rather than labor-intensive lowtech industries. In contrast, China’s development is characterized through

her reliance on investment rather than consumption, on exports rather than domestic demand, on manufacturing rather than service, on labor-intensive low-tech industries rather than hightech industries. So the growth patterns of India and China are quite the opposite of each other.

If there is trade, it always implies the existence of relative advantages and mutual benefits. Otherwise the trade won’t take place. These relative advantages can involve absolute advantages, comparative advantages, and competitive advantages, or firstmover advantage, late-developing advantage, intra- and cross-industrial trade, and so on. What two nations

trary, we believe both of us are winners and strong.

have to do is to take advantage of their respective advantages in full scale.

Protectionism is often to protect the existing industrial structure and thus the backwardness and the weakness of the economy. It prolongs the existence of the disadvantages of their respective economy. The best way for getting out of such a “race to the bottom” game is to open the market and reinforce competition. This is the way we can turn our respective disadvantages into advantages. Both nations should have the courage to open the market, just because both have strong sentiments of “national dignity”: Each of us doesn’t believe that both of us are losers or the weak one. On the con-

by a large mass of analysts, been called the “Chinese Miracle.” Similarly, the remarkable economic success of India since the early 1990s was praised by some as the “Indian Miracle.” It is necessary to explain what happened to China in some detail.

China’s path of reform is basically characterized by gradual reform and opening-up. In particular, China recognized the spontaneous experiments with the rural household responsibility system and extended the system across China, and thus adopted the least resistance path at the beginning of reform.

China enforced selective stabilization of currency value till 1994 by adopting foreign exchange certificates which val-

Behind the “Indian miracle” and the “Chinese miracle” I would like to argue that both the economic success of India and China is to a large extent to be traced back to the formation and preservation of a competitive order which doesn’t function fully, but is still in shaping and improving and subjects to be deteriorated if we don’t take care of it cautiously.

The Chinese reform began more than 10 years earlier than the Indian reform. The rapid economic development and transformation of Chinese society over the past three decades has,

November-December 2010  India-China Chronicle |11|

INFOCUS | INDIA-CHINA | TRADE

ues was preserved by a fixed exchange rate in term of the US dollar, and by enforcing the Budget Law to prevent government’s borrowing from the Central Bank to cut the linkage of the borrowing to inflation. China gradually introduced private property rights which emerged spontaneously through their recognition and through “silent” privatization of most of the state owned and collective enterprises. China selectively adopted open market, first for foreign companies and capital, then for collective enterprises, or township and village enterprises (TVEs), and finally for the private sector. China didn’t enforce the reform of state owned enterprises in the beginning, but gradually introduced competition between

state owned enterprises and TVEs as newcomers and then that among SOEs, TVEs and private enterprises as newcomers. In this regard, China also gradually introduced to some degree freedom of contract and strengthened to some extent personal and corporate liability. Further, China ensured selectively the consistency and continuity of economic policy, especially for foreign direct investments (FDIs). The ban on the domestic sale of foreign capital involved enterprises which happened in India never happened in China.

Although this kind of step-by-step, selectively opening-up approach has been successful, it cannot be consid-

ered as the mystery and key point of the “Chinese Miracle.” Rather, it should be pointed out that it liberated the productive forces to some extent.

In economic terms, it improves the efficiency of resource allocation and expands the production frontier, but still limits further enhancement for resource allocation and thus further expansion of production frontier.

The above reform approaches, no matter they were of the nature of spontaneous order or piecemeal social engineering, rendered in general a higher degree of economic freedom and allowed market actors a larger free space of division of labour and knowledge.

Many reform approaches as mentioned above appear to be government-

led, but in practice it is due to factors both inside and outside of government control. At least until the mid-2003, the government had mainly chosen to quit from the economic sector to a certain extent, especially the competitive sector; removed a large number of restrictions, provided a policy and regulations environment that was beneficial for the development of industries and commerce and created and sustained, in most part of the competitive sector a relatively well functioning but still “ailing” competition order which has been favorable to performance competition and economic growth.

However, there is a certain distance,

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or even gap in quality between the poor competitive order which would relatively promote performance competition and one that would absolutely promote performance competition.

For example, till now, China has been using state power to depress private property rights in “important industries” as emphasized by government, i.e., the banking sector, securities sector, and other service sectors.

In contrast, the emergence of Germany’s “Economic Miracle” is related to the establishment and preserving of a competitive order which would absolutely impel performance competition in its early stage of social market economy. West Germany stressed the maintenance of private property rights since the establishing of the state. The thought of a competitive order in Germany stemmed from the Freiburg School, which is the most important source for the early stage of the social market economy in Germany. The other two sources are Christian and Socialist ideology. Eucken, founder of the Freiburg School, asserts that the establishment of a competitive order is the only road leading to prosperity.

And the principles that constitute the competitive order are: the primacy of monetary policy (stability of currency value), private property rights, open market, free contract, liability (Haftung) and the consistency and continuity of economic policy. The market economy and competition order has laid a direct institutional foundation for Germany’s “economic miracle.”

The competition order of China, which has still much deficiency, could be seen as an unintended approximation to or imitation of the competition order of the early German social market economy - a benchmark that would completely promote performance competition. Nevertheless, the poor competition order of China has still provided a space for bringing into play the entrepreneurship in large scale.

Similar as in China, India’s economy was once heavily dependent on agriculture. It evolved under social democratic-based policies from 1947 to 1991. The economy was characterized at that time by extensive regulation, protectionism, public ownership,

pervasive corruption and slow growth. Economic reforms in 1991 dramatically altered economic policy to privatize state-owned enterprises and to promote competition and investment.

Since 1991, with continuing economic liberalization, India moved towards a market-based economy. The focus has since changed from one based on selfsufficiency to one based on services and trade with other countries. A revival of economic reforms and better economic policy in the 2000s accelerated India’s economic growth rate. In recent years, Indian cities have continued to deregulate their business and economy. India’s economy has expanded in recent years into the industry and services. By 2008, India

which is characterized by preserving a certain degree of economic freedom in combination with political suppression. However, the above analysis shows there is a learning of “Western Model” behind the “Chinese Model”, which is implied that the “Chinese Model” is rather an illusion or a misinterpretation.

For productive forces to become fully liberated, China has to abandon the particularistic and selective approach to reform: It has to base a set of rules and procedures to better preserve currency value, protect property rights which implies reform of SOEs, open the market, enforce freedom of contract, enhance personal and corporate liability, and implement

As related to trade, it is utmost important to reduce trade barriers of any kind. A triple track path toward trade liberalization can be established and enforced: First, push forward trade liberalization in the WTO framework; Second, promote regional economic integration and the formation of an internal market between India and China, or substantialize it by expanding the ASEAN-China Free Trade Zone to India (however, one should avoid to build a protectionist front consisting of “ins” against “outs”); Third, proclaim unilateral trade liberalization in one’s own country.

Philosopher Immanuel Kant once argued that peace can neither be inaugurated nor secured without a general

a fair and consistent economic policy.

This step implies that China has to launch an essential political reform that President Hu Jintao and Premier Wen Jiabao proclaimed in Shenzhen respectively. Without political reform, it is less certain that China will attain a distinctly high per capita GDP. In contrast to China, India, as the world’s largest democracy, doesn’t have the necessity of a political reform as an obstacle that China is facing. It is also uncertain that whether the Party and the government in China really enforces political reform. In this regard, China’s future is still dismal while India’s future is brilliant and promising.

agreement between nations. He thus believed that a particular kind of league, which might call a “pacific federation” (foedus pacificaum), is required.

This applies to India-China space, the South and East Asian Region, or even the Asian-Pacific Region. 

According to ancient Chinese philosophy, there are in everything elements of Yin (negative) and Yang (positive). The Yin can be turned to Yang, and vice versa. This applies also to the trade relationship between China and India. had established itself as the world’s second-fastest growing economy.

In comparison with the history of the “Indian Miracle” and that of “Chinese Miracle”, India and China have approximated or simulated, intended or unintended, the competition order elaborated by Eucken and enforced in Germany and the US. Actually, there is no escape from this path for any country in the world if it seeks to become prosperous and developed.

Working Together for a Better Future Recently, there was a hot debate on the so called “Chinese Model”

Feng Xingyuan is Deputy Director of Unirule Institute of Economics and Professor of Economics of Chinese Academy of Social Sciences. Email: xingyuanfeng@gmail.com.

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Education in present-day China

Policy & Paradox |14| India-China Chronicle  November-December 2010

China may have largely eliminated illiteracy and encouraged primary education but investment in higher education lags. China’s high levels of economic growth since reform have been achieved in spite of the existence of relatively few college-trained managers and professions.

Imagine if it did?

An exhaustive look at China’s education system and what ails it.

India-China Chronicle |15|

INFOCUS | CHINA | EDUCATION

Sreemati Chakrabarti

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ducation and knowledge have been greatly valued in China since time immemorial. In its 5000 year old history China has had a tradition of respecting and honouring teachers and scholars. Education in ancient China was of a high quality and therefore Chinese civilization had made great advances and also contributed to world civilization. But for a variety of reasons education remained limited to the wealthy classes and there was no concept of mass education till about the later half of the 19th century.

From this period to about 1949, due to the semi-colonial and semi-feudal nature of Chinese society, modern education in China lagged behind the rest of the world. The literacy rate in China was below 20 per cent at the time of Liberation in 1949 but today it stands at more than 90 per cent. A significant leap by any yardstick!

Soon after its inception in1921 the Communist Party of China began literacy campaigns for the masses and set up an Education Department for the purpose. The communist leadership’s stress on education and its commitment for its dissemination is clearly evident from the fact that during the revolutionary struggle, whenever there was absence of hostilities, literacy-related work was carried out by party workers particularly among peasants. This is remarkable as the party was struggling for survival up till 1949 when China came under its rule.

Formal and informal primary schools were set up all over the country. Education campaigns were led by mass organizations i.e. the party’s peasant, youth and women’s associations and much of the work was done by volunteers. Here it must be mentioned that China, unlike India, did not have

a neutral apolitical bureaucracy to implement the state’s policies. This task was the responsibility of the cadres of the party who were also the officials.

In about 10 years there was massive improvement in literacy rates in rural as well as urban China and along with this, as a result of the spread of literacy, basic healthcare also showed great strides.

The Chinese succeeded in spreading literacy through various innovative measures particularly in the countryside. This included setting up of night schools, spare time schools, off-season schools, mobile schools, teacher-athome schools and so forth. Expenses for these schools, which were anyway meagre as volunteer-teachers took no salaries, were borne by the local community. Women and peasants who comprised the overwhelming number of illiterates were the primary beneficiaries of these measures. In higher education though achievements were not as striking yet some noteworthy developments did take place in the 1950s when Soviet influence on China was deep.

Remote areas of China which did not have institutions of higher education saw the setting up of universities and engineering institutes.

Since the Soviet-supported First Five Year-Plan with heavy emphasis on industrialization, required a large pool of engineers and technicians, many technical institutions were established all over the country. Also comprehensive universities were done away with and in their place specialized institutions of higher education were created. By the mid-fifties only 14 comprehensive universities survived.

The period of 1958 to 1978 was a period of political and economic radicalism which had an adverse effect on higher education. During the Cultural Revolution (1966-76) intellectuals

While most people can read and write yet the average Chinese does not possess high levels of education or skills which the country requires to sustain its growth and development. |16| India-China Chronicle  November-December 2010

and universities became the political targets of the Maoists. This was so because Maoist ideology saw them as promoting elitism. The intelligentsia in China was subjected to unprecedented persecution during this 10-year period.

This had a very adverse effect on the state of China’s education because for these 10 years most schools, colleges and universities particularly in urban China remained practically shut.

In the post-Mao period, however, as an effort to win back the confidence of the educated class many far-reaching measures have been taken to boost higher education. Private institutions of higher education have mushroomed all over the country. Even state-run institutions are receiving massive funding to develop their infrastructure and to hire very qualified faculty. For main-

taining its speedy growth and development China needs a vast pool of not just scientists, engineers, doctors and teachers but also managers, executives, accountants, lawyers, etc. Today university campuses in China are vibrant.

Libraries and laboratories are being modernized, a variety of disciplines introduced, international exchanges increased and overall research developed remarkably.

Basic or primary education in China today constitutes of pre-school education, nine year compulsory education, three years of senior secondary education, four-years of undergraduate education. Master’s courses are mostly for two years particularly for professional courses but are sometimes integrated with the doctoral programme mainly in the sciences and social sci-

ences. (Structurally the Chinese system of education resembles that of the United States whereas the Indian system follows the British pattern). In addition to these there are schools for special education of the disabled and adult illiterates. The China Radio and Television University imparts distance education to millions of students who cannot enter universities. Similarly there are vocational schools which provide specialized technical education for two years to students who cannot enter secondary schools. Except for nine years of compulsory education students have to pass an entrance test to enter high school and again for entering college/ university.

To ensure education for all up to the junior middle school level the Compulsory Education Law was passed in 1985,

when a series of educational reforms were undertaken. Despite the fact that there was no law for basic education, in the pre-reform Maoist period there was vast advancement in basic literacy.

Why was then a law needed later?

Although without directly acknowledging the causes for this, the government admitted that there were high drop-out rates in primary schools, particularly in the fourth, fifth and sixth years. (Enrolment rates, however, in the first year of primary school is more than 95 per cent.) The drop-out rates alarmed the government which then passed the Law for Compulsory Education for up to nine years in 1986.

Findings of independent researchers have revealed that there were two important reasons why drop-out rates increased from the early 1980s.

First, in the post-Mao period agriculture was de-collectivized.

Families were granted lease for individual plots of land to farm on and after paying taxes to the state were allowed to sell the surplus in the open market. More produce meant more income but also more hands to work in the family farms. Parents began to withdraw their children from school so that their labour could be used to increase family income. Such a thing was simply not possible during the ‘Commune system’ of the Maoist era where only adults worked in the collectivized farms.

Second, with increased opening up of the economy to both domestic and foreign business a large number of small and big entrepreneurs emerged all over China. In rural areas many township and village industries were set up by these entrepreneurs. On the one hand, these provided employments to large numbers of villagers for whom farming was no longer providing livelihood, on the other, many children below the age of fourteen were hired in these nonstate, privately-owned ventures. During the Mao period child labour had almost completely disappeared although it was rampant in the pre-1949 period.

Now the situation in China greatly resembles that of India where though there are laws against child labour yet they cannot be enforced. Poor families prefer to send their children to work

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INFOCUS | CHINA | EDUCATION

rather than to school. The only difference with India is that so far one does not see child labour in the cities.

There are, however, other reasons too for the high drop-out rate in rural China’s primary schools. During my field research on “China’s Compulsory Education Law,” with the help of some unpublished research reports of UNICEF (Beijing), I found some interesting but not totally unexpected facts.

In poor rural families parents consider nine years of education as wasteful because good jobs are available to the urban, university educated. Parents who are not so poor also prefer to withdraw their children half way through primary education as the system of entrance test is no guarantee that even a fairly good student would be able to pass it.

Not all those who complete nine-years of compulsory education can enter high school. Less than half of them pass the test to study in secondary schools.

Also there are not enough schools and qualified teachers for secondary education. The entrance test is only an eliminating process.

Similarly all those who complete high school do not enter state supported universities without passing a national entrance examination. According to unofficial statistics only about 20 per cent of examinees qualify to enter any stream – medicine, engineering, law, science or arts. Moreover, now, unlike the Maoist era, higher education is expensive. Of course there are scholarships and bank loans for competent students. After graduation from universities, again unlike the Mao period, there are no employment guarantees.

