Reading between China's miracle lines

The most remarkable feature of China?s 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 the turn 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 enterprises ranging from small-scale steel plants to the production of crude consumer goods without 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-year goals and translate them diligently into policies and actions at all levels. India, by contrast, still does not have an integrated energy policy that reflects its own endowment of resources, in the absence of which different ministries and departments 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 sceptical of Chinese claims and official statistics of growth and its ability to maintain the pace of progress that has been achieved, albeit at a genuine pace lower than official rates. The other camp continues 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 economic output. The China pessimists reflect two sets of concerns?the first deals with the ability of the Chinese political system to maintain firm control of the thinking and action of its people, 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 to become stronger, challenging the military form of command that has existed for so long and giving expression to a much more inclusive form of decision making at every 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 that those 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 sense would still be absent. However, the bigger threat to sustaining growth in China comes from that very feature of growth at all cost, which has created wealth and income at a breathtaking pace. 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, 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 acute deprivation. China today is an extreme example of unsustainable water use, which spells catastrophe and crisis in the very near future not only for the Chinese people but also 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 would have global implications on agricultural commodity prices and some clear lessons and 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 a rational 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 were to 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 few votes in election after election. A gigantic example of the preponderance of economic growth to the exclusion of human or natural resource considerations in Chinese official policies can be seen in the 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 at least 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 of sacrifice, make China strong??. What is amazing about today?s China is the ability of the 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 in national 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 India?s population and the infrastructure sectors have to move rapidly on the path of reform if we are to keep pace with China and the rest of the world. While China has surged ahead in the past two decades, a conscious decision to catch up with the middle kingdom is perhaps the first step in changing the mindset of our political leaders and decision-makers. We would do well if, at least, we keep pace with China, and freeze the gap that exists today.