Catching up to China?

Financial Times

July 5, 2007

When I lived in mainland China 10 years ago, most everyone got around by bicycle. Private cars were rare. I rode in one just once during the two years I worked in the lively city of Nanjing, a few hours west of Shanghai, from 1996-98 as a university English teacher and editor. Back then the sight of a new mountain bike with gears instead of the standard black clunkers could turn heads.

Fast-forward ten years to an age when cars throng China’s roads and luxury sedans garner barely a second glance. Last month I reconnected with some of my former students during a trip to three Chinese cities: Nanjing, Yellow Mountain and Shanghai. I remember them vividly as shy 18-year-olds for whom activities such as foreign travel and driving were alien concepts. So it was a surprise when a former student picked me up in her shiny new Audi – a far cry from the tinny Flying Pigeon-brand bicycles we used to ride.

Times have changed. Although this column is titled Engaging India, some observations about China seem appropriate since the two fast-growing countries are constantly compared and contrasted. A thorough comparison of China and India is impossible here, but it seems worthwhile to highlight some anecdotal changes over the past ten years.

These days India is often positioned as China’s laggard. Pundits wonder if India can ever catch up to China, especially in terms of infrastructure – new roads, airports and train stations – and aggressive industrialization. Indeed, I was stunned to see Nanjing’s new train station – an airy glass structure that resembles an airport, instead of the chaotic madhouse I remember – as well as a sleek new subway system.

Yet in its timeline of economic reforms, China has a considerable head start on India. It began opening its economy in 1978 under Deng Xiaoping, while India’s economic reforms began in 1991 under Manmohan Singh, then finance minister and now prime minister.

China — or at least its major cities — is now considered a fashionable place. This was not the case a decade ago and this change in perception is most striking. When I departed for China in 1996, people asked if I was afraid. Would there be hospitals and running water? they asked. Most were puzzled about why I would choose to live in China, which is a reaction not dissimilar to when people learn that I live in India today.

When I arrived in Nanjing, China was 18 years into its market reforms. Although economic statistics in retrospect may paint a different picture, no one I knew who lived there was trumpeting the smooth transition to modernization. On the contrary, many of the expats went mad with frustration. One American I knew who lived in Shanghai (who even spoke the Shanghai dialect) left after a year doubting he would come back.

Infrastructure then was not the shining example held up today. There was barely a sidewalk outside the well-known university where I taught, so pedestrians mingled with buses, bicycles and trucks. Services were practically non-existent. I had to trek to Shanghai to use an ATM machine. Buying a train ticket involved waiting and jostling among hordes of people at the ramshackle station. Grumpy attendants glared at and scolded you. This ordeal also was common at the post office and at stores where goods were kept behind glass counters manned by napping attendants.

Big infrastructure projects were just beginning in China. When the blissfully smooth expressway between Shanghai and Nanjing opened up, it remained quite empty because it was a toll road. The old Shanghai airport was an alarming sight and I remember once wondering how cabbage leaves had gotten onto the luggage belt.

Now it is hard to convince people that China was once difficult and chaotic. In Nanjing, the road outside the university is paved, has traffic lights and, for better or worse, is bereft of street vendors. The service at our hotel was courteous and a hotel travel agent smoothly changed our train tickets, saving us the hassle of trekking to the station.

My former students were still the same lovely bunch though their lives today seemed unimaginable a decade ago when none of the mainland Chinese I knew had much money. Several of them had been abroad to Australia and Europe for advanced degrees; some own cars and large apartments. When they talked about shopping online I thought of how the university’s precious store of computers was kept under lock and key when they were students.

But the middle-class success stories of this well-educated group showed some cracks when they shared their thoughts on education and healthcare. Several of them were proudly pregnant and one expressed deep frustration at the soaring costs of providing for her new family.

She described the large sums of ”key money” needed in the future to secure her child a position in school – different from her school days when passing rigorous exams allowed admission. Without health coverage provided by her husband’s foreign joint-venture company she did not know how she could afford good healthcare. Life was a struggle, she complained.

Visitors to China crow about the dazzling quality of life in Shanghai and Beijing, and lament lagging India. But I can’t help recalling my experience 10 years ago when China’s rough edges hit you at every turn, and those rough edges remain, though they may seem less obvious to a casual visitor.

India, now in its 16th year of market reforms, seems at a similar pivotal stage as the China I knew of a decade ago. Big infrastructure projects – airports, highways, subways, power stations – are promised. Plans have been outlined to overhaul basic services and attack the roots of India’s blatant poverty.

How these promises and plans play out remains to be seen. Implementing them will prove far trickier than in China because of India’s multiple authorities at central, state and local levels and its plethora of interest groups.

Critics paint a dire picture for India. As Shankar Acharya, India’s former chief economic advisor, writes scathingly in his collection of columns Can India Grow Without Bharat?: ”India will never find either the resources or the will to build large-scale, quality infrastructure…Sloth, incompetence, political competition and corruption combine so effectively to block successful project execution.”

India’s other main shortcoming is rigid labour laws that hinder creation of large-scale factory jobs. In 2003 India counted barely 5m workers in organised manufacturing out of a labour force of over 350m, compared with more than 100m factory workers in China.

Finally, India’s human development indicators are far worse than those of China. At the turn of the millennium the number of people living on a dollar a day was 35 per cent in India and less than half that in China. About 200m — roughly 20 per cent of the population — still live in extreme poverty in India. China’s literacy rate is about 90 per cent compared to 61 per cent in India. Malnutrition in children under five remains endemic in India at about 46 per cent, making it worse off than sub-Saharan Africa. It is hard to imagine that India can catch up to China if nearly one out of every two children is malnourished.

If 10 years from now I have trouble convincing people that India was difficult and chaotic, much will have been achieved indeed. China has come a long way and India has the challenge of doing so too.

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