But those with degrees in the so-called market-friendly subjects – Business Management, Economics, Computers, Law. Accountancy, Foreign Language, etc. find it easy to get jobs. Those who study Chinese Literature, History, Philosophy, Marxism-Leninism i.e. market unfriendly subjects, are not so fortunate.

Although nine-years of basic education in rural China does not require tuition fees yet all kinds of miscellaneous fees for books, building, extra-curricular activities and so forth are charged by individual schools and this dissuades parents from continuing |18| India-China Chronicle  November-December 2010

with children’s education. The poorer the village, the higher the expenses! Although China is not a federal state yet education remains in the purview of the provinces which give authority to the counties and villages to implement the goals of primary education. There is, therefore, no uniformity in administration and implementation of laws.

Other reasons why villagers in China withdraw their children from schools includes poor quality of teachers. Salaries are so low that qualified people stay away from this profession. Many who become teachers quit their jobs for lucrative offers. Former teachers who have become taxi drivers or barmaids earn four to five times as much as they would have earned as teachers. The Chinese government has set up many teacher training institutions of higher learning called ‘Normal Universities’ so that the quality of school education improves but most of the graduates prefer to stay in the cities and work. To improve the content of education in recent years the central government in China has invested resources in many nation-wide teacher training and curriculum improvement programmes.

Their results are yet to be seen.

The primary aim of passing the compulsory Education Law was to achieve nearly hundred per cent literacy. In China’s countryside and in its minority regions like Tibet and Xinjiang this remains an unachieved goal.

Although there have been a few isolat-

ed cases where parents have been sent to jail for keeping their children away from school but officials have told me that this was not a sensible solution to the problem particularly in poor areas.

The law is more of an enabling provision to ensure improvement in rural literacy rates. Full implementation is not possible given the socio-economic conditions in the rural areas of the poor provinces of China.

In the cities, however, the situation is drastically different. There is near hundred per cent literacy. The average education level of a Chinese is about five years. While most people can read and write yet the average Chinese does not possess high levels of education or skills which the country requires to sustain its growth and development. In rural areas large numbers of peasants are moving away from farming into construction, food processing, transportation and other enterprises and desperately need knowledge and skills to develop their business and survive amid severe competition. Here it must be mentioned that not all school-drop outs remain low-paid wage earners all their lives. Many choose to engage in business and there are many examples of such people who have succeeded greatly in business – many are heroes or role models in their villages. Unlike the past when entrepreneurs were viewed with contempt today they elicit awe and admiration.

For an all-round success in its economic development strategy and to

meet the challenges of globalization the Chinese require not just a literate population in the industrial work force but also a pool of highly qualified professionals. For this, institutions of higher education required massive support and some amount of autonomy. Since 1985 the government relaxed control over universities over such things as personnel, funding, student enrollment, job assignment and foreign academic exchange. Flexibility provided many opportunities for university development. It was officially stated that universities in China should have three functions: teaching, research and economic activity. Before

with increased opening up of the economy to both domestic and foreign business a large number of small and big entrepreneurs emerged all over China. In rural areas many township and village industries were set up by these entrepreneurs. On the one hand, these provided employments to large numbers of villagers for whom farming was no longer providing livelihood, on the other, many children below the age of fourteen were hired in these non-state, privately-owned ventures. the situation in China greatly resembles that of India where though there are laws against child labour yet they cannot be enforced. Poor families prefer to send their children to work rather than to school.

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Since the Soviet-supported First Five Year-Plan with heavy emphasis on industrialization, required a large pool of engineers and technicians, many technical institutions were established all over the country. Also comprehensive universities were done away with and in their place specialized institutions of higher education were created. By the mid-fifties only 14 comprehensive universities survived. the post-Mao reforms all universities were run either by the national or provincial governments. In 1985 key cities were given the authority to establish universities and other tertiary institutions. Private institutions of higher learning were also allowed as the existing state-owned universities were in no position to absorb the large numbers of aspirants to higher education.

High tuition fees are no deterrent to the number of aspirants for university education. This is so because in urban China where nearly 35 per cent of the people live there are innumerable people who have the income to put their children through college.

Funds for higher education come from the following sources: government allocation, tuition fees, and private entrepreneurs from within China and also from Hong Kong and Taiwan, and aid from international financial institutions. There is, however, another source called ‘University Reserve Funds’. These are funds raised by the universities by (a) running factories, shops, bars, restaurants, internet cafes, hotels, kindergarten schools, crèches and so on (b) selling research to industrial establishments (c) contracts and commissions for research and training (d) faculty working in outside agencies as consultants, project directors, translators/interpreters. While this has improved the financial status of many academics it has visible negative sideeffects. Profit-syndrome has hit the campuses of China. In many instances teaching and research have been sidelined in favour of money-making ventures. Disparities have emerged between universities, between departments within universities and also between faculty members within one department. Senior university admin-

istrators handling large sums of money have been accused of embezzlement and fraud. This is strikingly similar to the situation in India.

Undoubtedly, higher education is making great strides in China today.

In 1949, there were only 205 higher education institutions, now the number has exceeded 2000. A major boost to higher education came in 1995 when the Ministry of Education of the People’s Republic of China initiated a new endeavour called ‘Project 211’.

The objective was to strengthen about 100 institutions of higher education and key disciplinary areas as a national priority for the 21st century. The most crucial aspect of this project has been massive funding to these universities to hire the best possible faculty and develop world-class university infra-

|20| India-China Chronicle  November-December 2010

structure – libraries, laboratories, stateof-the art class rooms, sports facilities.

Access to international scholarship through faculty and student exchange, joint collaborations for research with foreign universities, joint conferences and seminars, etc. are all part of Project 211. Again in 1998, another initiative called Project 985 was implemented in about 40 universities. Under this funding was to be used primarily for faculty members to attend conferences abroad and to invite foreign scholars to lecture in China. To make sure that liberal arts and humanities are not neglected, it is stipulated that 15 per cent of this funding has to be utilized for such disciplines.

In spite of all this there is still a huge gap between the requirements of a speedily growing economy and the supply of literate labourers for the industries, on the one hand, and qualified personnel for the service sector, on the other. For China there is no scope of prioritizing between basic education and tertiary education as both require advancing simultaneously. Looking at the social impact of these policies, reforms in Chinese education have not only exacerbated the existing inequalities but also created new ones. Reforms which preceded globalization created disparities and unevenness in all levels of education but globalization has further aggravated the situation. 

Sreemati Chakrabarti is Professor of Chinese Studies at the Department of East Asian Studies, University of Delhi and Honorary Director, Institute of Chinese Studies, Delhi.

S

ince my last write-up, I have shifted base to the other side of the Himalayas – literally beyond the Great Wall. And I’m soaking in all that is Chinese and new to me. And so I will try and give you a flavor of life as I see it unfold on the streets of China. Having kept itself shut out from rest of the world for long, China has always been a matter of curiosity. Having been a student of China, I have been extremely curious about the Chinese way of living.

Simple questions seem to keep popping in my head about what the Chinese people do all day? How they live?

What is Chinese family like? How is a Chinese teenager’s life different from that of an Indian? How is a Chinese marriage celebrated? The list is endless…

There are many “China experts” who comment on the Chinese economy, military, strategy and foreign policy but Indians are largely ignorant about the Chinese aam aadmi or laobaixing as the Chinese would say. Well language seems to be the greatest barrier due to which, transmission of popular culture is as yet limited. Therefore, through my limited means, I will humbly attempt to pass on to you all that I see and hear on my China sojourn. (And since I will look at them from an Indian point of view, the column will largely stress on what I find different here).

(kulcha like bun with different fillings) or fried Chinese bread with tofu-soup and the like. Most Chinese are atheists, or not very religious, and they do not seem to feel it’s necessary to bathe in the morning. So most “morning” ablutions are done during the day, and a bath is in the evening – after a hard day’s work.

While on public transport such as the metro, the Chinese young can be seen pouring over mobiles/Apple iphone 4/ ipads and other such electronic devices that allow them to either read internet novels or play games. I had not noticed this trend in our Delhi Metro where most are busy just listening to music.

Lunch again is not much of an affair. If not at home, then lunch is eaten at the workplace, (pretty much like everywhere else). Since dinner is the time when the whole family gets together, it is an important meal.

During their free time in the day, a lot of Chinese might watch TV or play cards. The younger generation prefers to play PC games or go online. If it’s the weekend, they might get together with friends to either play cards or Mahjong; also eat out at a comparatively good restaurant. The older generation prefers to stay home and meet with family or play cards and Mahjong.

Chinese food habits are very different from us. Though they also value family-get togethers, many things are starkly different. The first and very conspicuous fact is that the Chinese are strict non-vegetarians. Though they eat a lot of vegetables (many of their meat dishes are prepared with lots of vegetables), it is very hard to find a stand-alone vegetarian dish as the main course, apart from tofu. Also, the much valued Indian concept of jhootha does not exist in China. Though they will not share the same bottle of drinking water, while visiting a Chinese home, the host might serve the guest using his chopsticks to extend his warm hospitality!

But on a wider canvas, many aspects of Chinese and Indian family life are similar. For an Indian, especially those from the East, it’s not much of a cultural shock. It might even seem as if the “Hindi-Chini” is actually quite “bhai-bhai”.

Anyway, Zai jian for now! 

Shanghai Express

The life of a Chinese working person in Shanghai

Most middle-class Chinese do not use a personal automobile – they either cannot afford one or even if they can, public transport happens to be more convenient. Therefore, they usually wake up latest by seven thirty in the morning. Unlike Indian families where breakfast is usually “on bed” or at the table with the English hangover of bread, butter, and eggs, the Chinese generally buy breakfast; and eat it on way to work.

Also, an English breakfast is quite alien, especially for the middle class. Most eat traditional Chinese snacks like the mantou

Sumelika Bhattacharyya Research analyst ICEC. Sumelika will be writing a regular column which will aim to introduce China and its culture to India

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INFOCUS | CHINA | TOURISM-ENVIRONMENT

China’s best kept secret Yang Shengming

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fter many research trips to Guizhou, English scholar, Gina Corrigan, remarked, “Guizhou is one of China’s lesser known provinces, and best kept secrets.” In many parts of the world, the advance of modern culture has caused the rapid disappearance of ancient civilizations bringing some almost to extinction.

However, in Guizhou, the natural and cultural environment remains relatively untouched. The most outstanding trait of its cultural resources is its harmony between people and environment. Even today, much of Guizhou’s amazing cultural heritage remains well preserved, making the whole province a huge living ecological and cultural museum. Owing to the well-preserved condition of the local ecology and culture, China and Norway’s governments have worked together to establish Ecological Museums in Liuzhi Suoga Village, Zhenshan Village, Jinping Longli Ancient Town, and Liping Tang’an.

Guizhou has no plains area. The land area is 87% mountainous, and 10% hills, of which 73% are karst land formations, making it well worthy of

|22| India-China Chronicle  November-December 2010

the name ‘The Karst Mountain Kingdom’. Many ethnic minority peoples live in the area; over 13 million people from 49 recognized ethnic groups, making up 37.85% of the province’s population. Raised in this mountain environment the people have developed their own unique mountain lifestyles and village customs, with astonishing and unusual architectural styles and cultural arts.

Hidden in the lifestyle and farming methods of these many ethnic groups is a diversity of ancient historical traditions, making this a region “A Thousand Islands of Culture.” Every aspect of the province’s culture carries the deep impression and full-bodied flavour of the wild mountains, resulting in the emergence of a mountain culture unlike any other. This blending of ageold history with colourful cultures has become the most outstanding characteristic of Guizhou.

Wherever you go in modern Guizhou, you can experience the astonishing splendour of Miao finery, rites and festivals, songs and dancing; riverside Buyi villages; the pure sound of Dong songs sung at the foot of village drum towers or flower bridges; the exquisite

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INFOCUS | CHINA | TOURISM-ENVIRONMENT

beauty of the Miao people’s dance; the resplendent Yi language stele and cliff rubbings of the Yi people; mysterious ‘living fossils’ of ancient human culture, for example, the Yi people’s Cuotaiji (creation story drama), the Tujia people’s Nuo sacrificial ceremony, dance and drama, the Tunpu people’s ‘ground opera’; China’s only Shui people community, ‘Shui Shu’, the last remnant of the Shui people’s ancient pictographic language; and relics of the Tunpu people’s Ming Dynasty culture.

Guizhou remains as a treasure chest of living traditional minority arts, a museum of every day traditional customs displaying human history and culture. Ancient industrial practices continue. Ancient papermaking mills and papermaking skills, spinning, weaving, felt making, wax art, indigo batik, floral embroidery, vintage alcohol, tea production, along with many styles of ancestor worship and sacrificial rituals, festivals and rites, arts and crafts, oral traditions, music and dancing, historical legends, ecological knowledge, production skills and technology, lifestyle and customs, traditional community structures, and faiths are still alive and well.

In ancient times, Guizhou’s mid west region was the ancient Mediterranean Sea, a shallow sea area and perfect home for ancient living things. More than 4000 different types of biological

fossils have been discovered in the area.

A large number have verified that Guizhou was an important fountain head in the emergence of civilisation, with a resplendent Stone Age history and a mysterious ancient kingdom called Ye Lang. A strong historical influence of Yang Ming philosophy, an important role in the Long March and Japanese resistance, unique cuisine, alcohol and tea drinking culture, all add even more to the diversity and uniqueness of Guizhou’s cultural heritage.

Proactive Preservation, Productive Use of Resources There are two extremes in attitude towards the treatment of cultural heritage. One stresses protection, at the expense of development, an attitude of passive isolation that emphasizes not touching and the preservation of the resources intact; the second stresses

Hidden in the lifestyle and farming methods of these many ethnic groups is a diversity of ancient historical traditions, making this region A Thousand Islands of Culture.

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development at the expense of culture and for the pursuit of ‘modern culture’ will cast aside or cause the destruction of cultural heritage. Countless examples already prove that passive isolation leads to a lack of reality, and doesn’t result in effective protection of cultural heritage.

On the other hand, blind pursuit of development results in destruction of culture and does not in fact result in sustainable development. Based on a premise of protection, use of cultural resources, especially by a sustainably developed tourism industry, should be an effective proactive strategy for the protection of cultural heritage.

In practice, the utilization of cultural resources is a proactive and more effective attitude and method for the preservation of cultural heritage. Owing to the slow economic and social development in the ethnic minority regions, there is a big difference between the level of modernization there compared to the more developed regions, placing these ethnic minority cultures in a very weak position. If these people are not aware of the value of their own culture, they will look lightly on it and easily forsake it, resulting in their

cultures being rapidly swept away in the tide of assimilation into the mainstream culture. Whereas, if these vulnerable minority peoples are able to make some money and achieve some development through the use of their own cultural heritage, then their cultural heritage could become a resource for poverty alleviation and creation of wealth, their self confidence and strength as a people would be greatly strengthened. They would gain a completely new insight into the value of their own history and culture. Becoming consciously aware of the need for their culture’s protection, they would initiate protection measures, becoming masters of their culture in the truest sense. Proactive use of resources and a reasoned approach to cultural protection will certainly bring about a new attitude towards both resources and development.

The world already has many successful examples of accelerating protection of cultural resources through making use of cultural heritage in the development of the tourism industry. Guizhou has also been working hard in the search for a pragmatic way forward.

