(Part I of this article came in OhmyNews) 


India increasingly looks like the case of a lost democracy, in China there is no democracy. India has fallen prey to crony capitalism; China has adopted socialist market economy with tremendous state control and intervention. India liberalized its economy with literacy rate of 55% and poverty rate of 40%, if not worse, an unheard of proposition even in the west in light of the social fabric. Liberalization in India resulted in curtailing government spend/investments severely not only in manufacturing or industries, but also in social sectors (combined center and state spend on social sector dipped below 20% lately, a drop of 4% in as many years), and as a result today crony capitalists dictate Indian government what they expect, and Indian government is too-happy to deliver like midwives delivering babies to the wishes of these crony capitalists.  

China allowed industries to boom by retaining absolute control over policies, investing heavily itself in infrastructure along with attracting tremendous and unforeseen levels of FDIs; true there were casualties in employee rights, in human rights or even on environmental fronts.  

India championed in empty rhetoric failing thereby both in protecting human rights or delivering the growth impetus; China delivered without caring how people within or outside felt on its style of delivery. India never missed an opportunity to miss an opportunity; China created and grabbed opportunities.  

India and China are likely to have distinctly different roles in coming days, contrary to what’s popularly projected in global media about the common road they would traverse in short-term to medium-term future. Part I of this article dealt with their superficial (but misleading) similarities.  

The differences, as such, are many. The most important ones are listed here with little bit of history and their likely local and global impacts:


  1. Literacy Rate: China at 90.9% still ranks at the 80th position globally; whereas India with 61% literacy stands at the 144th position out of 176 nations. Sociologists worth their salt in India know teacher absenteeism in state-aided primary schools is as high as 18-57%. Many of those schools run with a single teacher; and it’s only obvious that half the students’ who complete primary schools, and constitute to be the largest chunk of literates in India, practically remains illiterate. Ample examples with the likes of South Korea globally show how important literacy as the sole soft infrastructure is in economic development. Incidentally both China and India had their literacy rates at 20% levels back in the 1950s. 
  2. Trade surplus/deficit – India happens to be the only major nation in Asia-Pacific or even in emerging blocks with significant trade deficits, in-spite of globalization of trade and easy export-money everywhere in this region. The deficits could be managed due to easy global liquidity so far; and less is said about trade surplus in China, the better. Global news headlines scream at unsustainable $230 billion trade imbalances between the U.S. and China itself; whereas India’s overall exports is little more than half that trade surplus China enjoys with the U.S. With all the hyped services outsourcing and IT prowess linked to India, India runs closed to 6% of its GDP is unsustainable trade deficits; and barring the U.S., no other major economy do enjoy that luxury. As a result of that, forex reserves in India ($200 billion) stands at 1/7th of the equivalent Chinese figures ($1.4 trillion). Indian capitalists beat the drums of free market when it suits them; and ask for government to intervene when it hurts them. Rise of rupee against dollar, sort of a global phenomenon with falling dollar, has prompted Indian exporters for government intervention/support in the form of export subsidies. 
  3. Consumption of hard infrastructure: In steel, consumption/capita/year in India is nearly 1/10th of equivalent Chinese figure, India consumes hardly 40 kgs (90lbs)/capita/year whereas China consumes around 350 kgs/capita/year. India incidentally has abundant good quality iron ore, and China (having low-ash coke) imports iron-ores from India. In cement, India produces (170MT) hardly 1/7th of what China does (1.1 bn tons). Coming to power consumption/capita, India stands at 1/5th of Chinese figures again. China added 300,000 MWs of capacity in last three years and thereby doubled its installed capacities (622,000 MWs); India has a capacity of 104,000 MW. Naturally consumers in India, from agriculture to industry to households; all pay dearly for the power-crisis, hampering unimaginable loss to the economy. 
  4. Accountability/responsibility: The biggest difference in India is no one is accountable or responsible for any failures whereas hyped successes have expectedly many fathers in India. Indian power minister blames states for the power shortage in India; Indian Prime Minister blames Indian industry paying high wages to its senior managers for phenomenal growth in ‘exclusive growth’ and ‘crony capitalism’ whereas his cabinet forms policies that pay for industries with Indian tax-payers money in different forms of sops and subsidies.

Indian Supreme Court did put on hold the OBC reservation policy by asking the government to ‘set the rules first before it plays the game’, whereas in case of another controversial policy (an attempt to copy from China, by the way), the SEZ policy, no one still knows what the rules are. There was a sealing for 5000 hectares in SEZ Policy even in last month; and now it’s gone with the clearance of bigger SEZs, that too without land-ownerships. It all depends on the influence a capitalist has in the government, and different SEZ policies would emerge to suit their customized needs. No one in India would know for sure what the latest SEZ policy is and how long that would stay. And by relegating basic government responsibility to create both soft and hard infrastructure to an adequate level before competition can take over, in the name of free markets, privatization (or Public-Private Partnerships), Indian government has abandoned governance too early towards the development of a crony-capitalized society. 


  1. Other economic measures: India has market-exchange rate with central bank intervention, China has regulated exchange rate. China, in-spite of absorbing the huge inflows and artificially keeping its currency low, could manage inflation (at around 3%, true rising lately but managed well between 2-3% for years) while delivering nearly double-digit growth for couple of decades. India with couple of years of 8-10% growth is already bleeding under high inflation rates (5-6+ %). Cost of capital in China, in-spite of often repeated slogans of slowing economy, is much less than that in India. Indian government debates on how closed to $60 billion, lying idle for years with state-owned Public Sector Units, or similar huge Provident Fund money, not even getting assured market-rate of returns, can be channeled to the stock markets; whereas that sum, if invested in power or roads or ports can collectively do the country much better, thereby delivering better returns to the shareholders and stakeholders of those funds as well. 


