Lessons from China

Published: Nov 12, 2011, 04:07 IST | Aindam Chaudhuri |

When I went to China a decade ago, what I saw hit me hard

When I went to China a decade ago, what I saw hit me hard. I felt if all of us in Delhi were to work 24x7 for 25 years, it would still be tough to convert Delhi into Beijing. That's the China I was expecting to see when I went there again last month. What I saw instead was an extra 25 years of growth in the last 10 years. If 10 years ago there were gigantic roads but less cars, this time the roads were filled with American cars; brands that companies haven't even cared to launch in India!

I believe every Indian politician must visit China as part of his induction process into the Parliament. Even a few decades ago, China was seen with lot of scepticism owing to their political structure and a gargantuan population. But it took China just a few years to give this huge population a purchasing power and lifestyle that even many in the West are deprived of. So what exactly did China do?

Among a host of other things, China's opening up of its Iron Curtain and freeing its economy from the shackles of Central control in the late 1970s brought about the miracle. Their carefully planned liberalisation allowed the nation to experience rapid growth. The new spirit and mission were well supported by increasing investments in infrastructure, education and various other social sectors that symbolised the Chinese rise in world forums and made it one of the most sought-after investment destinations. The policy of 'farmers can make their own economic decision' led to millions of poor being alleviated.

Today, every Chinese is free to travel to any city to try and make a living there (Of course, cities do have resident permits; holders of such permits get subsidies in health facilities etc). In the distribution of prosperity, the Central and Western counties were the weakest links always. To address the economic gap, the central authorities from 1986 issued subsidised loans to the poor people. 'Food for Work' scheme was another flagship programme wherein government spent 33.6 billion RMB between 1986 and 1997. In 2000, all agricultural fees was abolished and replaced with a single slab agricultural tax, more agricultural subsidies were introduced, which was followed by increased spending on rural infrastructure.

Initially, the coastal cities dotted with foreign funds and SEZs were responsible for the urban-rural divide that led to the cash-strapped hinterlands languishing behind. Even rural areas did not have a homogeneous income and lifestyle distribution. The rural industries, which began after liberalisation, were mostly concentrated in the eastern region. The government then introduced the "three-farm policy"-increased investment in rural areas, introduction of modern technology of farming, and providing clean and corruption free administration, and financial help to farmers. In 2005, finally all taxes from the agricultural sector were abolished.

Most importantly, China had designed their poverty eradication flagship programme in such a way that once people got out of the poverty bracket, they couldn't fall back. In manufacturing and services, similar miracles were witnessed.

Also, from the mid 1990s onwards, the tertiary sector in China employed more people than either manufacturing or agricultural sector (250 million people by the end of 2007). After joining WTO in 2001, China claimed that it had liberalised in 9 service sectors and 84 sub-sectors that included construction, education and environment beside many other sectors in the same lines.

Except for comparable population, there is nothing worth comparing in India and China. India's average of 2 per cent of GDP is paltry compared to 19 percent of China. China started with the development of its primary sector and moved to the secondary sector. Comparatively, India jumped from the primary sector straight to the tertiary sector with little growth in manufacturing.

Broadening the mind
If we want to change India, we need to take every Indian politician to China. They need to be taken to a city like Guangzhou so that they can see how they could be travelling on roads for three hours, and yet not come across any road twice. They should feel dwarfed with their deeds (Bangalore, our pride, might finish only in the very outskirts of Guangzhou). Our politicians should be taken to Guangzhou's annual Canton fair (where I too went) so that they realise how to attract foreign buyers.

Delhi's so called trade fair at Pragati Maidan looks like a prehistoric, dirty relic in front of the facilities at the Canton fair. In China, you cannot attempt a movement against the high command, but you can write about corruption in the government; you can criticise their policies. It's a shame that in India, we can't boast of the same. What a gigantic betrayal of a nation.

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