Strategies for Sustainable Use of Cultural Resources Through our experiences we have gained a profound understanding

that sustainable development of the tourism industry and sustainable use of resources will only be possible if top priority is given to the protection of resources. Intangible and oral cultural heritages are relatively difficult to maintain compared to the physical cultural heritage. Comprehensive laws and regulations, experience and technologies already exist to protect the physical cultural heritage, such as ancient buildings, historical sites, or archeological artifacts. However, the situation is very different for elements of the non-physical and oral cultural legacy related to the lifestyle and production methods of the local community, such as traditional rites, customs, folk songs, dramas and dances. Once these have been changed, there is no guarantee that they will not be lost forever. Therefore, finding a way to make use of ethnic cultural resources in the development

Guizhou is one of the most agriculturally dependent provinces in China. It’s most precious, unique and irreplaceable resources are its non-physical and oral cultural heritage.

of the tourism industry, while at the same time successfully protecting the cultural heritage, is indeed a difficult worldwide question. Guizhou is one of the most agriculturally dependent provinces in China. It’s most precious, unique and irreplaceable resources are those aspects of the non-physical and oral cultural heritage of the people that are widespread throughout the countryside. These are also the resources which are most fragile.

Our Aims Through the sustainable development of the tourism industry, and on the basis of both utilization and protection of cultural resources, further advance the harmony between man and nature and the establishment of a green ecological Guizhou. 

Yang Shengming is an expert on travel and tourism

November-December 2010  India-China Chronicle |25|

Radical Strokes Your first step into the Chinese script

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hinese writing is seen everywhere as Chinese characters serve as a potent decorative item. To find out how this writing came into being is an interesting journey.

Chinese is a pictographic language and the complexities of the Chinese (written) language multiply for a non Chinese when one learns that there are no alphabets to begin with. It is not like many Indo-European languages where alphabets are strung together to form words. For everything that exists in the world, from things to people to phenomenon, Chinese language has denoted a special character to it. Lu Xun, a well known modern Chinese writer who was deeply influenced

by Chinese literature, had once put the blame of China’s backwardness on the Chinese written script. He believed if Chinese characters were our pride, they are also an obstacle for the larger illiterate masses.

The Chinese characters that I am referring to here are basically pictograms or symbols that are sometimes based on the shape/appearance of the thing and sometimes crafted to represent a different meaning. There are six classified groups

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( ) for writing Chinese characters. The first one is the primary pictographs or pictographic characters which are based on the shape and appearance of the objects they represented.

The classical characters of horse ( ), vehicle ( ) and mouth ( ) are few examples of the primary pictographs.

The second category is Self explanatory and Indicative characters. Under this category, Chinese characters are divided into two. They are sometimes the symbolic marks and sometimes another stroke/mark is added to the already existing character to change its meaning and make a new character. For example, in the character of tree ‘mu’ ( ) if we add another stroke ‘yi’ ( ) either on the top or bottom of it, it changes its meaning. If we add it on top of the character for ‘mu’, it becomes ‘mo’ ( ) which means ‘finish or decline’ since the logic applied here is a tree is finished if you cut it. On the other hand, if we add it to bottom of ‘mu’, it becomes ‘ben’ ( ) which means ‘roots’.

There are Self explanatory characters which are very easy to recognize such as one ( ), two ( ) and three ( ). The indicative characters are father ( ) (the strokes at the bottom shows the father beating the son) to divide ( ) (the bottom has a ‘knife’ left to divide) and right ( ) (‘mouth’ at the bottom to show that its ‘right hand’ we use for eating) etc.

The third category is Associative compounds or Ideographs which are formed by combining two or more elements, each with a meaning of its own to create a new meaning. The examples can be the character for home/family ‘jia’ ( ) and ‘kan’ which means to see ( ). In the character for home/ family it has a roof radical followed by character of pig at the bottom, explaining a concept of old houses where men used to stay up and pigs used to be in the basement. In the character ‘to see’ there’s a character of hand above the character of eyes explaining the posture when you see something.

The fourth category is Pictophonatic characters or Ideophonatic compounds which has one element explaining the

meaning and the other lending the sound. For an example, ‘zhui’ ( ) will be common in all the following characters which have different meanings, ‘dui’ ( ) which has soil radical means dump or pile, ‘tui’ ( ) which has a hand radical means to push, ‘chui’ ( ) which has a metal radical means hammer and lastly, ‘shui’ ( ) which has a speech radical means who. In all the above characters, the radical explains the meaning and ‘zhui’ provides the sound.

The fifth category is Phonetic loan characters. They are adopted to represent homophones or words which have the same sound.

To illustrate, the character of ‘shu’ ( ) which means book and to write, also, the character of ‘ri’ ( ) which means day and sun at the same time. These words have the same sound but sometimes, can have different characters too, such as: ‘shu’ have two different characters for expressing ‘uncle’ ( ) and ‘beans’ ( ).

The sixth category is of Mutually explanatory or Synonymous characters. For example the character for old ‘lao’ ( ) and the character for aged, long life ‘kao’ ( ), are almost similar in their usage and can be interchanged. There are three theories that some Chinese characters fall into one category based on its shape, sound and meaning. So, the above mentioned example also illustrate that both ‘lao’ and ‘kao’ should be under one category because they fall under the same radical ‘lao’ ( ). Another example of this kind can be ‘dian’ ( ) and ‘ding’ ( ) where the right part is common in both the characters and therefore, they should be under one category, even though they are not similar in sound and meaning. Another example of this kind can be ‘wu’ ( ) which means military and ( ) which means dance having the same sound.

‘Classical Chinese’ was later simplified and took upon shapes which bore no resemblance to the shape of the objects they represented.

The new pictograms became distanced from the earlier realistic representations. After many modifications, ‘Simplified Chinese’ is compatible and comparatively far easier to learn. However, initially, it is always a challenge to memorize all the characters as they no longer appear similar to the picture/drawing of the objects they represent.

Even with a simplified version of the lan-

guage, Chinese remains as one of the toughest languages in the world for its complex and vast script. During my days in Shanghai in 2005, many times it happened that when I didn’t understand a Chinese character in the newspaper, I would carry it to my Chinese friends studying at my university and they would be of no help. Their reply varied from: “I don’t know”, “I haven’t seen this word ever” to “Why do you need to look for this word?”

It was then I realized that it is also very common for a native Chinese to not know many Chinese characters. There are approximately sixty thousand odd Chinese characters in the Chinese script, and definitely not all Chinese know all of them. A native Chinese is expected to know an average of eight thousand to ten thousand Chinese characters. The only way to learn Chinese characters is to memorize them arbitrarily one by one.

Both India and China, the world’s two largest nations with the fastest growing economies, also happen to be neighbours. In the backdrop of recent moves about strengthening cultural exchanges between the people of the two Asian giants, India has tentatively planned to introduce Mandarin as a part of the school curriculum. Since there’s a dire need for both countries to understand each other and open new avenues for people to people contact, this comes as pleasant news. 

MANJU HARA Manju Hara is a Research Scholar at Jawahar Lal Nehru University.

November-December 2010  India-China Chronicle |27|

BUSINESS

Sporting Spirit In the next two decades, together India and China will account for a quarter of global output.

The National Stadium or the Nest, Beijing |28| India-China Chronicle  November-December 2010

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BUSINESS

Amir Ullah Khan

T

here are many similarities between China and India. Both have emerged out of a long history of colonialism, with the largest populations in the world. Both have aimed at developing the economy and improving living standards of a vast majority of the population. In the development process, China and India have shared similar experiences, and till recently, their development levels were indeed very close to each other.

However, in the last decade or so, China seems to have surged ahead. In next two decades, together India and China will account for a quarter of global output.

India’s per capita income is upwards of 800 dollars per year while China’s is more than a1000 dollars. China has a mere 3 per cent population below the poverty line compared to India’s 22 per cent. China will receive 100 billion dollars of foreign direct investment this year while India should get more than 60 billion dollars. Indeed, in terms of foreign investment, China has even surpassed the US. Given the backdrop of sporting activities taking centre stage these days, it would be relevant to take a look at the sports sector in both countries.

In terms of sporting ability there is a wide gulf between the two. In the 1988 Olympics China won five gold medals, the same as Britain. In 2004 they won 32 gold medals, just three less than the US. They were fourth in the medal tally in 1996 Olympics, third in the 2000 Olympics, second in 2004 Olympics. Apart from hockey and a few fine performances in athletics, India’s record in the Olympics paints a dismal picture, for a country having a population of over a billion people.

Apart from the five gold medals, one silver medal and two bronzes in hockey, two silver medals in athletics, India has won bronzes for wrestling (Khashaba Dadasaheb Jadhav 1952 Helsinki), shooting (Dr Karni Singh 1964 Tokyo), tennis (Leander Paes 1996 Atlanta) and weightlifting (Karnam Malleswari 2000 Sydney).

In China, domestic sales of sporting goods reached 10 billion yuan ($1.2 billion) in 2001 and were worth over

Jawaharlal Nehru stadium, Delhi

$5b in 2009. Annual growth rate is estimated to be 12 to 15 per cent, slightly faster than the overall growth rate for the Chinese economy as a whole.

China currently has about 20,000 companies engaged in the sporting goods business, many of which are small-sized enterprises. According to a report from the World Sports Goods Association, 60 per cent of the sporting goods worldwide are made in China. National exports of sporting goods totalled US$7 billion last year, more than 15 times its sales income on the domestic market. Nearly 80 per cent of fitness shoes and 65 per cent of lowend sports equipment sold in the world market originate in China. China is the top producer for the US market (and world market) in both footwear and athletic apparel.

In India, the domestic market is worth Rs170 crores and foreign trade comprises roughly Rs 30 crores of imports and a little more than Rs200 crores of exports. The largest component comes from inflatable balls and the growth rate is upwards of 11 per cent. The Indian sports goods industry, exports nearly 60% of its total domestic

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output. The two cities of Jalandhar and Meerut together claim 75 to 80 % of the total domestic production. They have more than 3000 manufacturing units, including around 120 exporters.

Somewhat like China, the sports goods industry in India is largely concentrated in the cottage and small-scale sector.

The total number of persons working in the entire sports goods industry is about 30,000. The countries where Indian sports goods are exported to are the United Kingdom, Australia, the United States of America, Italy, Germany, South Africa, France, New Zealand, Netherlands and several Asian countries. The Indian sports goods industry manufactures 318 items.

China exports nearly seven times what India does and taking the exports of Hong Kong and Macau into account, China’s exports would be 10 times that of India’s. China enjoys an 8 per cent share of world trade, while India is at 1.5 per cent. But if seen closely, the gap does not seem as alarming as it is made out to be. While China is clearly miles ahead by way of infrastructure growth, India’s capital market is clearly more robust and certain. Telecom infrastruc-

ture is comparable in both countries, the education sector is equally strong and technology is leveraged almost at the same levels in each country’s industry. Chinese products are imported for their lower prices while Indian products are popular in Chinese markets. Trade between the two is now close to 20 billion dollars. While the whole world is experiencing economic slowdown, both India and China are growing rapidly. To take this forward, it is important the two countries stick to some basic rules of the game in the international trade context. First, the need to firmly practice the simple principles under the WTO-MFN treatment, the national treatment and compete. Both countries need to extend national treatment to goods and services traded and to investment from the other country.

Second is the issue of mutual benefit.

In the original Panchsheel agreement, one of the important principles was indeed mutual benefit. The anti dumping cases launched recently against each other do take away from this principle, and there is an urgent need for the commerce ministries in each country to sort this out mutually without

escalating the conflicts.

Third is to focus on the comparative advantages enjoyed by each economy.

The goods that are now being imported from China are chemical products, machinery, electronic goods, raw textiles, base metals and plants. China imports from India minerals, textiles, chemicals and jewellery. There is greater scope for complementarities in trade in goods and in services. The boom in the middle class Indian market provides a great opportunity for Chinese electronics and other fast moving consumer goods.

China on the other hand is among the world’s biggest markets for processed food, natural fruits and vegetables, minerals and handicrafts. Technical books and journals constitute another potential area for Indian exporters.

Medicinal plants, herbs and tropical products find a large market in China.

Finally it is also important to take serious note of the large amounts of mutual investment that is increasing rapidly. The tourism sector has also started benefiting from visits to each other’s countries. India’s service sector is well positioned to avail the opportunities in software development and

training work in China. China on the other hand has great expertise in engineering, particularly in the construction sector, that in India is on a never before ascendance and mutual cooperation there would indeed be beneficial.

The Indian capital market, the banking sector and insurance sectors, with their credibility and experience will find it easy to exploit the Chinese markets while the nascent food processing sector in India can well learn from and attract investment from China with its longer history in agricultural development. With both countries sitting on healthy foreign exchange reserves and no balance of payment issues in sight, it is the right time for mutual investments to take off.

Evolving from a rural agricultural society, China has become an urban, industrial one. Its vast size and unprecedented speed of industrialization has led to this. China’s transition from a closed economy to a market economy has also been unique with a combination of experimentation and incremental reforms leading to rapid progress.

The result has been a quadrupling of GDP since the late 1970s. During the last two decades, China’s nominal GDP ranking is sixth in the world. With China’s accelerated global integration by intensifying international linkages in trade, investment and finance, the implications have been tremendous.

Rapid growth in trade has resulted in high economic growth.

In fact, it is predicted that by 2020, China will account for 40 per cent of the increase in developing country imports, hence enhancing world trade.

And foreign investment has encouraged faster specialisation in labourintensive manufacturing and increased employment and incomes, while reducing poverty. 

Amir Ullah is the Dean and Director Research at Bangalore Management Academy

November-December 2010  India-China Chronicle |31|

INFOCUS | CHINA ECONOMY | COVER STORY

China Contrast

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INFOCUS | CHINA ECONOMY | COVER STORY

With great power comes great responsibility. China is the second largest economy in the world. While the West wants China to be part of the developed world, China is fighting shy. Why?

Mohammed Saqib is Fellow, Rajiv Gandhi Institute of Contemporary Studies, Rajiv Gandhi Foundation

Developed or Developing? he world has between 189 to 195 countries, depending upon what source you use. China’s current Gross Domestic Product (GDP) is $3,000 US per person . . . placing it 104th in the world. That’s not even in the top half of the world. So is China developing or developed?

China has achieved rapid economic development in the past 20 years and has been playing an increasingly significant role in the world. This has sparked off the debate. Some people in the West claim China has already become the engine pulling the world economy out of the mire of economic crisis. The reason why some people in the West try to cite China as a developed country is that they want China to shoulder a greater responsibility in coping with global issues, such as global warming.

China faces a host of lurking problems and obstacles in its economic and social development. Those claiming China to be a developed country evade crucial points and only dwell on what are favourable to their own argument, and their motive is to load heavier responsibilities on China’s shoulders so as to retard its development.

Sure, Beijing and Shanghai look sparkly and pretty. However, the eastern seaboard is more the exception than the rule. The media plays up the advancement of these mega-cities, but plays down the lesser developed parts of the same country. There are those in these cities too who are completely unaware that the whole country doesn’t have the same lifestyle that they do.

China’s rural-urban wealth gap was the widest last year since the nation launched its economic transformation three decades ago.

Urban per capita income stood at 17,175 yuan (US$2,500) in 2009, compared to 5,153 yuan in the countryside, a ratio of 3.33 to 1. The disparity, arising from rapid economic development in coastal areas and cities, while the vast interior has lagged behind, has become a key concern of China’s leaders as they seek to maintain social stability and prevent unrest.

T

Second largest Economy August 16 was a landmark for the People’s Republic of China 2010. For on that day, China went past Japan to become the second largest economy of the world, in terms of nominal |34| India-China Chronicle  November-December 2010

GDP. The second quarter output in China came in at $1.337 trillion against Japan’s $1.288 trillion and America’s $3.522 trillion. Earlier in February 2010, China had zipped past Germany as the world’s largest exporter with exports of USD 1.2 billion against Germany’s USD 1.12 billion in 2009. It heralded the arrival of the New China. China today also has the world’s largest foreign exchange reserves pegged at USD 2.45 trillion and is the world’s most attractive FDI destination with a more than 20 per cent year-on-year increase for the first seven months of this year, to $58.3 billion.

