CHINDIA UNVEILED
Reading up on China and India.
By Tom Leander

There’s no shortage of books lately explaining China’s and India’s economic
juggernaut and what it means to the world. Many suffer from a kind of stultifying boosterism, reflecting the credulity that afflicts so many observers when confronted with China’s economic rise. The Elephant and the Dragon: The Rise of India and China and What It Means for All of Us, by Forbes’ Asian correspondent Robyn Meredith, fortunately sidesteps this temptation. The book clear-headedly lists the dangers inherent in the economic growth of these remarkable nations, as well as the business case for operating in them.

The approach may have struck a nerve. Gifted Indian novelist and journalist Pankaj Mishra devoted 5,000 words in the June edition of Harper’s, a U.S. magazine, criticizing it as a work devoted to outmoded and quasi-imperialist U.S. sentiments, reflecting the ideas of Henry Luce, the renowned publisher of Time and Life and promoter of the “American Century.”

Meredith’s book does in fact feature a pro-market and anti-protectionist stance—not unusual and hardly a crime—and views the contrasting paths to development in China and India through this same prism. In China, Meredith writes, the greatest threat to development is that nation’s authoritarian approach to controlling the economy and denying its people political freedom. She cannily refutes the common observation—at its most obnoxious when it comes from the mouths of rich American investment bankers—that it is China’s can-do authoritarianism that has made its economy shine, and that India would do well to forget that it is a democracy.

She points out that several stars have aligned for China, allowing it to grow in spite of its political absolutism. One is that China’s extremely high savings—China’s rate is 40 percent versus India’s 26 percent—allowed the government to fund infrastructure projects that most developing nations cannot afford. Also, the timing at which China embarked on reforms has been crucial. The fact that China’s literacy rate was almost 90 percent in 1982—half of India was still illiterate in 1990—has played into its dizzying pace of development.

The immense challenges facing India come from the befuddled anomalies that afflict all democracies. Often, measures passed to appease India’s poor voters, and in the name of their welfare, can be counterproductive to growth. Meredith cites the current government’s National Rural Employment Guarantee Act of 2005, which assured 100 days of work a year to every rural household that wants it at a minimum wage of US$1.35 per day. This US$9.1 billion program was equal to 1.3 percent of India’s GDP, burdening the government with more debt. Although it provided a basic safety net, it has done nothing to ignite economic progress. She cites the familiar problems that emerge when political constituencies and national economic goals clash—politicians favoring squatters who block infrastructure development, political infighting that has halted the establishment of India’s special economic zones, and the 2006 government blocking of a modest plan to sell off minority stakes in government-owned companies.

Meredith’s argument—which so incensed Mishra—is that a government more open to competition and business (not unlike the previous government of Prime Minister Atal Bihari Vajpayee) would be better for India by allowing for more efficient job creation and would deliver more people out of poverty than government-backed programs. First hand reporting—showing a keen eye for detail when describing Bombay’s “working slum” or a village in east India—makes the point of view seem informed and reasonable.

The test of any survey book’s mettle is how it looks when the news changes. Meredith’s discussion of China’s and India’s relationship with Myanmar could serve as both preamble and postlude to the back story of Myanmar’s recently crushed saffron revolution. She describes the conditions that allow energy-starved China to help prop up the brutal Myanmar junta. But she also points out that while democratic India formerly pressured for democratic leader Aung Sang Suu Kyi’s release, it will no longer do so because it, too, desperately needs Myanmar’s resources.

The book ends with a wake-up call to the insular United States to prepare for competition on a global scale that few citizens—or politicians—have grasped. Far from issuing a jingoistic warning, Meredith counsels understanding and gives a solid accounting of the motives of the soon-to-be-global economic leaders. So different in many ways, they share a fundamental goal of delivering their huge populations from poverty. Meredith paints a lucid picture of the seriousness and durability of that effort, and why the United States should abet it via economic and political embrace for the sake of its own future.