China on the march: 5 lessons to learn from nation's success
Prime Minister Narendra Modi's upcoming visit to China has the potential to be a catalyst for the stirring "tiger" (India) to learn, adapt and apply the economic mantras of the "dragon" (China). In the last 30 years, the Chinese per capita GDP grew 30 times - unprecedented in modern history.ht view Updated: May 01, 2015 18:58 IST
Prime Minister Narendra Modi's upcoming visit to China has the potential to be a catalyst for the stirring "tiger" (India) to learn, adapt and apply the economic mantras of the "dragon" (China). In the last 30 years, the Chinese per capita GDP grew 30 times - unprecedented in modern history.
Three decades back, in 1982, India proudly celebrated the Asian Games in Delhi followed by the Non-Aligned summit in 1983. Meanwhile China, post the Cultural Revolution and under the leadership of Deng Xiaoping, embarked on the path of "socialist modernization". Though both countries were poor, India's per capita GDP was more than a third of China.
Today, the $9 trillion Chinese economy adds an equivalent of India every 4 odd years. In China, less than 10% of people live below the poverty line ($1.25 PPP/day) compared to over a fourth in India. The high speed train network, six lane highways, urban planning and dynamism of Tier II, III cities - Chongqing, Dalian, Nanjing, Hangzhou, Wuhan (all unheard of in India) put even the largest Indian metros to shame.
It is simplistic to explain away the difference in recent trajectory of the two (civilizational) nations with differences in the modern political systems. Hence, for the Indian policy makers, industry captains and civil society at large, it is important to understand the Chinese economic mantras.
It's economic growth--stupid!
In early 1990s, Bill Clinton won against President George Bush who was basking in the success of the Iraq-Kuwait campaign, with a simple message--focus on the economy. In late 1970s, Deng Xiaoping, while visiting a fishing village Shenzhen (now a metropolis of 13 million+) stated "it doesn't matter if the cat is black or white as long as it catches mice". Since then the Chinese state has had a single minded focus on modernizing the economy. City mayors, provincial governors, bureaucrats in Beijing are measured on GDP growth. Yes the data at times has been fuzzy, but the entire nation's resolve, energy has been laser focused on accelerating economic growth, pulling millions out of poverty and getting rich!
Modern China is urbanizing 1% every year to achieve a billion people in cities by 2030. Cities are the engine of economic growth - with higher incomes, productivity and better quality of life. Even a Tier IV, V city (smaller than Indore, Gaya, Burdwan) has a planned Central Business District, new high rise apartments, six lane highways and now, high speed bullet trains connecting it to the bigger Tier I, II cities. Of course, post three decades of breakneck growth, China has challenges on air, water pollution; but these dwarf compared to poor quality of air in Delhi or the filth in the Ganges River.
Unleash the entrepreneurial energy
Chinese diasporas have built among the most successful businesses in SE Asia. In 1980s, Chinese Town and Village Enterprises (equivalent of Indian SMEs) were unleashed to establish manufacturing primarily for exports. Chinese SOEs were reformed when China joined the WTO. Today, China is the No. 1 trading nation in the world and an integral part of manufacturing supply chain from buttons to iPhones. Chinese entrepreneurs are the new leaders in the digital economy. Just three companies - Baidu, Alibaba, Tencent (BAT) have a market capitalization of $500+ billion - almost a quarter of the GDP of India!
Education and equality of women
Prior to rapid economic growth, China had a good foundation of overall literacy with primary enrollment at 96% by mid 1980s. Chairman Mao had proclaimed that women "hold half the sky". By 1980s, 40% of women were in the workforce and female adult illiteracy dropped from 88% to less than 15%. The strong social infrastructure is an unsung mantra in China attaining the current economic heft.
Pragmatism coupled with disciplined execution
The Indians and Chinese have 5000 years of history, common strains of Buddhist influence and shared importance of family values. The biggest difference is the Chinese society's pragmatism and the state's ability to execute large (and small) projects with discipline. The Chinese pragmatism has fostered a society that is open to change and progress. It is proud of the history, culture but not bound by conventions, ideologies or religious dogma. As a state, China has the capacity to plan, execute long term projects that defy short term economic rationale or national capacity. The Three Gorges dam, Go-West (inland China development) policy, laying 10,000 kilometers of high speed railway (more than Europe) within a decade and planning 225 cities over a million population by 2025, has not been achieved by any other country.
For India, the stars are aligned with a confluence of demography, democracy, entrepreneurial energy coupled with the tailwind of cheap global commodity and capital. However, it is daunting to replicate the unprecedented Chinese success by growing 10%+ consistently over the next 10 years, leave alone 30 years. PM Modi's China visit can be leveraged to re-ignite the Indian politicians, bureaucrats, industry and citizens at large to learn from the Chinese economic mantras and achieve India's rightful economic potential.
(Milind Pant is the president & COO of Yum China. He has lived and worked in India, South Africa and Thailand and is currently based in Shanghai. He can be reached at email@example.com. The views expressed are personal.)