This year, although growth has begun to moderate a bit, China’s economy is forecast to expand by about 10.5 per cent, according to the IMF, which will amount to a remarkable three-decade streak of double-digit growth.

There is little disputing that under the direction

of the Communist Party, China has begun to reshape the way the global economy functions by virtue of its growing dominance of trade, its huge hoard of foreign exchange reserves and the United States government debt and its voracious appetite for oil, coal, iron ore and other natural resources. With its meteoric growth over the last three decades, it is becoming questionable whether the country can still be considered a developing country. Many in the West would like to believe that China is part of the developed world and so must share its global responsibility. But China is not willing to fall prey to western notions aimed at slowing down the Dragon.

China is clear that it is still a developing nation and has a long way to go before it can wear the mantle of the developed.

Parameters for Developed But what are the parameters that define developed or developing? And how does China fare compared to global indices of “developed.”

According to the United Nations (UN), a developed country is one that allows all its

Source: World Development Indicators database, 2009

citizens to enjoy a free and healthy life in a safe environment. The development of a country is measured with statistical indexes such as income per capita (per person) (GDP), life expectancy, rate of literacy, etc. The UN has developed the HDI, a compound indicator of the above statistics, to gauge the level of human development for countries where data is available.

The IMF classification system considers per capita income level, export diversification and degree of integration into the global financial system, as the three factors to determine whether a country is developed or developing.

In case of WTO, members announce for themselves whether they are “developed” or “developing” countries. A developing country status in the WTO brings with it certain rights.

There are for example provisions in some WTO agreements which provide developing countries with longer transition periods before they are required to fully implement the agreement and developing countries can also receive technical assistance. WTO members have provisions to safeguard the interests of developing countries when adopting some domestic or international measures (eg. in anti-dumping, safeguards, technical barriers to trade). It also has provisions for helping developing countries (eg. to deal with commitments on animal and plant health standards, technical standards, and in strengthening their domestic telecommunications sectors).

By some measures — such as per capita income — China is still very much a developing nation. However, China’s size, power and influence exceed what most experts would attribute to a developing nation. China is already a major driver of global growth. The country’s leaders have grown more confident on the international stage and have begun to assert greater influence

China faces a host of lurking problems and obstacles in its economic and social development.

November-December 2010  India-China Chronicle |35|

INFOCUS | CHINA ECONOMY | COVER STORY

The large proportion of China’s rural and impoverished population means the country has not yet extricated itself from a developing nation status.

in Asia, Africa and Latin America, with things like special trade agreements and multibillion dollar resource deals.

China now has more billionaires than any other country besides the United States, according to Forbes magazine. According to Forbes, the world now has 1,011 billionaires with the biggest concentration being in the US at 403 followed by 64 in China. Although China is developing faster than any country of the world, there are huge challenges ahead. China is in the throes of urbanization and is far from developed, analysts say, meaning it has a much lower standard of living, as well as a lot more room to grow.

China has roughly the same land mass as the United States, but it is burdened with a fifth of the world’s population and insufficient resources. Its per capita income is more on par with those of impoverished nations like Algeria, El Salvador and Albania — which, along with China, are close to $3,400 — than that of the United States, where it is about $46,000. Its per capita GNI is still at the level of medium and low-income countries. A very crucial reason why China still retains its status of a developing country is the fact that China’s development has been unbalanced with growing income disparities. Its uneven distribution of wealth leaves a large part of the population without the benefits of improved standards of living implied by official statistics.

China’s Three Zones The country comprises three distinct economic regions, each of which presents a unique economic landscape for urban development.

The eastern coastal provinces are the most developed, utilizing 75.1% of foreign direct investment (FDI) in 2008. The country’s three major growth engines – the Yangtze River Delta, the Pearl River Delta and the Pan- Bohai Rim – are all located within this area. The Eastern areas comprise 11% of China’s land area, 28% of its population and 62% of its GDP. The manufacturing prowess of these provinces constitutes China’s economic engine, driving the country’s export-oriented growth model.

In contrast, central Chinese provinces such as Anhui, Henan, Hubei, Hunan, Jiangxi, Helongjiang and Shanxi comprise 15% of China’s land area and 30% of its population, but only 23% of its GDP. This region relies on an outdated industrial base made up of state-owned enterprises. Much of the infrastructure is outdated and the region is largely dependent on agriculture and other primary industries.

Finally, western provinces such as Gansu, Qinghai, Sichuan, Yunnan, Guizhou, Shaanxi,

|36| India-China Chronicle  November-December 2010

Sources: IMF, NBS Yearbook 2009

Guangxi, Xianjiang and Tibet lack an economic base due to their rugged and inhospitable geography. Together, these provinces comprise 72% of China’s land area, 28% of its population and only 15% of its GDP. The government-initiated stimulus of 2009 has allocated substantial resources to infrastructure development in the region.

The large proportion of China’s rural and impoverished population means the country has not yet extricated itself from a developing nation status. Of the country’s 1.3 billion population, 700 million, or about 58 per cent, still live in rural areas, seven percentage points higher than the world’s average level of 51 per cent.

According to the “one dollar a person a day” poverty standard set by the United Nations, China still has 150 million people living below the poverty line, unevenly distributed in 512 poor counties. Even according to the lowincome standard worked out by China in 2009 — which set an annual income of 1,067 yuan as the threshold dividing those who weren’t living in poverty from those who were — the country still has about 43 million people living in poverty, a figure equivalent to the whole population of the People’s Republic of Korea

and five times Singapore’s population.

Besides its comparatively low productivity, China’s industrial and economic structures also have some worrisome problems, with industrial and agricultural value accounting for 47 per cent and 11 per cent of its economic output, with the service sector supplying only 42 per cent. Whereas in some high-income countries it is the service sector that is creating the lion’s share of their economic output.

Urban and Rural China’s urban and rural economic development is also seriously unbalanced, with the per capita disposable income in urban areas 3.3 times that of rural areas in 2008. The Gini coefficient, an index to measure the rich-poor gap, was 0.415 in this country the same year, not only higher than that in developed countries, but also higher than that in such developing countries as Romania, India and Malaysia.

In terms of its social development process, China is still in the middle stage of modernization. In 2009, the country’s urbanization rate was 46.6 per cent, lower than the 50 per cent world average, and much lower than the average level in the US and European countries, where it was 80 per cent. The same year, the country’s Human Development Index (HDI), worked out by the United Nations Development Program, was only 0.772, which ranked it 92nd in the world. As per UNDP, China qualifies as a country of medium human development.

Country Norway Australia Japan USA Italy UK Germany Malaysia Russia Brazil China South Africa India

HDI 0.971 0.97 0.96 0.956 0.951 0.947 0.947 0.829 0.817 0.813 0.772 0.683 0.612

Ranking 1 2 10 13 18 21 22 66 71 75 92 129 134

China’s economy is too heavily dependent on exports and investment and it needs to encourage greater domestic consumption. It needs to continue to pay attention to rebalancing development.

Source: Human Development Report 2009 (2007 data)

Social Index Mao Zedong was famous for his quote, November-December 2010  India-China Chronicle |37|

INFOCUS | CHINA ECONOMY | COVER STORY

“Women hold up half the sky.” But, in modern and growing China, women today are still not regarded equally. There is huge chasm between education for men and women. Despite a remarkable progress in its economic development over the past decades, China has yet to make significant efforts to improve its education, medical care and social security infrastructure. In 2008, the country spent about 2.4 per cent of its fiscal revenues on education, compared to the 4.9 per cent world average, the 5 per cent of OECD members, and 4 per cent of middle-income countries. China’s economy is too heavily dependent on exports and investment and it needs to encourage greater domestic consumption. It needs to continue to pay attention to rebalancing development domestically in many sectors.

The rebalancing of urban and rural issues and related to that the possibility of increasing value-added production in China to support higher income and better living standards, is the need of the hour.

The country’s largely state-run banks have recently been criticized for lending far too aggressively in the last year and even engaging in financial engineering, shifting some loans off their balance sheet to disguise lending and evade rules meant to curtail lending growth.

China is also locked in a fierce debate over its currency policy, with the United States, European Union and others accusing Beijing of keeping the Chinese currency, the renminbi, artificially low to bolster exports — leading to huge trade surpluses for China but major bilateral trade deficits for the United States and the European Union. China says its currency is not

substantially undervalued and that it is moving ahead with currency reform.

Regardless, a fast-growing China suggests that it will continue to compete fiercely with the United States and Europe for natural resources but also offer big opportunities for global companies and technology firms eager to tap its market. Evaluating what China’s newfound clout means, though, is complicated. While the country’s has relatively poor per capita, it has an authoritarian government that is capable of taking decisive action — to stimulate the economy, build new projects and invest in specific industries.

As we know, what makes a country developed is not merely its GDP, its foreign exchange reserves or its total import-export volume. More important elements of a developed country come from the level of a nation’s technology, the influence of its cultural appeal, its persuasive power, and the effect of its comprehensive power including education, eco-environment and welfare systems. China should boldly draw upon all the progress of human civilization and all advanced business and managerial expertise that embody the laws governing modern social production.

China’s progression to Socialism, however, has made it lag far behind those of the developed countries. It will take a fairly long historical period before China can achieve industrialization and modernization. This can be ascribed to China’s huge population, weak economic base and development imbalances between urban and rural areas and among different regions. Its low level of productive forces have also remained basically unchanged. China is still in the primary stage of socialism and the country will still be a developing nation for a long period in the future.

Dr Barun Mitra, Director of Liberty Institute makes a valid point when he says that, “China is still a developing country, but is moving towards developed status at a pace that is unique.”

The international community has been judging China from many angles, some of which are objective and friendly, while others are clearly biased and hostile. The difference in the premise of their analyses has naturally led them to different conclusions. A biased view and a preconceived notion can never be conducive to developing relations, knowing or benefiting from each other and contributing to the integration of the world economy. As for now, China is heading in the right direction. The future is indeed promising!  Inputs by Anchit Goel and Aanchal Kumar.

(Views expressed by the writer are his personal views)

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INFOCUS | WORLD | ECONOMY

Developed Defined

Developed countries are shown in blue (According to the IMF, as of 2008)

T

he term developed country is used to describe countries that have a high level of development according to some criteria. Which criteria and which countries are classified as being developed, is a contentious issue and is surrounded by fierce debate.

Economic criteria have tended to dominate discussions. One such criterion is income per capita; countries with high gross domestic product (GDP) per capita would thus be described as developed countries. Another economic criterion is industrialization; countries in which the tertiary and quaternary sectors of industry dominate would thus be described as developed.

More recently another measure, the Human Development Index (HDI), which combines an economic measure, national income, with other measures, indices for life expectancy and education has become prominent. This criterion would define developed countries as those with a very high (HDI) rating. However, many anomalies exist when determining “developed� status by whichever measure is used.

Countries not fitting such definitions are classified as developing countries.

Similar terms Terms similar to developed country include advanced country, industrialized country, more developed country (MDC), more economically developed country (MEDC), Global North country, first world country, and post-industrial country. The term industrialized country may be somewhat ambiguous, as industrialization is an ongoing process that is hard to define.

The term MEDC is one used by modern geographers to specifically describe the status of the countries referred to: more economically developed. The first industrialised country was Britain, followed by Belgium, Germany, United States, France and other Western European countries. According to some economists such as Jeffrey Sachs, however, the current divide between the developed and developing world is largely a phenomenon of the 20th century.

November-December 2010  India-China Chronicle |39|

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Definition Kofi Annan, former Secretary General of the United Nations, defined a developed country as follows: “A developed country is one that allows all its citizens to enjoy a free and healthy life in a safe environment.” But according to the United Nations Statistics Division, There is no established convention for the designation of “developed” and “developing” countries or areas in the United Nations system.

And it notes that The designations “developed” and “developing” are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process.

Human Development Index (HDI), which combines an economic measure, national income, with other measures, indices for life expectancy and education has become prominent.

The UN also notes In common practice, Japan in Asia, Canada and the United States in North America, Australia and New Zealand in Oceania, and most European countries are considered “developed” regions or areas. In international trade statistics, the Southern African Customs Union is also treated as a developed region and Israel as a developed country; countries emerging from the former Yugoslavia are treated as developing countries; and countries of eastern Europe and of the Commonwealth of Independent States (code 172) in Europe are not included under either developed or developing regions.

According to the classification from IMF before April 2004, all the countries of Eastern Europe (including Central European countries that still belong to the Eastern Europe Group in the UN institutions) as well as the former Soviet Union (USSR) countries in Central Asia (Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan) and Mongolia, were not included under either developed or developing regions, but rather were referred to as “countries in transition”; however they are now widely regarded (in the international reports) as “developing countries”.

In the 21st century, the original Four Asian Tigers (which are Hong Kong, Taiwan, Singapore and South Korea) are considered “developed” region or areas, along with Cyprus, Czech republic, Israel, Malta, Slovakia and Slovenia.

Human Development Index The UN HDI is a statistical measure that gauges a country’s level of human development.

|40| India-China Chronicle  November-December 2010

While there is a strong correlation between having a high HDI score and a prosperous economy, the UN points out that the HDI accounts for more than income or productivity.

Unlike GDP per capita or per capita income, the HDI takes into account how income is turned “into education and health opportunities and therefore into higher levels of human development.” A few examples are Italy and the United States.

Despite a relatively large difference in GDP per capita, both countries rank roughly equal in term of overall human development. Since 1980, Norway (2001–2006 and 2009), Japan (1990– 91 and 1993), Canada (1992 and 1994–2000) and Iceland (2007–08) have had the highest HDI score. Countries with a score of over 0.800 are considered to have a “high” standard of human development. The top 38 countries have scores ranging from 0.902 in Malta to 0.971 in Norway.

Many countries listed by IMF or CIA as “advanced” (as of 2009), possess an HDI over 0.9 (as of 2007). Many countries possessing an HDI of 0.9 and over (as of 2007), are also listed

by IMF or CIA as “advanced” (as of 2009). Thus, many “advanced economies” (as of 2009) are characterized by an HDI score of 0.9 or higher (as of 2007).

The latest index was released on October 5, 2009 and covers the period up to 2007. The following are the topm 10 countries with a “Very high human development” of above 0.900.

1.

2.

3.

4.

5.

6.

7.

8.

9.

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Norway 0.971 (▬) Australia 0.970 (▬) Iceland 0.969 (▬) Canada 0.966 (▬) Ireland 0.965 (▬) Netherlands 0.964 (▲ 1) Sweden 0.963 (▼ 1) France 0.961 (▲ 3) Switzerland 0.960 (▬) Japan 0.960 (▬)

Other lists of Developed Countries Only three institutions have produced lists of “developed countries”. The three institutions and their lists are the UN list (shown above), the CIA list and the FTSE Group’s list, whose list is not included because its association of developed countries with countries with both high incomes and developed markets is not deemed as directly relevant here.

However many institutions have created lists which are sometimes referred to when people are discussing developed countries. The

IMF identifies 34 “advanced economies”, The OECD, also widely known as the ‘developed countries club’ has 30 members. The World Bank identifies 66 “high income countries”.

The EIU’s Quality-of-life survey and a list of countries with welfare states are also included here. The criteria for using all these lists and for countries’ inclusion on these lists are often not properly spelt out, and several of these lists are based on old data.

IMF advanced economies

Economist’s Quality-of-life survey of 2005 Research about standards of living and quality of life by the Economist Intelligence Unit resulted in a quality-of-life index. As of 2005, the highest-ranked economies are 1.

2.

3.

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6.

