china's miracle

8/14/2019 China's Miracle

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CHINAS MIRACLE

The most remarkable feature of Chinas growth in the past two decades has been its

ability to set course and stay on it against all odds and eventualities.

The Chinese government launched, in the early 1980s, its programme called the

Four Modernisations, which laid down a goal of quadrupling economic output by theturn of the century while only doubling energy consumption. This vision rested, of

course, on the highly inefficient and wasteful pattern of energy consumption that

existed at the time as a consequence of the Maoist drive of creating enterprisesranging from small-scale steel plants to the production of crude consumer goodswithout regard to the state-of-the-art technology or economies of scale. But, what is

praiseworthy is the ability of the entire population of China to adopt these 21-yeargoals and translate them diligently into policies and actions at all levels.

India, by contrast, still does not have an integrated energy policy that reflects itsown endowment of resources, in the absence of which different ministries anddepartments continue to define policies in their own disconnected manner.

China watchers and scholars are generally divided into opposite camps, reflecting

extreme views. There are those who are generally skeptical of Chinese claims and

official statistics of growth and its ability to maintain the pace of progress that hasbeen achieved, albeit at a genuine pace lower than official rates. The other campcontinues to be dazzled by the Chinese economic miracle and remains convinced that

in the coming decades China will emerge as a rival to the US in aggregate economicoutput.

The China pessimists reflect two sets of concernsthe first deals with the ability ofthe Chinese political system to maintain firm control of the thinking and action of itspeople, even while, in economic terms, China continues to become an important and

firm part of the global system. The demand for genuine democracy is bound tobecome stronger, challenging the military form of command that has existed for solong and giving expression to a much more inclusive form of decision making atevery level. The leadership is trying to bring into the Communist party the nouveau

riche, who have emerged in significant numbers across the country, to ensure thatthose who have acquired economic power are also allowed access to political power.This would eliminate the formation of disaffected groups outside the system who

have enough clout to foment dissent and dissonance, but democracy in a real sensewould still be absent.

However, the bigger threat to sustaining growth in China comes from that veryfeature of growth at all cost, which has created wealth and income at a breathtakingpace. A hidden part of this approach is the very high cost in terms of depletion and

distorted use of natural resources. In the water resources policy of China, for

instance, across several parts of the country where water is already scarce,


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allocation of supply has gone in favour of industry, even as agriculture suffers from

acute and growing shortages and human consumption is reduced to levels of acutedeprivation.

China today is an extreme example of unsustainable water use, which spellscatastrophe and crisis in the very near future not only for the Chinese people butalso globally. Lester Brown, the eminent ecological economist, estimates that 160

million tonnes of food production in the world today is based on unsustainable use of

water, and the bulk of this production occurs in China. In the foreseeable future,China would, therefore, emerge as a major importer of food grains, which wouldhave global implications on agricultural commodity prices and some clear lessonsand opportunities for India.

Our populist policies of free electricity for farmers and irrationally subsidised water

use charges for all sections of society render us similarly vulnerable to looming crises

in large parts of India, which are already water stressed. Yet, if we exercised arational vision of the future, we would emerge as a major exporter of food grains in

the world market without depleting our natural resources to an unsustainable level.

Clearly, this is an area where competition with China would be skewed in our favour,if we were to exercise a responsible degree of political will and if all our leaders wereto arrive at a consensus on changing their populist postures and policies. These only

deprive our children and grandchildren of their rightful heritage for the sake of a fewvotes in election after election.

A gigantic example of the preponderance of economic growth to the exclusion ofhuman or natural resource considerations in Chinese official policies can be seen inthe Three Gorges Dam, designed to tame and harness the mighty Yangtze river. At a

projected cost of US$ 22.5 billion, this would be the largest dam in the world

spanning two km across and rising 185 metres high. This project would displace atleast 1.2 million people, and the benefits are hardly consistent with the financial and

human costs.

But the government exhorts people to accept hardship for the larger good of the

country. A sign perched high near the dam, it is reported, reads, In these times ofsacrifice, make China strong. What is amazing about todays China is the ability ofthe country to mobilise investments on a scale that makes the Three Gorges Dam

feasible. The government is also spending huge sums of money for social services,

having agreed recently to attract foreign funding for the national social security fund,planned at almost US$ 7 billion.

If India is to compete with China, major reforms would be essential not only innational level policies but in the states as well. In particular, as long as states like

Uttar Pradesh, Bihar, Orissa, and West Bengal are viewed as pathetic examples of

investor-unfriendly policies, India as a whole would remain a lumbering elephant.Literacy and health care systems have to spread to every part of Indias population


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and the infrastructure sectors have to move rapidly on the path of reform if we areto keep pace with China and the rest of the world.

While China has surged ahead in the past two decades, a conscious decision to catchup with the middle kingdom is perhaps the first step in changing the mindset of ourpolitical leaders and decision-makers. We would do well if, at least, we keep pacewith China, and freeze the gap that exists today.

china's miracle

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