Sunday, April 10, 2005

The Up-and-Comers

Fascinating New York Times article on the rise of China and India on the heels of Chinese Prime Minister Wen Jiabao's arrival in New Dehli. The narrative goes a little like this: 1/3 of the human race expanding economically at incredible rates; huge demand for energy resources; on the hunt for new markets; and a reassertion of the balance of power in the world (from the trans-Atlantic relationship with the U.S. to the emergence of an East Asian-Pacific relationship with the U.S.). Where the two diverge is political openess:

"There is constant talk these days of turning Mumbai, the southern commercial metropolis formerly known as Bombay, into a new Shanghai, China's most glitteringly modern city. More to the point may be Bangalore, India's booming capital of telephone call centers and high-tech software. Growth there has been menaced by political delays that have stalled construction of a new airport for seven years. Shanghai, on the other hand, built one of the world's most spectacular airports in three years.

Such contrasts have left some Indians to remark, sometimes despairingly, about a "democracy price" that slows development. At the same time, Indians almost invariably say they would have it no other way. "I'm often approached by friends returning impressed from China, saying how our airports in Bombay and Delhi can't compare," said G. P. Deshpande, a longtime China scholar at Jawaharal Nehru University in Delhi. "When I tell them that these things come in a package, that you don't just get the new airports, and I describe the package, though, they say no thank you."

The package Mr. Deshpande alludes to is strict authoritarianism, which allows the local and central governments in China to rezone entire districts without so much as a hearing, to pollute city and countryside without having to face public objections and to conduct large-scale social engineering, often disastrously, but with similarly little question. For their part, mainstream Chinese intellectuals talk of India's advantages in democratic governance. For all of China's apparent strengths today, they say, future success may depend on democratic reform.

"If China learns its lessons from India, it can succeed in democratizing in the future," said Pang Yongzhing, a professor of international relations at Nankai University in Tianjin.

"India is a far more diverse country," he said, "a place with the second largest Muslim population in the world, and lots of ethnic minorities, and yet it organizes regular elections without conflict. China is 90 percent Han, so if India can conduct elections, so can China."

Chinese have also begun openly to question the kind of growth their authoritarianism has spawned.

"We are using too many raw materials to sustain this growth," said Pan Yue, China's environment minister, in a recent interview with the German magazine Der Spiegel. "To produce goods worth $10,000, for example, we need seven times more resources than Japan, nearly six times more than the United States and, perhaps most embarrassing, nearly three times more than India.

"Things can't, nor should they, be allowed to go on like that," he said.

Others worry about China's seeming addiction to large investment, which leads to huge waste and steep cyclical downturns, a shaky financial system imperiled by a huge burden of nonperforming loans, and rampant official corruption.

"In India there is a lot more room to move around," said Zhang Jun, director of the China Center for Economic Studies at Fudan University in Shanghai. "Their capital markets are good, their banking sector is better than in China, and there is entrepreneurialism everywhere in India, along with well-protected intellectual property rights. All of these are things that China lacks."

Pressed for a prediction, Mr. Zhang said he saw the two countries' positions converging within 15 or 20 years, by which time they may rank as the two largest economies in the world, if still far below the United States and other top economies in terms of per capita wealth. How they get there, and the examples they set along the way, may hold important lessons for other developing nations, on global peace, human rights and democratization.

"If China continues to grow and grow, people will inevitably begin to think this is proof of the validity of their system, and that would be very bad for all of Asia," said Subramanian Swamy, president of India's Janata Party and former minister of law, commerce and justice.

"On the contrary, if India continues to emerge, taking a seat on the Security Council, it will have a tremendous impact for the good," he said. "As far as exporting democracy, it is only a matter of time before India gets the self-confidence to begin doing this."

My guess is that the first part of the 21st century, the primary focus for the U.S. will be continuing to help the Middle East get up to speed and stomping out the the last remants of al Qaeda. But the for the rest of this century, the action will be in East and South Asia, led by India and China. Wall Street and American business are already there "setting up shop." The question remains if our political and strategic thinking will follow the economic and financial route in locking up those important diplomatic and strategic partnerships -- not antagonizing or threatening these folks.


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