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Ireland Switzerland Norway Luxembourg Sweden Australia Iceland Italy Denmark Spain Singapore Finland United States Canada New Zealand

16. Netherlands 17. Japan 18. Hong Kong 19. Portugal 20. Austria 21. Taiwan 22. Greece 23. Cyprus 24. Belgium 25. France 26. Germany 27. Slovenia 28. Malta 29. United Kingdom 30. South Korea

n Countries described as Advanced Economies by the IMF. According to the International Monetary Fund the following 34 countries are classified as “advanced economies”: • Australia • Austria • Belgium • Canada • Cyprus • Czech Republic • Denmark • Finland • France • Germany • Greece • Hong Kong • Iceland • Ireland • Israel • Italy • Japan • Luxembourg • Malta • Netherlands • New Zealand • Norway • Portugal • San Marino[19] • Singapore • Slovakia • Slovenia • South Korea • Spain • Sweden • Switzerland • Taiwan • United Kingdom • United States The CIA has a modified version of an old version of the IMF’s list of Advanced Economies. The CIA notes that the IMF’s Advanced Economies list “would presumably also cover” some smaller countries. They are: • Andorra • Bermuda • Faroe Islands • Holy See • Liechtenstein • Monaco

Newsweek’s Quality-of-life survey of 2010 Research about standards of living and quality of life by Newsweek, resulted in the “world’s best countries” index, measuring: “health, education, economy, and politics”. As of 15/8/2010, the highest-ranked countries are: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

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Finland Switzerland Sweden Australia Luxembourg Norway Canada Netherlands Japan Denmark United States Germany New Zealand United Kingdom South Korea

16.

17.

18.

19.

20.

21.

22.

23.

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25.

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27.

28.

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30.

The term MEDC is one used by modern geographers to specifically describe the status of the countries referred to: more economically developed.

France Ireland Austria Belgium Singapore Spain Israel Italy Slovenia Czech Republic Greece Portugal Croatia Poland Chile 

November-December

2010  India-China Chronicle |41|

INFOCUS | CHINA | DEBATE

Why China is still a developing country

N

ot long ago, many media outlets covered the story that in the second quarter this year, China’s GDP figure and growth rate had surpassed Japan’s. This has triggered arguments that China has become the no 2 in the world and that China is no longer a developing country but a strong economic power. Views like such are shared by much of Europe’s media as well.

Judging by the size of GDP alone, it is fair to argue that China is now the world’s second largest economy. The economic strength of China has indeed recorded significant growth over the last three decades through reform and opening up. As a Chinese, I am proud of the fact that today’s China enjoys much stronger international standing.

That said there is absolutely no basis to the argument that China is no longer a developing country but a developed one. China’s GDP is only one of many indicators of our economy, and it is by no means a sufficient proof that the Chinese people are even nearly as wealthy as the Japanese people.

In fact, way behind Japan in science and technology, production level, and living standard, we still have a long way to go before we can call ourselves a strong and wealthy nation. Although size matters, a holistic and simplistic approach is not enough for a fair understanding of a country

as populous as China.

With per capita GDP at only 3,700 US dollars, China is among middle and low income level countries, ranking below the 100th place in the world behind Cape Verde and Algeria. In terms of per capita possession of natural resources, China is far behind the majority of the developed world. In some cases, we are even far below the world’s average. In per capita terms, our fresh water reserve is only 1/3 of the world’s average, coal consumption 1/2, and natural gas 1/5.

In China, 150 million people, equivalent to the total Russian population, are caught in poverty according to the UN standard, living on less than 1 US dollar a day. By our own definition, 35.97 million rural residents, equivalent to the size of Polish population, were living in poverty as of 2009, with a yearly income under 175 US dollars.

Nearly 83 million people in China are living with disabilities, matching the total population of Germany. Each year, 12 million people are newly added to our job market, outnumbering the total population of Greece.

China is still at the lower end of the global industrial chain. Our trade mix is dominated by commodity trade that is resource and labour consuming. The knowledge-based trade in services only accounts for a small portion in our foreign trade however. Due to our modest production level and reliance on conventional

Song Zhe is the People’s Republic of China’s Ambassador to the EU.

A developing nation with growing pains

Despite a dramatic increase of its GDP, China is still a “rising developing country” rather than a developed one. |42| India-China Chronicle  November-December 2010

Though 61 is a mature age for people, the new China, which celebrated the 61st anniversary of its founding on Oct 1, is still in its adolescence, developing rapidly and full of the vigour of a young man.

Also like a youth, the country has experienced growing pains over those contradictions between its self-perception and recognition by its peers.

China has been on track for rapid development during the three decades since its reform and opening-up in the late 1970s, as gross domestic product (GDP) jumped to more than 34 trillion yuan (5.08 trillion US dollars) in 2009, from 364.52 billion yuan in 1978.

Even the global financial crisis failed to slow the country’s developing momentum, with an annual growth rate of 9.1 per cent last year, outshining its developed counter-

parts, such as the US and Japan.

Despite the impact from the economic downturn, China also replaced Germany as the world’s third largest economy and largest exporter last year, and overtook the US to become the world’s largest auto market.

What’s more, in the second quarter of this year, China’s GDP exceeded that of Japan for the first time.

Zhuang Jian, chief economist with the Asian Development Bank, praised the achievements China has accomplished during the past three decades, saying its strong growth has boosted the confidence of the Chinese people and encouraged them to work harder for a better future.

As China’s economic clout grows so do suspicions, criticism and even intentional exaggerations. Different readings on China’s development have caused confusion - is November-December 2010  India-China Chronicle |43|

INFOCUS | CHINA | DEBATE

Personally, I find it more reasonable and convincing, as many others do, to argue that China is a rising developing country. Both ‘rising’ and ‘developing’ describe an ongoing process.

China still a developing nation or a developed one?

The Chinese government has reiterated its status as a developing nation, while some insisted that China could no longer be called an emerging economy, and thus held China accountable for more responsibilities in its trade surplus, exchange rate, emission reductions and energy consumption. There is also fear that the emerging China would be a threat to other nations.

Premier Wen Jiabao said in September at the UN General Assembly that China was still in the “primary stage of socialism” and remains a developing country.

“These are our basic national conditions.

This is the real China,” he said.

Wen stressed this point with data showing that, although China’s GDP ranks it as the world’s third largest economy, per capita GDP is only one-tenth of those of advanced countries. China’s further development is constrained by its shortage of resources, as well as energy and environmental problems, he added.

Experts believe that the growing Chinese economy is too large to be ignored, despite it industries with low added value, the energy intensity of China’s GDP is much higher than the world’s average, let alone that of the developed countries.

Our shortfalls in scientific and technological innovation capacity impede our corecompetitiveness. Across China, industrial structure and the development between urban and rural areas and among different regions remain quite unbalanced. Apart from these, we are also faced with such challenges as lack of investment in education, medical services, and social security.

The Cannikin Law argues that the greatness of a nation would not be recognised if there are definite weaknesses in certain aspects. Although China boasts a large economy and moderately prosperous society, its development is indeed constrained by a number of weak links.

Chinese Premier Wen Jiabao once said, “Since China has 1.3 billion people, any small individual problem multiplied by 1.3 billion becomes a big, big problem.

And any considerable amount of financial and material resources divided by 13 billion becomes a very low per capita level, and becomes really small.” This remark vividly depicted the difficult reality that we in

|44| India-China Chronicle  November-December 2010

still being a developing economy.

Wang Jun, a researcher with the China Center for International Economic Exchanges, said China would continue its relatively fast economic growth for an extended time, a fact that would be difficult for some nations to accept in the short term. This also requires constant adjustments in how China views its own development, as well as how other nations see China, he said.

“Misunderstandings and conflicts are inevitable,” Wang noted.

“I can’t name another country in the world that has changed so much in so short a time,” said Patrick Chovanec, an associate professor at Tsinghua University’s School of Economics and Management in Beijing. He has been coming to China since 1986.

Chovanec noted that China has undergone one of the most rapid and dramatic social changes in history, and “it is still playing out.”

“People around the world have a lot of uncertainty over what a more powerful China would look like and what it would mean for them. A lot of cultural and political differences remain, and some of them

are pretty significant,” said Chovanec. So it is understandable that people have some fears and concerns, he added.

Further, to deal with misjudgements, Zhuang Jian said China should be more involved in explaining its true self to the world as it becomes more involved in the international community.

Patrick Chovanec suggested China should “try to empathize, and develop a thick skin ...

As it becomes more powerful, China is going to be on the receiving end of more, not less, criticism.”

Sheng Hong, director of the Beijing-based Unirule Institute of Economics, warned of self-complacency and arrogance, saying the larger one’s economy grows, the more cautious and humble it should become.

“China should take some criticism seriously, apart from that criticism based upon purposely harmful intentions, which could help step up its economic and political reform. Also, a clear understanding of its real strength would help the government to make the right decisions,” he said.

Zhuang Jian said China’s strong economic growth, mainly fuelled by its large investment

of resources and capital, is unsustainable, inefficient and energy-consuming, remaining vulnerable to the changes of the outside world. China has a long way to go to catch up with the developed nations in terms of per capita GDP, and China is lagging far behind in terms of industrialization, Wang Jun said.

The biggest challenge that China will face in this century is how to achieve sustainable development, he said, adding that the imbalance of regional development, income disparities and the widening gap between state-owned and private firms are also among the difficulties China must face during its future development.

Additionally, Sheng Hong said China has to step up its reforms in becoming a market economy to achieve sustainable development. For the achievements China has gained have been attributed to economic reforms, because of which millions of Chinese workers can now unleash their creativity, rather than only their hands.

China should also accelerate political reforms, including restraining and effectively supervising its administrative power to match the economic reforms, said Sheng.

China must face.

Personally, I find it more reasonable and convincing, as many others do, to argue that China is a rising developing country. Both ‘rising’ and ‘developing’ describe an ongoing process, suggesting that the development of China is not a one off task.

The remarkable achievements we have made in economic and social development have not changed the fact that we are still a developing country. And being a developing country provides us time, room and potential for further growth.

As we narrow our gap with the rest of the world, we will also contribute, through our own development, to healthy global economic growth.

What China pursues is peaceful and open development of cooperation and win-win progress. China will not seek development at the cost of other’s interests. Our approach is to make the cake bigger and bring more development opportunities to the whole world.

Though a developing country, China will not walk away from its international obligations commensurate to its capability, and we will continue to try our utmost to contribute to world peace, stability and prosperity. 

What China pursues is peaceful and open development of cooperation and win-win progress. China will not seek development at the cost of other’s interests.

November-December 2010  India-China Chronicle |45|

&

INFOCUS | CHINA | CULTURE

The Loong short of it China is proud of the Dragon as its national symbol and character. But unlike the western imagery, the Chinese dragon is milder and peaceful or in short Loong.

Ji Ping

T

he image of China is closely linked with the Dragon.

That is partly because many Chinese people often use the term “Descendants of the Dragon” as a sign of ethnic identity and the dragon is regarded as animal symbols for representation of the nation, just as the elephant was used among Indians, and the wolf among the Mongols. However, the concept of Dragon in China and other East Asian Countries is extremely different from that in the rest of the world.

Tales of Two Dragons The English word “dragon” derives from Greek, meaning “a serpent of huge size.” The two most familiar interpretations of dragons are the European Dragon, derived from various European folk traditions and ultimately related to Greek and Middle Eastern mythologies, and the unrelated Chinese Dragon. The European Dragon is usually shown in modern times with a body like a huge lizard, or a snake with two pairs of lizard-type legs, and able to spit fire from mouths. Sometimes they also have bat-type wings growing from its back. Following discovery of how pterosaurs walked on the ground, some dragons have been portrayed without front legs and using the wings as front legs like pterosaurs on the ground. |46| India-China Chronicle  November-December 2010

European dragons exist in folklore and mythology among the overlapping cultures of Europe. Despite having wings, the dragon is generally depicted as having an underground lair or cave, making it an ancient creature of the earth element. European dragons are usually depicted as malevolent.

Naturally, Westerners sometimes confuse the benevolent Chinese dragon with the aggressive Western dragon.

In most of Indian friends’ perception, the Chinese Dragon is more or less equal to the European one. The Chinese Dragon is also a “fleet-footed” animal of the mountains that “can move faster than the swiftest river, so that nothing escapes them”, and “they have teeth as sharp and indestructible as those of the

An orthodox Chinese Dragon is the assembly of the horns of a deer, the head of a camel, the palms of a tiger and the ears of a cow. It symbolizes power and excellence, valiancy and bravery, heroism and perseverance, nobility and divinity.

largest fishes”, “their eye is sunk deep under the eyebrow, and emits a terrible and ruthless glance”. And “they give off a noise like the clashing of brass whenever they are burrowing under the earth, and from their crests, which are all fiery red, there flashes a fire brighter than a torch”.

Dance with the Dragon As a matter of fact, the Chinese dragon has quite different characteristics and origins from those of the European one. In European-influenced cultures the dragon has aggressive, warlike connotations.

An orthodox Chinese Dragon is the assembly of the horns of a deer, the head of a camel, the palms of a tiger and the ears of a cow. It symbolizes power and excellence, valiancy and bravery, heroism and perseverance, nobility and divinity. A dragon overcomes obstacles until success is his.

He is energetic, decisive, optimistic, intelligent and ambitious. Moreover, unlike the negative images associated with the Western Dragon, the Chinese Dragon is elegant, friendly, and wise. They are the angels in China.

Instead of being hated, they are loved and worshipped. Temples and shrines have been built to honor them, for they control the rain, rivers, lakes, and seas. Many Chinese cities have pagodas where people used to burn incense and pray to dragons as Indian people pray

November-December 2010  India-China Chronicle |47|

INFOCUS | CHINA | CULTURE

to Hanuman or Ganesha.

Chinese people believe the dragon is the ruler of rivers and lakes who could marshal clouds and rain. So, whenever there was a drought or flooding, people would pray the dragon for rain or no more rain. On the front covers of the old Chinese lunar calendars, there used to be words telling how many dragons would harness the flood that year. In the folk festive days, dragons also served as a symbol of joy and happiness. For example, there is a dragon lantern festival in the New Year and dragon boat race on the fifth day of the fifth moon.

For thousands of years, the Chinese people have respected and liked dragons, regarding them as a symbol of the character and spirit of Chinese nationalities. Therefore the term “descendants of the dragon” is used to refer to the entire Chinese nation.

And dozens of Dragon tales suggest that dragon symbolize the spirits of the Chinese peoples.

In Chinese daily language, only excellent and outstanding people are compared to dragon while incapable people with no achievements are compared with lesser creatures. A number of Chinese proverbs and idioms feature references to the dragon, for example, “Wangzhichenlong” (Hoping one’s son will become a dragon), i.e. be as successful and powerful as a dragon. Kungfu movie star, Jackie Chen, famous for his acrobatic fighting style is still very popular among Indian fans, though only few of them know that his name actually means “Becoming Dragon”. If the Chinese dragon doesn’t symbolize, strength, good luck

China and India are great neighbours. On the occasion of the celebration of the 60 years anniversary of establishment of diplomatic relations between China and India, a new word could also be created– the Loongelephant or the Haathiloong.

We wish the Loong and Haathi perfect cooperation and peaceful coexistence forever!

and auspicious powers, who will like to have such a name.

Rename and Rebuilt So when people stubbornly insist that the Chinese Dragon and the Western Dragon are the same, either because they don’t know the culture background or they are politically motivated.

The possibility of an anti-China political design cannot be ruled out.

To label Communist China as a Dragon with fire emitting from its mouth can easily mislead innocent people giving them the impression that a rising China is a potential threat. You cannot easily change the mindset of those who believe in the China threat and keen to demonize the country, but you might be able to change the mind of those who don’t know about the cultural background.

