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Number 2 without attitude

Going from an air-conditioned public bus to a three-wheel electric cart one can see why China prefers to be called a developing nation, not the world’s new No. 2 economy.

world Updated: Aug 22, 2010 00:48 IST
Reshma Patil
Reshma Patil
Hindustan Times

The ticket to see both sides of the world’s new second-largest, five-trillion-dollar economy costs just 12 yuan (R 94).

Bus number 918 rolled out of Beijing with dozens of migrants heading home for the weekend and one Indian. After 90 minutes of leaving behind high-rises and corn and wheat farms, the bus stopped on a six-lane highway.

We were one hour away from the Beijing airport --- the world’s biggest when it opened in 2008 --- and over two hours away from Asia’s biggest bullet train station. Buicks whizzed down the highway of the world’s new car capital where the Chinese bought more cars than the Americans last year.

At the gateway of Liangshanzhuang village, a farmer had arranged transport for this correspondent, who hopped off the air-conditioned bus and on to a wooden stool in a three-wheel electric cart called the sanlunche. The farmer was proud of his new green vehicle that looks like the tricycles plying in old Delhi, but without a backseat or backrest. The box on the cart is usually used to transport coal cakes and farm produce.

Our cart jolted past the village hill that the locals said would be developed into a ski resort with artificial snow. Inside his one-storey home overlooking the future ski resort, the farmer has stocked one tonne coal cakes — cheaper in summer —to stay warm in winter. The family will burn four tonnes in winter. Thirty minutes away in the Riviera, foreigners and the wealthy Chinese live in centrally heated villas that some Beijing planners describe as ghettos.

Do you know China is now the world’s second-largest economy, HT asked Wang Wei, the farmer’s daughter. “Really? I didn’t know, but I feel proud,’’ she said. “Though many argue that life is still the same, I feel it’s getting better.’’ Wang, a schoolteacher in Beijing, is the family’s highest educated member and first English speaker.

No cheers in China over its achievement

The stability-obsessed Communist Party promises to create a ‘moderately prosperous society’. Beijing hopes that the title of the second-largest economy won’t spark discontent over domestic inequalities.

China’s per capita income is over 10 times lower than Japan’s and its population 10 times bigger. In 2009, China’s rural-urban income divide widened to its highest since 1978, when Beijing began economic reforms to lift millions out of poverty.

On chat forums, netizens from underdeveloped provinces have reacted with comments about rising costs and deteriorating living standards. Netizens from coastal provinces that are richer than several nations post patriotic reactions.

“I have to think before I buy a bottle of bean sauce even,’’ commented a netizen from remote Xinjiang this week. “How glorious we are, how much happiness we are sharing now!” said a man from Guangdong near Hong Kong on the same website. A man from eastern Jiangsu province wrote that the number two encouraged him to ‘fight for his life’.

This week, the Chinese media issued a commentary dismissing western expectations of China’s greater responsibilities as a rising power, and said China’s global role would be determined by its national conditions.

“The fact that China is overtaking Japan is not a matter of exultation given that the country still has miles to go before it can become a real economic power,” wrote Yi Xianrong, a researcher at China’s official think-tank, the Chinese Academy of Social Sciences, on August 10. The Chinese media headlined the piece ‘more concerns than cheers’.

India will speed up, China will slowdown

Beijing’s first reaction to overtaking the Japanese economy was to remind the world that China remains a developing nation with over 40 million below its poverty line. India, the second-fastest growing economy after China, has over 10 times as many poor people. In 2009, the World Bank ranked China’s per capita income at 124 and India’s at 162.

“Over the next decade, India should start to surpass China as the fastest-growing 2025, at least, the Indian economy should be bigger than Japan,’’ Arthur Kroeber, managing director of Dragonomics, told HT.

A latest Morgan Stanley report forecasts that India will outpace China’s growth rate by 2013-15. The report said that India’s rising number of graduates and working age population, compared to ageing China, would spur faster growth. By 2020, India will contribute 136 million to the global labour pool, compared to 23 million from China and eight million from Japan.

“China’s GDP is almost certainly going to fall by the end of this decade,’’ said Kroeber. “India can maintain the current pace or grow even higher.”

India will face bigger urban development challenges than China. The consultancy firm McKinsey estimates that by 2030 India will need to build two new Mumbais every year to cope with 68 cities with a population above one million. By 2030, China will have 221 cities above one million and may build 10 New Yorks equivalent to 50,000 skyscrapers. The future India will need 20 times the size of roads added in the past decade and 350-400 km of subway to be built every year.

The news about China overtaking Japan was splashed after Yi Gang, a deputy governor of the central bank casually mentioned in one sentence that China was the second-largest economy.

“Yi’s words were directed domestically. His point was that China needs to accept its growth rate needs to slowdown,’’ said Kroeber. He added that the democracy vs dictatorship theory is outdated in forecasting India’s comparative growth. “There’s no particular reason why a democratic system should be an impediment to growth.”

As the sanlunche headed home, it stalled before a speed bump. Wang cheerfully jumped off and pushed. It felt like a journey in rural India.

First Published: Aug 22, 2010 00:20 IST