Thirty years ago, a young Indian economics doctoral student, blown away by reading Pushkin in a San Francisco bookstore, abandoned his thesis on the demography of China and turned instead to literature. Vikram Seth found he could say more in verse and prose than in equations and graphs but that didn’t disqualify him from commenting, inadvertently, on why the mayhem in the Chinese stock market foreshadows further economic trouble or why the Indian economy looks more resilient. Seth’s book of translation Three Chinese Poets includes this insight from Li Bai’s The Hard Road: “Travelling is hard! So many forks in the road. Which one to take?”
The many forks in the road of Indian democracy are often cited, in India itself, as a source of weakness. Narendra Modi, the prime minister who came to power last year on a slogan that he would Modi-fy the country, has vowed to import the capacity for action that impressed him on visits to China. The attraction of China’s state controls on population growth has much to do with India’s deep-seated fear that its sprawling population is too large to be fed and educated.
On the face of it, the two countries underwent parallel processes of opening up. After Deng Xiaoping bested the Maoists in 1978, China phased out collectivised agriculture and granted controlled autonomy to state enterprises. It looked like a success for authoritarian capitalism; since 1978 the Chinese economy has grown massively.
It seemed, by contrast, typical of India’s tardy democracy that its own changes took another decade. Reform of Nehru’s Fabian-inspired state, in which a licence was needed for everything short of breathing, only began in 1991. Tariffs on goods were cut and tax rates were lowered. There was a welcome boost to growth but it seemed too little, too late. At the start of the 1990s, Indian income per capita had been as good as China’s. It is now a quarter as good. The Chinese economy is worth $9.3 trillion; the Indian $1.67 trillion. Whatever orders the Chinese authorities were issuing in Beijing seemed to be working better than the decentralised chaos over which Delhi had no control.
This year, however, according to Arun Jaitley, the finance minister, India will grow by 7.5 per cent. Raghuram Rajan, India’s central bank governor known as “the Bond of banking”, has kept a tight rein on inflation and boosted foreign reserves. The International Monetary Fund has said it expects India soon to be the world’s third largest economy. Meanwhile, China is convulsed in economic turmoil that is rooted in political authority. Being a democracy — however shambolic — is one of the economic virtues that India holds over China.
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The Chinese have made an explicit bargain with prosperity. The authority of the ruling Communist party rests on its promise that state-controlled capitalism will enrich China. At some point, the theory goes, the benefits will trickle down all the way to the peasantry. The problem is that the party has no other source of authority when confronted by fiendish policy conundrums. How to reduce China’s high savings rate and low consumption rate? How to manage the migration of more than 250 million people from the neglected interior to the coastal provinces? Environmental degradation is eroding arable land and there is a looming energy crisis. China has a rapidly ageing population as a direct consequence of its inhumane one-child policy. State corruption is endemic and there is no cleansing effect from either a free press or public opinion.
When the authority reliant on prosperity starts to erode there will be a political battle within the Communist party, the signs of which are already visible. Authoritarian regimes always, of course, retain another source of authority. Too much discontent and the tanks will come rolling in. China, in short, will not deal with a downturn as easily as India has done because it does not have the democratic institutions that are vital for the long-term health of a market economy.
In India, contracts are enforced, for the most part, with impartial regard for justice. Farmers who want to move to the city can, in India unlike in China, sell their land or borrow against its value to finance the move. Monetary and fiscal policy are transparent. The exchange rate obeys open market principles. Government officials and company executives are called to account, though not often enough, by newspapers that have more readers than any free press in the world. It is a painfully slow process but Indian politicians are charged with delivering what people want and will be judged accordingly, in free elections.
India has other advantages over its bigger and more successful neighbour. The median age of an Indian is 25; in China the median age is 34. Educated Indians speak English, the language of global services. Already, two thirds of India’s output is in the services sector even though it employs just a third of the workforce. India’s problems are persistently severe. A third of the country cannot read. Women face systematic discrimination. Only a third of homes have electricity and the roads are a mess. The current-account deficit is still too high and foreign investment too low but these are fixable problems. The more Indian democracy is given practical effect the more its population, which at 1.25 billion is now larger than China’s, will be seen not as a burden but as the greatest gathering of productive potential in the world.
It is very telling that there can be no Chinese Vikram Seth. He would have to be a fugitive, scribbling samizdat sheets out of sight of the authorities. Next year, Seth will follow up A Suitable Boy, his monumental story of India after independence, with a sequel set in the present, A Suitable Girl. Seth speaks from, and describes, a culture that thrives on a licence for argument. As Octavio Paz said in his great study In Light of India, “the surest method for resolving conflicts, however slowly, is dialogue”.
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Where India is a rowdy public conversation, China is, officially at least, a monologue. Of course no people is ever really like that. The Chinese are not aliens. The human desire for expression is theirs too and it will, eventually, find an outlet. The road, though, is hard. The poet Li Bai writes of the desire to “hoist my sail into the clouds and cross the mighty ocean” but Seth’s rendering expresses the necessary caution: “A great enterprise must find the right moment.” It will, and the catalyst, perhaps years hence, will be that Indian democracy has proved to be more hospitable to market capitalism than the dwindling authority of the Chinese state.