Chinese people will certainly not accept any proposal to change its national symbol, since we love the legendary creature. But we can change the translation of the Chinese Dragon into the Loong to differentiate it from the western Dragon. Loong is the pronunciation of “dragon” in Manda-

|48| India-China Chronicle  November-December 2010

rin Chinese. The name will naturally arouse rich literary associations with the concept of longevity which is in fact one of features of Loong.

By doing so, a correct image of the Chinese national symbol could be rebuilt. Loong respects others. Loong values cooperation. Loong promotes the concept of world harmony. In short, Loong would be more peace loving than the Dragon.

China and India are great neighbours. On the occasion of the celebration of the 60 years anniversary of establishment of diplomatic relations between China and India, a new word could also be created – the Loongelephant or the Haathiloong. We wish the Loong and Haathi perfect cooperation and peaceful coexistence forever! 

Ji Ping is a Senior Research Fellow of the Chinese Central for Contemporary World Studies, Beijing.

Email: jiping767@yahoo.com.cn

INFOCUS | CHINA | CONFERENCE

Cooperation or Competition Guess what separates India and China is modesty, a willingness to learn and a quest for efficiency.

Amir Ullah Khan

T

he city of Nantong is like Hyderabad with a population of 70 lakhs, a growth rate of more than 15% for the past 15 years and a history that goes back hundreds of years. However the similarity ends there. The Yangtze River that flows through Nantong is remarkably clean and has a waterfront that is dotted with restaurants, shops and wharfs. Reminds one of the several times the municipal corporation in Hyderabad has drawn up vain plans of making the Musi a respectable river.

The discussion at the Fifth China India Trade and Investment Conference organised by the India China Economic and Cultural Council (ICEC) in cooperation with the Nantong government and our own Ministry of Small and Medium Scale Enterprises centered around the potential for trade between the two countries. The delegation that went to China comprised of over 60 industrialists, with 18 of them coming from Hyderabad. The Chinese speakers were unanimous in their belief in India’s software success and in their own innovation led manufacturing story. All of us talked of the need for cooperation between the two countries and gamefully underplayed the competition between two of the world’s largest economic powers today.

What was obvious was that China indeed is far ahead in terms of infrastructure provision and in the availability of cheap finance. In fact what most of our industrialists exclaimed at was that their Chinese counterparts never had to face power shut downs. While the bane of our factories is the uncertainty in electricity supply and its poor quality, the Chinese did not even know that such a problem could exist. Their capital requirements too are met by banks that give access to easily available loans and low rates of interest. Our in-

dustry battles really high interest rates and banking regulation that makes borrowing cumbersome and tedious.

On the other hand the Chinese industries problems are far more sophisticated. The export dependence makes even small players vulnerable to the vicissitudes of the US economy, the European crisis and the fluctuations in the exchange rate of the yen. Their competition comes from SMEs in Japan and in Taiwan. Their problems have more to do with tariffs and non tariff barriers in the West than with labour problems back home. Unlike the Indian small industrialist who battles internally against a bureaucracy that is caught in archaic regulation, the Chinese businessman fights external barriers.

China indeed is far ahead in terms of infrastructure provision and in the availability of cheap finance.

Shanghai is two hours away from Nantong and is hosting the World expo that opened in May 2010. Any visitor is left gaping. There are more than 230 pavilions and the entire world is showcasing its industry in China. The India pavilion has seen more than four million visitors coming by in the first four months. The expo itself has recorded attendances of more than 80 million already and by the time the six month long expo ends the number of visitors would have crossed the 100 million mark. The site itself is bigger than some countries like Monaco and visitors ferry across the Huangpo River to see both parts of the exhibition.

Beyond this mighty exposition of progress however is extreme modesty.

The Chinese speakers at the expo keep praising the Indian economy for its

resilience. They never stop talking of India’s software prowess and accomplishments in the IT enabled sector.

Almost apologetically, they keep on the constant refrain that theirs is an increasingly open economy. It is so transparent that they are mindful of past mistakes when the Chinese economy was completely shut out from the rest of the world and suffered as a result.

There is no mention of the past ever. It is as if there is no history. In a land that boasts of 3000 years of history, this aspect is eerie.

In Nantong and Shanghai, all that you see are sparkling new buildings and roads. Even the museums are fairly new and appear considerably sanitised.

For those of us who grew up hearing our own politicians extol the virtues of one Mao Zedong, it is indeed strange how you never hear Mao mentioned anywhere in China. The only place I came across his portrait was in the currency notes and one forgotten portrait tucked away in the corner of an old shop. Though reluctantly I guess, we have treated our political icons slightly better, or maybe I am being unnecessarily patriotic here.

Back in the hotel room, while flipping channels I came across Amitabh Bachchan and Kulbushan Kharbanda exchange sharp dialogues in Chinese while Parveen Babi and Bindiya Goswami lurked in the background. Almost every day one particular channel showed mainstream Bollywood dubbed in Chinese, bringing home our own lack of exposure. The only Chinese movie I could remember was watching was Bruce Lee’s Enter the Dragon. Some of us did read about the Oscar winning Crouching Tiger Hidden Dragon but I don’t know of any channel that showed this movie made in 2000 using either a dubbed version or even with subtitles. Guess that is what separates us: Modesty, a willingness to learn and a quest for efficiency. 

November-December 2010  India-China Chronicle |49|

A Small Step

From the Yangtze

Some moments from the launch of the India-China Chronicle in New Delhi by Sashi Tharoor, MP.

Glimpse from the fifth China India Trade and Investment Conference organised by the ICEC in cooperation with the Nantong govt in Nantong.

THE LAUNCH THE CONFERENCE

Dr Shashi Tharoor (Member of Parliament and former MoS for External Affairs) releasing the special issue of the India-China Chronicle, along with Dr Abid Hussain (Chairman, ICEC) and Mr PS Deodhar (President, ICEC)

Dr Shashi Tharoor in conversation with Mr Ding Dawei (Mayor of Nantong Municipal People’s Government, China)

Dr Shashi Tharoor greeting HE Mr Zhang Yue (Charge d’Affairs, Embassy of China in India)

WARM EMBRACE: Dr Shashi Tharoor and Dr Abid Hussain

Mr Som Mittal (President, NASSCOM) being welcomed by the ICEC

Dr Shashi Tharoor, Mrs Sunanda Tharoor and Mrs Riva Ganguly Das (Consulate General of India, Shanghai) with ICEC China staff

Dr Shashi Tharoor and Mr Ding Dawei releasing books on the occasion

A TOAST: Dr Shashi Tharoor and Sunanda raise a toast with Mr Ding Dawei.

Mr PS Deodhar (President, ICEC) addressing the audience

Guests at the launch

Mr Zhang Yue and Mr Gautam Bambawale (Joint Secretary – East Asia, Ministry of External Affairs) at the panel discussion that followed the launch

Dr Sreemati Chakrabarti (Director, Institute of Chinese Studies) delivering her speech

Dr Amir Ullah Khan (Dean & Director Research, Bangalore Management Academy)

Mr Jagat Shah (Mentor and CEO, Cluster Pulse and Global Network)

Dr Shashi Tharoor with Mr Dinesh Rai (Former Secretary, Ministry of MSMEs) and Mr Som Mittal

Dr Abid Hussain signing an MoU with Dr Manoranjan Mohanty (Chairperson, Institute of Chinese Studies)

Dr Tharoor with Mr Peng Gang (Commercial Counselor, Embassy of China in India), Mr Gautam Bambawale, Mr Zhang Yue and Mr Pramit Pal Chaudhari (Foreign Editor, Hindustan Times)

Members of the ICEC delegation from India at the conference

Members take a break

Dr Tharoor and Sunanda with some of the Chinese staff of ICEC.

|50| India-China Chronicle  November-December 2010

November-December 2010  India-China Chronicle |51|

CULTURE

Chandni Chowk to China India and China, two of the world’s oldest civilizations, are so near, yet so far from each other. Can Bollywood and other cinemas of India, ambassadors of India’s culture and emblems of our soft power, take India to the Chinese?

Zafar Anjum

R

ecently, I met a young Chinese girl, Julia, at a dinner party in Singapore. As we talked over drinks, it emerged that Julia, now in her twenties, was born in a small town in China, was educated in Shanghai and after her graduation, had gone to the US to work for a tech company.

At the time of our meeting, she was based in Singapore working for a consultancy firm.

Julia told me she had an Indian boyfriend and that she had recently visited Mumbai along with him. She had come back impressed with India’s colours, culture, and cuisine. That was not surprising. But then she told me something that struck: “We Chinese know so little about India. We are so close to each other as neighbours but we know so little about each other’s culture.”

The point she was making was that even though trade was happening between India and China, culturally we knew next to nothing about each other.

I agreed with her. India and China, two of the world’s oldest civilizations, are so near, yet so far from each other.

Then I wondered: Can this gap be bridged, and more specifically, can Bollywood and other cinemas of India, ambassadors of India’s culture and

emblems of our soft power, take India to the Chinese and vice versa?

The Days of Awaara and Caravan I asked this question to Pallavi Aiyar, who has spent more than six years in China writing for the Hindu and the Indian Express newspapers, the only Chinese speaking Indian foreign correspondent to be based in the country.

|52| India-China Chronicle  November-December 2010

Besides her work as a journalist she has taught news writing to students at the Beijing Broadcasting Institute and served as advisor to the Confederation of Indian Industry (CII) on Chinarelated issues.

In her book, Smoke and Mirrors: An Experience of China, Pallavi provides a first-hand account of life in China. Before going to China, Pallavi knew that Raj Kapoor’s films, especially, Awara

(1951), were well-known all over the word, from Russia to Peru. But she didn’t know that the Chinese too loved that film and that the people of older generation still remembered it. When I met her at a literary soiree in Singapore once, she told me that even now some Chinese people knew Abala Hoon (Awara Hoon, the film’s title song) by heart.

“Film imports have always been controlled in China,” Pallavi explained.

“In those days, Awara was perhaps considered socialist enough to be allowed a release in China.” The film was seen widely from the late 1950s through till the late 1970s.

Another film that has stayed fresh in the memory of the Chinese people is the Jeetendra-Asha Parekh starrer, Caravan (1971). According to Pallavi, Caravan was shown in China only in the 1980s, after the end of the Cultural Revolution. While Awara was in black and white, Caravan was in colour, imbuing the memory of a generation of Chinese with the India of myriad colours. This film too was given a Mandarin title and people still have VHS copies of the film.

Post-Caravan, no Hindi film was released in China in the last century.

Meanwhile, in the 1990s, the Chinese also got a taste of international films, including films from Hollywood.

After a gap of nearly three decades, Amir Khan’s Lagaan became the first Indian movie to be released in China nationwide in 2002. At its release, Joe Zhang, an official from the Columbia

Film imports have always been controlled in China,” Pallavi explained. “In those days, Awara was perhaps considered socialist enough to be allowed a release in China.” The film was seen widely from the late 1950s through till the late 1970s.

Tri Star Film Distributors International said, “Continuing with its international success and now reaching here, Lagaan brings us a great chance to break the wrong idea that good movies are the American ones.”

Despite these films, the perception of the Chinese about Indians has not changed much. According to Pallavi, the Chinese think that India is a very crowded country (which it is) and every Indian woman can sing and dance like Bollywood heroines. Pallavi told me how very often she would get requests from ordinary Chinese people to perform Indian style singing and dancing for them.

Hunger for Indian culture Clearly, there is a hunger for Indian culture, including its song and dance, among the Chinese people. Perhaps they find Indian classical dance and music closer to their own cultural traditions (traditional Chinese music and opera). Indian yoga is already a big hit in China.

I had a first-hand experience of this hunger for Indian cultural traditions when I used to help out the India China Trade Centre (ICTC) around 2003-2004. Many musical troupes wanted to go to China and perform there but from the Chinese side, the demand would always be for those groups that could perform Indian classical singing and dancing.

If you turn the equation around, what kind of perception do Indians have of China and the Chinese? The most common perceptions are that China is a socialist country with an authoritarian regime; that China is the factory of the world and China is way ahead of India in terms of infrastructure. Even the Indian Prime Minister talks about turning a city like Mumbai, not into London or New York or Tokyo, but into Shanghai. “Chinese cities have become sort of benchmarks for us now,” Pallavi pointed out.

To a great extent, Indians have correct assumptions about China. This could be largely due to the existence of a free media in India and the culture of debate and discussion that prevails in most parts of the country. But how much do Indians know about the

November-December 2010  India-China Chronicle |53|

CULTURE

Chinese people and its culture?

According to Pallavi, there is a difference between how Indians and Westerners see China. For example, when a Westerner arrives in a city like Shanghai or Beijing, he is appalled to see the unruly traffic or by the behaviour of Chinese drivers. When an Indian arrives, he is all praise for the Chinese drivers and their respect for traffic rules—so, Indians find Chinese citizens more well-behaved. Pallavi herself was full of admiration for the low level workers in China who, unlike their Indian counterparts, at least get to wear gloves while doing menial tasks such as carrying refuse or cleaning toilets.

“That glove, a barrier between the dirt and the worker’s body, provides him with a modicum of dignity.”

In terms of cinema, perhaps a section of Indians might be familiar with Chinese stars such as Jackie Chan and Chow Yun-Fat (more because of their Hong Kong action flicks and Hollywood productions such as Chan’s kung fu films or Yun-Fat’s Crouching Tiger,

In a situation like this, coming from the India plus China philosophy, there clearly is a case for the Indian and Chinese governments to encourage each other’s films in their respective markets to improve cooperation and friendship.

|54| India-China Chronicle  November-December 2010

Hidden Dragon). But beyond that, what? How much do know about the mainstream Chinese films or the less well-known film actors from China?

And that is just cinema. The cultural field goes much beyond cinema.

Clearly, there is a great wall of cultural ignorance between the two countries. When a film like Chandni Chowk to China (2009), Warner Brothers’ first Bollywood film, tried to cross over this great wall, it fell flat at the box office. So what is the way forward?

Slumdog Millionaire Unfortunately, the current generation of Chinese youth is not interested in Indian films unlike the older generations. According to Pallavi, the young dig international cinema (Hollywood, Korean) and they approach Bollywood as exotica, as anybody in the West would. The current generation of Chinese youth knows India more by Slumdog Millionaire than by Awara.

Surely, their expectations from cinema

are different.

In a situation like this, coming from the India plus China philosophy, there clearly is a case for the Indian and Chinese governments to encourage each other’s films in their respective markets to improve cooperation and friendship.

Take the Singapore and China example. In July 2010, the two countries signed nine agreements paving the way for industry collaborations, ranging from financing, pre-production, production to distribution and marketing. The first was a memorandum of understanding (MoU) between Singapore’s Media Development Authority (MDA) and China International TV Corporation (CITVC) and China Radio Film TV Program Exchange Centre (CPEC) to exchange programmes, co-produce content and participate in annual TV trade markets hosted by the other party, namely the China Radio, Film & TV International Expo hosted

by CITVC in Beijing, and the Asia Media Festival hosted by MDA in Singapore. Next was a tripartite MoU between MDA, Central Newsreel Documentary Film Studio (CNDF) and China Information Business Network (CIBN) to co-produce a slate of five TV documentary series for global distribution. MDA also signed a letter of intent with the China Film Foundation (CFF) to co-produce a slate of 10 telemovies over the next three years. And so on.When a small country like Singapore can take steps in this direction, why can’t India?

Not just the governments, trade bodies like FICCI and ICTC can also pitch in and bring film companies together (co-production)—after all it is a market economy in both the countries. What about cross-sharing of some television content?

For the two countries to come closer, equally important is the need to expose the youth to the culture of the respective countries. One way to do this

is through the exchange of students (in all subjects, not just sciences or medicine) and cultural groups between the two countries at a large scale to facilitate more interaction.