India’s economic growth is slowing before even touching that magical double digit number even for a single year; whereas contrary to all textbook theories, China looks like a heavy train, accelerating with every passing quarter.  And when IMF forecast for growth for all emerging economies is at 7.5%, and 5% for the world; India’s 8% projected growth looks no big deal. Per-Capita Income of India stands at two-fifth level of China, both in nominal and PPP terms; and Indian savings rate of little over 30% falls short of 50% savings rate of China. In terms of market-capitalization, India stands at $1 trillion, China is at around $2 trillion; however when Hong Kong is included, it gets closer to $3.5 trillion for China. India allows derivatives trading, China doesn’t; in India there is no separate pricing for domestic or foreign investors, allowing FIIs with unending reserves to play havoc in an apparently depthless market where retail investors often pay the price of being the victims, China tries to protect domestic investors with some safeguards, true effectiveness of these safeguards can be questioned.


  1. Posture (China’s aggression and India’s tepid acceptance: Some six months back, in a train in India I met an officer working with Indian Railways, the lifeline of India. The uniqueness of this gentleman was his ability was his rattling of latitudes and longitudes, up to couple of decimal points, of smaller unknown places. He did travel extensively in the North Eastern Provinces of India; and he told me categorically that China would take away Arunachal Pradesh (AP) from India one day, sooner or later. He also shared many of his frustrations on why India continuously fails to counter internal terrorism (lack of intelligence). I did not take his China aggression views seriously; however he explained how China has built logistics and rail-links to their border with AP, whereas India has let the rail-links from British period die in those remote parts due to negligence. In next few months till date, I read often in mainstream media about China claiming AP to be part of it, with stronger and stronger voice with every passing day. 


China has illegally taken possession of a large part of Jammu and Kashmir (J&K) as well. Both sides have their claims and counterclaims. Rather than facing the truth with courage, Indian school kids are still taught about the maps where undivided J & K is shown as an integral part of India. India is known to be soft, and would accept any nonsense (example of Kargil war, with Pakistan) whereas China has been able to send a no-nonsense strong signal globally, more so with India. One wonders whether any Indian ambassador in China can claim Tibet to be part of India and still be based in Beijing. Probably not, not even for a single day.


India does not have any consistent foreign policy, what it has is a political theater of democracy to be in power, at any cost. There isn’t a single example where Indian diplomacy and foreign policy have succeeded fairly, not even in Bhutan (going by latest reports), Nepal or Sri Lanka (who may now consider the option of taking Chinese or Pakistani help in its fight against LTTE if Indian response is inadequate). Bangladesh, a country surrounded by India on three sides, and where India played significant role in its freedom back in the 1970s, today decides in favor of China for its gas-exploration contracts, ignoring ongoing Indian discussions for years. It’s the same story in military-ruled Myanmar. Land-based links for China from AP to Bangladesh or to Myanmar to the Bay of Bengal would help China commercially and militarily, weakening India’s position further. Obvious Sino-Pak relationship and interests are well-known. And this is the only part of the world having three proven Nuclear Powers with reasonably proven delivery mechanisms. Any forms of escalation with unjustified aggressions can happen anytime in South Asia.

Beyond Asia, China has successfully started influencing untapped Africa also like never before with its trillion-dollars reserve cash pile. India is yet to get its long due recognition even within various Asian forums (ASEAN).

Any power anywhere needs to be balanced with counter powers. Monopoly anywhere rots, and present unipolar world is a glaring example of that. With the reducing U.S. influence, countries from Japan to South Korea (where US defense has permanent base, it also has presence in Philippines) to others in Asia-Pacific may come under strong Chinese influence sometime in the future.

None has any objection to China and its legitimate global right of 1.3 billion people.  However what many are concerned about is the aggressive signals that China routinely sends – to its very own neighbors. China should realize that before it gets accepted and acknowledged as a responsible global power, its very own neighbors need to accept that first; and help it achieve bigger role in the global arena.

To counter a unipolar and aggressive China in these parts (East Asia, Asia-Pacific, South Asia) of the world, this is high time that like-minded democratic nations from Japan to South Korea to India develop alternative arrangements locally, starting now itself as it’s better late than never. Prevention is better than cure. India is not able to respond adequately to Chinese aggression even with its own borders, and India’s future influence in this region to counter alone that of Chinese influence would be grossly inadequate. If countries in this region start relying too much on the external U.S. protection, which to counter China has to grow proportionately in this region, may prove counterproductive both for other Asian economies and also for China. It’s another matter that rise and fall of powers forecast fall of U.S. influence sometime in the future, signs of signs are already visible with Iran impasse.

Other countries of the region – starting with Japan, South Korea, and others should act on counter-balancing strategy with India so that Asia does not get affected by rotting monopolistic super-power ever in future. Though China isn’t like that today, there is no guarantee that with unforeseen opportunities, it does not become one misguided superpower in near-to-medium term future.

Ranjit Goswami is a research scholar with the Indian Institute of Technology (IIT), Kharagpur, India; and is the author of the book “Wondering Man, Money & Go(l)d’“.

Be Sociable, Share!