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Birds of a feather

A comparative study of how China and India unleashed their economic reforms, writes Ravni Thakur.

books Updated: May 15, 2010 00:22 IST

China and India: The Battle Between Soft and Hard Power
Prem Shankar Jha
Viking Rs 599 pp 908

Prem Shankar Jha’s book is a thought-provoking analysis of the path of economic transformation taken by India and China from centrally planned economies to market economies. It looks at the success and failures of economic reforms taking human development as the main parameter.

Jha points out that the difference between India and China’s growth is based on the 15-year headstart that China had with its economic reforms and feels that, in the long-term, India will catch up.

In the case of China, Jha points out how the main feature of economic management during the reform process was economic decentralisation that empowered provinces and provincial leaders. This became both the road to success and, in Jha’s words, the “power of one” — the “complete fusion of power to make laws, levy taxes, take away land” in the figure of the provincial leader.

This in turn led to the emergence of the cadre capitalist class in China, transforming the role of the Chinese Communist Party and the way it was perceived by the people. As the author says, the State, thus, became a predatory State.

The decentralisation of finances has also meant the devolution of basic human development like health and education to provinces and counties.

This has increased the differences between rich and poor counties at every level, leading to China having the third largest gini coefficient, and increasing social conflict.

Where India is concerned, Jha points out how reform started under Indira Gandhi but, until 1991, was carried out by stealth. In India, opposition to economic reforms came from both the organised Left, trade unions, the bureaucracy and industry, who feared competition if India were to open its economy.

The results, of course, were totally opposite and Indian industry responded spectacularly to the opening up of the economy. However, Jha points out that while the industrial sector was given financial and policy-level encouragement, India’s agricultural sector was neglected throughout the 90s. This led to a big dip in agricultural growth.

Both countries have witnessed massive social unrest. In India, he mentions the Maoist uprising; in China, massive peasant and worker protests.

He points out how lack of avenues of protest and a controlled press in China have led to the use of the traditional tool of filing petitions to higher authorities to demand justice, a majority of which don’t receive any response.

The author details incidents of peasant protest, violence and activism in China and points out that the situation doesn’t seem to be improving despite Hu Jintao’s new policy of a ‘Harmonious Society’, emphasising basic social security to people.

Similarly, since 2004, the emphasis of the Indian government has been on inclusive development with investment in schemes such as the National Rural Employment Guarantee Scheme and other social sector programmes.

He points out that these challenges still remain and for both countries to outgrow the West, they will have to set their houses in order: India, to seriously implement its social sector policies, and China to allow genuine alternatives to cadre-based capitalism. The book is a must read for those interested in the future of India’s and China’s economic development.

Ravni Thakur is Associate Professor, Delhi University