China maybe the factory of the world but India has a vibrant cultural scene and for once, at least China can be a net importer than an exporter in this arena.

Knowing about each other will help India and China in the long run. If familiarity breeds contempt, ignorance breeds suspicion. In the case of India and China, I think a healthy contempt is better than layers of dangerous suspicion and mistrust. 

Zafar Anjum (www.zafaranjum.com) is a Singapore-based Indian writer and journalist.

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B O O K E X C E R P T

The Giant Stir WHY DON’T THEY GET INDIA?

Excerpts from Raghav Bahl’s book on India-China – Superpower?

The Amazing Race Between China’s Hare and India’s Tortoise

A

lot of Indians believe in rebirth and transmigration of the soul.

While it is an intellectually rich philosophy, its quick and everyday version simply means that a person’s second, third, fourth or nth life is influenced by his actions, or karma, in previous ones. By this simplistic yardstick, I must have been a foreign investor in at least a couple of my earlier births!

Ever since I began my entrepreneurial life in the early 1990s, I have dealt, rather pleasantly, with foreign

investors of all hues, shapes and sizes.

One foreign investor or the other sits atop every key milestone. In the early days, there were venture capitalists just coming to grips with the ‘maddening complexities’ of India. I was, in their lingo, a person with ‘promising intellectual capital’ in a ‘virgin consumerfocused business’ which was likely to witness ‘explosive growth as India’s GDP shifted gears and consumer aspirations stretched beyond the needs of daily survival’. In other words, I was

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a poor but bright fellow, bereft of any financial capital, brimming with special media skills and ideas, capable of creating ‘value’ as the country’s television content business was ‘unleashed’.

So if they gave me million in cash and a chunk in equity, I could build a team of professionals and a company which could become a leader in ‘India’s nascent media industry’. That’s the first kind of foreign investor I encountered way back in 1993.

I must hand it to these guys for get-

ting it somewhat right. Frankly, if I had million in those days, I would have kept it under the mattress, but never given it away to a struggling thirty-two-year-old who barely had enough money to buy a second-hand car. But these guys did bet on us, and I daresay, made plenty of money. As our operations grew, we took bigger bets-and ran into even weightier foreign investors! The earlystage venture capitalist gave way to the late-stage private equity chap, who now gave us million, but took a smaller chunk of equity, simply because ‘startup risks had been mitigated, and proof of concept was visible in our growing operations’. These fellows would visit us once every quarter, sit through board meetings, see some fancy graphics, meet our key people, tour the facilities, and round off with plenty of spirits at the Dublin bar. Their excitement about India was always subdued, tinged with an edge of scepticism, if not outright disbelief. Why does your government take so long to give approvals? Why is your foreign investment policy so restrictive? Why are your airports in such a shambles? How come your hotels are so good, when the roads leading to them are so potholed? How do you speak such good English? Why do you have so many newspapers? Why are so many of them in English? How are they able to survive? Why don’t you lower your voice when you make fun of your politicians? How come your licence was not cancelled after you did such a tough interview with the finance minister? Why are there no malls here?

Why are your cinema halls so rundown? Why don’t Indian consumers pay for services?

Every conversation would end with some variant of the same observation: ‘You know what, it’s not like that in China-or Korea, or Thailand, or Dubai.’ As we acquired commercial muscle, our confidence and market share soared. From foreign investors who gave us equity capital, we moved ‘up the value chain’ to do deals with ‘foreign strategic players’-large American media groups who bet their brand, programming and reputations with us. Our first joint venture was with CNBC to launch a twenty-four-hour

business news channel in India. We made all the investments, took all the risks, and paid them a royalty. We followed through with another deal with CNN, to launch a twenty-fourhour general news channel in India.

Again, we made all the investments, took all the risks and paid them a royalty. We then bought 50 per cent of Viacom’s India operations, including such iconic brands as MTV India, Nickelodeon India and VH1 India. We put in slightly over 0 million to launch Colors, a general entertainment channel; the venture was led by our CEO,

The colour of money changed from ‘financial’ to ‘strategic’, but the scepticism never ceased. Why is the Indian market so small? Why are Indian regulations so weak and confusing? Why is there no protection for intellectual property rights? delighting our foreign partners with its spectacular success. Next on our rollcall was Forbes, as we set about publishing Forbes India.

In less than five years, we had put together a pantheon of the world’s leading media brands on the same Indian balance sheet. Who would have imagined, or dared, to bring such competing American media groupsCNBC, CNN, MTV, Nickelodeon, VH1, Forbes-under a single owner?

I am often asked: ‘How did you pull that off ?’ My answer is a shrug; how do I say that I must have been a foreign investor in at least a couple of my previous births?

The colour of money changed from

‘financial’ to ‘strategic’, but the scepticism never ceased. Why is the Indian market so small? Why are Indian regulations so weak and confusing? Why is there no protection for intellectual property rights? Why does the Indian consumer steal our signals? Why do Indian courts take so long to decide anything? Why do Indians prefer tacky Bollywood films to Hollywood’s masterpieces? Why are Indian commentators and politicians so free with their words and criticism? Why don’t you have stricter libel and defamation laws?

Why do we have to use Indian satellites only? Why are long overdue policy decisions put on hold by ever-so-frequent elections? Why is India’s bureaucracy so timid? Why are India’s bankers so conservative? Why are the interest rates so high? Why are all policies made in English? How do Indians speak such good English? Why does such abject poverty coexist with such immense amounts of corporate wealth in India?

Why don’t you want more dollars to come into your country? How come you have built such an efficient capital market? But then, why don’t you have a bond market? Why do you control the prices of oil and cable TV? Why is the government trying, but failing, to ban jeans in colleges? Why do your social clubs insist on western attire? Why don’t you allow more foreign players in your cricket league? Why do you have such old politicians in key ministries?

Invariably, almost every such ‘why conversation’ would end with: ‘Oh, but it’s not like that in China-or Korea, or Thailand, or Dubai!’

Frankly, I could never escape the feeling that India was just a ‘hedging instrument’ for the investors. While they put serious money and conviction into China, Korea, Thailand and Dubai, their attitude towards India was, to use their terminology, somewhat ‘derivative’ or ‘collateral’. India was a bit too complex and inexplicable for them, yet India had some of the dynamics which could, one odd day, make for an economic superpower. So even if they couldn’t, or wouldn’t, understand the country, they dared not bypass it, since India had mysterious potential: it could be the quaint outlier, or ‘multi-bagger’,

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in their portfolio. It made sense to ‘play blind’ on India-put in some money, but not bother too much with it. If you were dealt a good hand, you could make a killing; otherwise, your ‘max downside’ was to simply write off the investment as a ‘hedging cost’ for bets taken elsewhere in Asia.

A question began to beg for an answer: do these foreigners even ‘get India’?

I was twenty-two when I first set foot on foreign soil, in February 1982.

It was under extraordinary circumstances. I was flown into New York for emergency medical treatment. Our plane landed in a city buried under a severe snowstorm. Muscular attendants pushed my stretcher past immigration and loaded it on to a howling ambulance. Everything was a blur of ceiling lights and whizzing corridors. It was my first brush with American efficiency, and I was wide- eyed with admiration.

The traffic into midtown Manhattan was exceptionally heavy, but we made generous use of the howler. Cars would part with magical discipline, clearing the way for my ambulance to race to the hospital. I was checked in and tucked into a rather comfortable bed. I spent the whole evening answering questions from friendly male nurses (the whole experience was full of firsts!).

I spent the next four months in hospitals, clinics, hotels and sub-leased apartments. I would run into guards, housekeepers, lift attendants, nurses, all of whom, without exception, would ask me one cheerful question: ‘You from Pakistan?’ India simply did not exist in popular consciousness. That was the year Gandhi swept the Oscars.

I was often asked ‘if that guy was for real?’ Another question would pop up with unerring regularity: ‘How come you speak such good English? Have you studied in London-you have such a British accent! Does every Indian speak such good English?’

At the end of four months, I was convinced about two things: Americans are a terrific people to deal with, but India is simply not on their radar.

It was an astonishing revelation, since the streets, universities and hospitals were crammed with Indians. Yet we did

not exist, as a nation, or a real, tangible, identifiable entity.

One question has troubled me for nearly three decades now: why don’t foreign investors really, I mean really, get India? Why can’t they figure us out?

I have often been asked, ‘You are such an India bull, what do you believe is the biggest risk to the India story?’

This is one question I have answered without the slightest hesitation. There is only one risk for India, and that’s the lack of confidence that India’s own leaders have in its abilities and destiny.

Every other disability stems from this endemic, ingrained complex that our policymakers suffer from. They peg India lower than an Indian can stretch to. They force India to punch below its weight. They are content being in the upper quartile, never quite believing that India has what it takes to be at the top, not just near the top. They delight in small achievements and celebrate the climb to the base camp, secure in their conviction that India cannot scale the peak. They are so incremental and risk averse that they pitch India much lower than what young India is yearning for, aspiring for, and increasingly, is impatient for.

I am not an academician, nor an economist, nor a policymaker-I am a simple editor and entrepreneur.

The book I am asking you to read is largely a work of instinct, intuition and experience. Today there is a transformational opportunity for India to do what China has done-lift hundreds of millions of its people out of poverty.

Between India and China, the odds are fifty-fifty. It’s an amazing race between China’s hare and India’s tortoise-one that China need not automatically win, and India should not believe it is bound to lose.

CHINA AND THE ART OF ESCAPE VELOCITY Napoleon once said, ‘Let China sleep, for when China wakes up, she will shake the world.’

China has woken up-as predicted, its economic growth has shocked and awed the world. While several factors are responsible for this miracle, the principal thrust has come from capital

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spending on a scale unknown to mankind. China has built schools, hospitals, roads, railways, airports, bridges, ports, ships, skyscrapers, factories, malls, technology parks and new cities with an ambition that can only be described as spectacular and brutally effectiveand I use ‘brutal’ in a largely positive sense. There is simply no other word that can capture the mind-numbing ambition and scale on which China has marshalled its investment machine There is a saying in the Red Army that quantity has a quality all its own; that quality is now on show for the whole world to gasp at.

China today is investing nearly half its GDP, something that’s simply unprecedented. No other economy, at no other time in history, has invested capital on that scale. At the peak of its economic miracle, Japan was investing only 30 per cent plus of its GDP; but China is investing 50 per cent! Roy Ramos of Goldman Sachs paints a graphic picture of China’s credit expansion, estimating that in less than ten months in 2009-10 it added ‘the equivalent of India’s banking industry twice over’.

Over 200 years of economic experience tells us that hyper-investment creates a bubble and ends in a dreadful collapse. Even common sense should tell us the same thing. If you spend trillions of dollars in creating mammoth bridges, malls, plants and ports, the immediate impact is nice and invigorating. The economy expands, people earn more, they spend more, factories hum with production, and wealth gets created. But problems begin when ports go half empty (because they are larger than needed) or roads fall short of toll revenue targets (because fewer cars are being driven). It’s what economists call ‘over-capacity’ created by ‘hyperinvestment’-in common sense terms, it’s simply a case of building a palace when all you needed was a five-bedroom dwelling (ask the Emir of Dubai). The trouble begins when you have to keep extra guards, gardeners, electricians and housekeepers to tend to the unused parts of the palace. Sooner or later, you begin to feel the pinch of all that wasteful maintenance of unused rooms and hallways. That’s when you cut your

losses and abandon unused parts of the palace which eventually fall into ruin; the feel-good bubble gets pricked, and wealth is destroyed.

But China has consistently defied all such prophesies of doom. Too many smart people-for very cogent and rational reasons that are steeped in economic logic and theory-have been predicting that China’s bubble has to burst. But it’s not happened, and shows no real signs of happening, yet.

True, there have been bumps along the road: China has weathered a few storms and some small bubbles have been pricked, but nothing that can be called an epic disaster caused by an epic spree of hyper-investing. Actually, the time has come to acknowledge a truth: either conventional economic theory will have to be rewritten, or China will eventually collapse. The two cannot co-exist. China cannot defy 200 years of economic laws with such ease and facility; either its defiance will end in tragedy, or conventional economic theory has become irrelevant and hit a dead end.

Frankly, it’s not too bizarre to believe that China could be scripting a new economic logic. I would venture a 50 per cent wager on China actually trumping conventional theory. Why do I say that? Because by investing on a scale hitherto unknown and untested, China may have defined a new ‘escape velocity’ of capital spending. Traditional theory says that investment should be ‘sustainable’, that is, it should be ‘matched’ by rising consumption. But what if you pump so much capital into your economy-similar to putting extra fuel into a rocket-that you ‘escape’ the gravitational pull of low thresholds?

Especially if the bulk of your capital is spent on infrastructure (roads, railways, schools, hospitals, ports), as against factories which produce toys and televisions? This could be the Chinese masterstroke, the single discontinuity which could defeat 200 years of economic wisdom. Big factories may create over-capacity, but mammoth infrastructure could trigger higher productivity and the ability to create wealth.

So it may be a fatal mistake to look at China’s investment spree in a single

lump of factories- plus-infrastructure.

Perhaps big factories create waste, while big infrastructure, especially life-enhancing social assets, empowers people.

By rapidly educating your workforce, by brilliantly executing immensely large projects, by importing expertise and dollars in a shrinking world, you could create a ‘shower of wealth and productivity’ such that consumption ‘trickles through’ quickly into the bubble. The sheer scale of your activities could end up swelling the tide in which everybody and everything rises together; a new model of ‘tidal wave investing’

It made sense to ‘play blind’ on India-put in some money, but not bother too much with it. If you were dealt a good hand, you could make a killing; otherwise, your ‘max downside’ was to simply write off the investment as a ‘hedging cost’ for bets taken elsewhere in Asia. could buoy the whole ocean to a much higher watermark.

China’s final and ultimate repudiation of conventional theory may be the apparent neutralizing of democracy.

Two hundred years of political economy have taught us that genuine enterprise and innovation take place only when people are free, when individual genius soars unfettered. Look around you-America, Europe, Japan, Israel, South Korea, Brazil, India, Australia, the bulk of the world’s wealth resides and flourishes in a democracy. But China is challenging that axiom; once

again, it is using ambition and infallible execution to trump democracy. It believes that people will trade wealth for freedom; for nearly three decades, this belief has held good and gathered in strength. So will China drive the final nail into the coffin of history? Can real wealth be shared and sustained if ordinary people live in constant fear and threat? Sooner or later, won’t the will to create wealth break down, or a revolution of rising expectations overturn the rule? However much China may protest otherwise, the jury is truly out on this one.

Clearly, China is crafting a new economic wisdom which has stood textbook material on its head. It’s spending unbelievable amounts of capital under an ‘escape velocity’ model as opposed to the ‘sustainable investment’ theory of conventional economics. It is betting on consumption ‘trickling through’ as against ‘matching investment’ under traditional economics.

It is using mandated prices of foreign currency, wages and land, as against free market discovered prices, and finally, it is doing all of this in a rigidly controlled quasi-democracy (many wouldn’t bother with such semantics, and call it a plain authoritarian state, but that could be missing a few nuances of China’s extraordinary story). Will it succeed? As I’ve said before, I wouldn’t wager more than 50 per cent on this happening. But what about the other 50 per cent?

Now look at India: that’s a classical textbook case. India’s structure is an uncanny prototype of a ‘promising’ economy. Well above half its GDPnearly 58 per cent-is consumed by over a billion people (another 11 per cent is consumed by the government), giving it the kind of organic strength that transformed the economies of the US, UK, Germany and Japan. Just its rural economy is made up of 800 million people spending over 5 billion. This when agriculture’s share is declining, manufacturing is rising, and services are already more than half the GDP-again, a classically attractive mix (although India needs to have higher manufacturing and even lower agriculture, but the lines are moving in the right direction).

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Like China, India saves nearly 40 per cent of its GDP, but the bulk comes from households (as against China, where state- owned corporations with somewhat contrived accounting contribute more than households).

India’s resource consumption has decreased for every incremental dollar of GDP since 1991 (as against China, which was using three times more resources per dollar of GDP than India). India’s economy is healthily private, with state-owned corporations accounting for less than a tenth of the output. Its stock exchange was set up in 1875, the oldest in Asia-it is also perhaps the most digitized in the world. At slightly over a trillion dollars, its stock market capitalization is about equal to its GDP-another beautifully balanced economic attribute. Its foreign reserves are over a quarter of a trillion dollars, neither uncomfortably high, nor low.

Its bank credit is roughly equal to half its GDP (as opposed to 150 per cent for China), while bad loans are at an astonishingly low 2-3 per cent in a world devastated by toxic financial assets (recall that China’s bad debts are precariously estimated at between 30-50 per cent, the large range itself betraying a huge risk of fuzzy estimates). Indian banks had virtually zero exposure to the sub-prime paper that ravaged America and Europe. About 40 per cent of the economy is exposed to global trade (exports and imports)-low enough to escape world crises, yet high enough to remain an open, competitive economy.

The Indian rupee largely floats against world currencies, in contrast to China’s yuan, which is globally pummelled for being artificially undervalued. The rupee danced in a 25 per cent band after Lehman’s collapse, without disrupting anything. A red rag is India’s weak government budget and rather high public debt at 80 per cent of GDP-but here again, the highly vulnerable dollar loans are paltry by Asian standards.

India is in a very sweet demographic spot, being the youngest country in the world: half a billion Indians are less than twenty- five years old, giving it a unique ‘demographic dividend’ among peers. Ten of the world’s thirty fastestgrowing cities are in India; its urbaniza-

tion rate, at 30 per cent, is accelerating.

With 350 million people displaying a reasonable proficiency in English, it’s the largest English-using country in the world. Its judicial system is robustly based on English common law. It’s a genuine, albeit imperfect, democracy.

To repeat, India is a classical textbook case. If 200 years of economic theory is sound, then India simply must succeed in creating an Americaand Japan-like miracle. Continuing to infuse physics into economics, India’s growth is like the ‘wave theory’: closer to the epicentre, the waves are tiny, densely packed, and look really small.

But as they spread outward, they pick up cascading strength, making larger and stronger concentric ripples. It starts as an undetectable wobble, but soon becomes a ring of thrusting circles, growing in size and strength with each outward lunge. That could be India’s model-dotted with micro changes, the atoms picking up energy from each other, pushing and jostling those around them to move faster, until all the particles begin whizzing around kinetically, pumping up a balloon of spreading prosperity.

So, if China’s got the all-new, not-yet-fully-tested model of ‘escape velocity’ capital investments, India’s going with the rather established ‘wave theory’ of inaudibly permeating growth. I also stumbled upon a fascinating piece by Nobel Laureate Paul Krugman called The Myth of Asia’s Miracle: A Cautionary Fable. It

Napoleon once said, ‘Let China sleep, for when China wakes up, she will shake the world.’ China has woken up-as predicted, its economic growth has shocked and awed the world.

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was written in the early ‘90s-therefore, it can be interpreted with the luxury of hindsight. Krugman analysed two earlier economic races: one between the US and Soviet Union (‘50s through to the ‘80s), and another between the US and Japan (‘70s and ‘80s). He cited plenty of popular commentary from those days which read ominously like today’s obituaries. By way of example, he quoted Calvin Hooper (1957) who had predicted that ‘a collectivist, authoritarian state was inherently better at achieving economic growth than free-market democracies (and) the Soviet economy might outstrip that of the United States by the early 1970s’.

Others asserted that ‘Japan would overtake the United States in real per capita income by 1985, and total Japanese output would exceed that of the United States by 1998’.

According to Krugman, these predications were bound to fail because they ignored the intangible force-multipliers of innovation, technology and competitive efficiency. He added that similar predictions were also being made then (do remember that ‘then’ was the early ‘90s!) about the US and China. ‘The World Bank estimates that the Chinese economy is currently about 40 per cent as large as that of the United States. If China can grow at 10 per cent annually, by the year 2010 its economy will be a third larger than ours.’ Of course, at that time Krugman concluded that this comparison too could fail. Today we are in 2010, and we know that Krugman was right. Forget about being a third larger, the Chinese economy continues to be less than 40 per cent of the US even today.

Krugman’s fallacies have a crucial bearing on who will ultimately breast the tape, China’s hare or India’s tortoise. Perhaps the answer will not be quite as simple as who is investing more and growing faster today. You will have to put your arms around a few intangibles: Who has superior innovation?

Who has more entrepreneurial savvy?

Who is grappling with and expanding in intensely competitive conditions?

Finally, there is another, enormously enigmatic factor at work here. It’s not about China versus India, but China

and India versus the rest of the world.

During their peak growth decades, countries like Great Britain, the US, Germany, Japan or South Korea added trillions of dollars in income to hundreds of millions of people. But it’s for the first time in human history that trillions of dollars are being added to billions of people. Now imagine this contrast playing out on the groundfor instance, America and China have roughly the same land mass, but China has thirteen times more people than what America had a century ago when it began its economic miracle. So today’s China (or India, for that matter) could be cradling several countries, or sub-economies, at different points of transition; its rich coastal sub- economy is perhaps the equivalent of a Japan or Germany, while parts of the hinterland could be similar to a Brazil, South Korea, Australia or Bangladesh. As soon as the top 150-200 million Chinese hit a Japan- or Germany-like living standard, the growth impulse could be moving to another sub- economy which is mimicking a Brazil or Australia, and finally, perhaps three quarters of a century later, to the ‘Bangladeshlike sub-economy’.

Earlier, in 50-150 million people countries like the US, Japan or Germany, many people would get very rich quite rapidly. Now billions more are getting somewhat rich (but not ‘very rich’) at a reasonable clip (but not ‘rapidly’); as soon as one sub-economy becomes rich, the growth wave moves to the next-in-line poorer one. Earlier, the smaller rich economies made a ‘onetime transition’ over a few decades; but China and India, because of their large numbers, could see ‘serial transitions’ as one sub-economy after another hits higher living standards. This could make their growth stories far more elastic, with repeated ‘rebounds’ from ‘slowdowns’, as one sub-economy plateaus but another begins firing on all cylinders. What’s more, this uncharted dynamic could be happening simultaneously across both countries in a contiguous part of Planet Earth. The centre of economic gravity could be shifting from some point in the Pacific Ocean to a dot near Mount Everest.

But China has consistently defied all such prophesies of doom. Too many smart people-for very cogent and rational reasons that are steeped in economic logic and theory-have been predicting that China’s bubble has to burst.

Earlier, each transforming country had a somewhat predictable economic graph, with a thin two-dimensional line rising along an ‘S curve’. Today, China’s and India’s income curve is more three-dimensional, thickening and flattening out over billions of people in several sub-economies. It is a wave without known coordinates, one that cannot be mapped on any prior experience in human civilization. Will this dynamic create many more happy, better off, better educated and motivated citizens, workers and consumers?

Or will it create a larger constituency of relatively deprived, worse off, more dissatisfied people (compared to peers in smaller countries that became wealthy much earlier)? Will a slower accumulation of wealth encourage them to patiently strive for more, or make them impatient and angry? How differently will these billions of ‘comparatively lesser mortals’ work, play, consume, save and invest versus their historical counterparts?

So what’s my wager now? If I put 50 per cent on China, would I put more on India? No, I would still venture no more than a 50 per cent bet on India, because we are at a critical crossroads in economic history. In stock market parlance, China is the ‘beta stock’: it could give wildly high returns, or it could sink like a stone. India is the ‘defensive scrip’ which may not leap to

the stratosphere, but is also unlikely to fall too much from where it is. If China scales the summit, it will force a rewrite of economic textbooks. If India ascends to the top, it will reinforce the strength of conventional wisdom.

But which way will history turn?

China’s spectacular sweep, compared to India’s relatively mild rise, could tempt an easy answer, but it would be wise to remember that history unfolds over several decades, perhaps even in fractions of centuries.

So it truly may be too early to call this match. Do also remember that China and India were the quickest to bounce back after the Lehman crisis. China’s rebound, however, was accompanied by huge debt and deflation, as prices (and therefore demand) were weak. India’s turnaround was sturdier, caused by lower debt and modest inflation. So in economic terms, India’s nominal GDP grew twice as fast as China’s for a few quarters on the trot-the first time that this happened in nearly three decades.

This is what economists call a ‘lead indicator’: in simple language, it could be the one swallow which makes the summer, an early signal of change. But before we spring to quick conclusions again, do remember that China is so far ahead that India’s fledgling momentum could easily get snuffed out. The imponderables are far too many; China’s ambition and confidence are, unfortunately, equalled by India’s poor governance and self-doubt. China could yet re-write economic theory, and India could yet blow its chances.

As with all good games of chance, there’s a joker in the pack. What if India were to graft some of China’s ambition and determination? Or, what if China were to adopt some of India’s democracy? Now the game gets really interesting, because the odds then move, from comparing economic structures, to figuring out which country can do what more easily. Can India fix its governance more easily than China can repair its politics? Whoever gets this one right will win the biggest wager of the twenty-first century.  (Raghav Bahl is founder and editor of Network18 as well as publisher of Forbes India.)

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F I L M R E V I E W

Ghost Town Directed by : Zhao Dayong

T

here are documentaries that set out to explain the world, to shape the chaos of experience into coherent stories or compelling arguments. This kind of movie — dominant just now in American nonfiction filmmaking — performs the journalistic work of advocacy, investigating problems and engaging the sympathy or the outrage of viewers.

But another documentary tradition is more exploratory, less concerned with the interpretation of life than with the communication of its texture. Zhao Dayong’s Ghost Town, a nearly three-hour-long visit to a remote Chinese mountain village, is hardly indifferent to social issues, but it approaches them obliquely, with open-minded curiosity and inexhaustible patience.

From the start Zhao’s camera is an acknowledged, if discreet, presence. In the opening shots, unseen residents

of the town are heard commenting on how their familiar world looks as they peer through the lens. Later some of their neighbours address it directly and with minimal self-consciousness, talking about their personal histories, religious practices and the hardships they have faced.

What they have to say is fascinating — in particular the reminiscences of an elderly preacher who serves as the patriarch for the local Christian population — but Zhao has an exquisite ability to balance words with images. The life stories and household interactions that fill out the film’s three chapters take place against a natural background that is shot beautifully, though never ostentatiously. Green mountains and deep, shadowed valleys frame the desultory daily routines of the villagers, while the nonhuman population of dogs, chickens and pigs receives a proper and proportional share of attention.

Child abandonment, marital discord, poverty and religious persecution all figure in Zhao’s canvas, but Ghost

Town, is less a chronicle of misery and deprivation than a miniature epic of the everyday. In spite of its length the film feels foreshortened, as if every vignette or incident, every character encountered for a few moments, contained the germ of an unwritten novel. Its author might be a modern Chinese counterpart to Thomas Hardy whose intensively observed dramas of rural life have a similar tone of beguiling, melancholy strangeness.

The agrarian England that Hardy depicted at the end of the 19th century was on the brink of vanishing, swept away on a tide of industrialization. Given China’s rapid urbanization, Zhao’s film has an inevitably elegiac undertow. Villages like this ghost town are emptying out, feeding the explosive growth of China’s cities. The folk traditions he shows — the climax of Ghost Town is a ritual, torchlighted chasing away of demons — seem at once durable and vulnerable, perched between a quickly receding past and an unknowable future. 

The Road Home

erostami’s work. Its panoramic shots of the village nestled in the snowy hills in the dead of winter and of grain fields blazing gold in the late summer heat are unabashedly gorgeous and fraught with a nostalgic poignancy that one doesn’t feel in Iranian films in which the atmosphere tends to be more mystically spiritual.

The film’s overwhelming sense of a purifying return to nature helps compensate for its central characters — two humble but luminous young people living in a remote Chinese village during the Cultural Revolution — not being sharply etched.

The story is narrated by Luo Yusheng (Sun Honglei), a young engineer who, upon the sudden death of his father, returns from the city to the village of Sanheutun, where he was born. When the funeral arrangements are discussed, his wizened mother, crushed with grief, insists that traditional custom be observed and the body be carried on foot by local residents the considerable distance from the hospital back to the village.

As Yusheng contemplates his father’s death, he begins to reminisce about his parents’ marriage, and the movie, whose opening scenes are filmed in a grim bluish gray, bursts into brilliant colour. We meet Luo’s mother Zhao Di (Zhang Ziyi) when she was a radiant 18-year-old who falls in love at first sight with Luo Changyu (Zheng Hao) the handsome 20-year-old schoolmaster who arrives from the city.

For the first third of the movie Di, the prettiest girl in the village who has resisted entering into an arranged marriage while tending her blind but canny mother (Li Bin), throws herself at the visitor, who soon notices and shyly

Directed by : Zhang Yimou

Z

hang Yimou’s tenderhearted film The Road Home is a cinematic ballad of such seamless construction and exquisite tonal balance it transcends most of the pitfalls of movies that aspire to a classic, lyric simplicity.

Zhang, whose credits include Red Sorghum, Raise the Red Lantern, and The Story of Qiu Ju, was a cinematographer before becoming a director, and his mastery of colour and mood and his attunement to nature lend this elemental love story a penetrating hum of universality. Much of the film is set during the winter in a pristine, hilly region of northern China that is connected to the outside world by a single unpaved road. There is no electricity in the town, and water is pumped from two wells.

Saturated in a bluish winter snow-light and filmed with an extraordinary sensitivity to the changing seasons, the weather and the time of day, these scenes are so atmospheric they beckon you into a childlike state of wondrous apprehension. Before the engulfing realities of wind, snow, sky and cold and the sound of crunching boots, nagging everyday thoughts recede into the background.

A major influence on the film Zhang has said is contemporary Iranian cinema, especially the movies of Abbas Kierostami, which convey a similarly ecstatic awareness of the natural world. But The Road Home isn’t as austere as Ki-

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reciprocates her interest.

When the villagers build the schoolhouse in which Changyu will spend most of the rest of his life teaching primary school, she lovingly weaves the traditional red cloth to be wound around its rafters. Visiting the school daily, she stands outside, listening enchantedly to the sound of his mellifluous voice as he drills the students in quasi-military calls and responses.

The chaste courtship is painfully interrupted when Changyu is called back to the city to face interrogation for unspecified political reasons, and Di, who has pinned all her hopes on his return, nearly dies of a fever caught waiting by the road for him to return on the day he promised.

Supported by the warm cinematography of Yong Hou and San Bao’s evocative score (both of whom worked on Zhang Yimou’s Not One Less), Zhang Yimou has fashioned raw emotion and a simple narrative into a deeply heartfelt masterpiece. Though the central romance is rather simple, and told in a decidedly one-sided manner through Di’s eyes, Zhang Yimou gives the story an irresistible emotional pull with his lyrical execution of the material, which is based on Shi Bao’s novel Remembrance. This is a love story told in its simplest terms.

As the film’s lead, Zhang Ziyi brings much enthusiasm and charm to her memorable and well-cast portrayal of the young Di. While most Western audiences equate the young actress with the spirited and sassy Jen of Crouching Tiger, Hidden Dragon, this film broadens her dramatic versatility, while reinforcing her unmatched screen presence.  November-December 2010  India-China Chronicle |63|