Regional Role Models

"Despite improved growth rates that we have achieved in the last 15 years, our share of world trade, our share of world gross domestic product, our share of world exports is much too small compared with our nation's potential and when we look at what a country like China has achieved in the last 20 years. I think that's the role model that we have to look at. We cannot be satisfied with the status quo.
Indian prime minister Manmohan Singh

Xujiahui, Shanghai. New Years Eve 2007. An earthquake off the coast of Taiwan has torn up undersea cables cutting off Asia from the West. The Internet crash has ruined the chance to look back at last year’s roundups. The urban landscape reinforces the erasure, encouraging its inhabitents to think of the future instead of the past. Mirrored skyscrapers appear where only months ago there was nothing but rubble, every available surface – giant billboards, bus stops, and most recently, the outer walls of phone booths – are  covered in moving images, the latest electronic market has a full time employee demonstrating immersive cyberspace to the surrounding crowd. Filmmaker Michael Winterbottom had already taken advantage of Shanghai’s affinity with science fiction in 2003, when, with his film Code 46, he depicts a future without using any special effects simply by using the city as the set.  

For at least the past two centuries it was the West--first Europe then America- that stood for temporal progress. Traditionally the very notion of development was equated with ‘catching up with the West’. All societies, it had been assumed, would follow the same trajectory passing through a series of developmental stages which imitate -- or at least conform to -- a Western model.

Still today the idea that the modern is necessarily Western is widespread. The most prosperous and dynamic cities of Asia are commonly described as Western even though  there is nothing in the West that compares with the skylines of Hong Kong, Singapore or Shanghai.

Yet, in the early years of the 21st century these long held presumptions are beginning to crumble. There is a growing sense that the world is undergoing a fundamental reorientation. A Shanghainese government worker, upon returning from her first trip to America comments, without a hint of irony, “now I know why they call it developed, everything there is so old.” This impression is reinforced waiting in Canada’s largest airport where the surest way to tell Chinese Canadians from their Asian counterparts is by the size and sophistication of their cell phones.  

China, then, – itself a developing nation – is starting to compete with the West as a model for growth. Its contradictory position, however, as both ‘in the lead’ and still determined to ‘catch up’ is creating an example that is far more dynamic than anything that has come before. Witnessing the exhilarating rise of its cityscapes one begins to suspect that what it means to be developed is simply to describe the fact that a country is no longer developing. What matters is the static nature of the noun. While the developed world is locked in the past, developing societies are racing to carve out the future.

It is thus no surprise that India, China’s giant neighbour and the second fastest growing country in the world, is increasingly looking  East not West and basing its own development on the ‘Chinese model.’Initially, the mere fact of China’s growth acted as a wake up call for India. Despite the rise of the small Asian tigers there was the overwhelming impression that the complexities of a country the size of India made these examples irrelevant.  It wasn’t until China started to show 10 percent growth that developing a giant seemed possible. For India the only real role model is China. ‘When you are a country of a billion people,’ argues techno-theorist Madanmohan Rao ‘the only other benchmark can be another country of a billion people’. ‘China holds a strange fascination,’ claims Rao, ‘because to see another country like us grow so fast and so spectacularly has just left everyone spellbound’.

China, then, acted first as inspiration for India’s reformers shattering excuses and altering expectations. More recently, however, India is shaping itself according to concrete lessons taken from its  neighbour. This is particularly evident in three main areas; infrastructure, the establishment of Special Economic Zones and a concentration on manufacturing.
It is apparent to even the most casual observer that the difference between India and China rests on infrastructure. In China, electricity, transportation and communication all work smoothly and efficiently. Skyscrapers rise almost instantaneously, gleaming new subway lines are regularly added to an ever expanding network, above ground it is rare to go for more than a couple of blocks without witnesing new construction. India, on the other hand, is notorious for its potholes and power outages. In New Delhi it is not uncommon to be plunged into darkness as frequently as twice a day, airports are dingey and  overcrowded, hotels in booming cities like Bangalore and Hyderabad are overbooked and even some of the most well used arteries are little more than dirt roads. This has huge effects on productivity and foreign investment, not to mention quality of life.
Indians are becomingly increasingly intolerant of this glaring, embarassing gap. In response they are planning to invest massively in infrastructure aiming to spend  US$320 billion in the next five years. The capital recently added a subway and the government is now working on a 15-year project to widen and pave some 40,000 miles of “narrow, decrepit national highways,” which the New York Times calls, “the most ambitious infrastructure project since independence in 1947 and the British building of the subcontinent's railway network the century before.” Indians, it seems are finally paying heed to a phrase popular in China during the initial period of reforms: “To get rich, first build a road.”
In keeping with the ‘China model’ India hopes that much of the infrastructure investement will come from the private sector. Following China’s lead they are planning to attract that investment through the establishement of Special Economic Zones (SEZs). Originally enclaves of experimentation, SEZ’s with their streamlined procedures, generous tax breaks and excellent infrastructure, have been crucial to China’s rise. They are not totally unfamiliar to India. The booming software sector has made use of IT parks and the country established  “export processing zones” as early as 1965. The SEZ ‘gold rush’  however, is only just getting started. Since Febuary of this year when “India’s parliament finalised a new SEZ law, companies, including most of India's most famous firms, have,” according to the Economist,  “filed more than 400 applications to set up SEZs, and 212 have been approved.”
There is one area where India leaves China trailing behind --software and IT services. Even the most ardent supporters of India’s IT revolution, however, doubt that India can leapfrog from a predominantly agrarian society directly into a post-industrial, IT-services-led economy. The entire IT sector  - even counting the indirect employment - comprises little more than a fraction of India’s vast (and expanding) workforce. “No other country in Asia,” writes The Economist “not even high-flying service hubs such as Hong Kong and Singapore, has climbed out of poverty or lower-middle-income status without a manufacturing boom.” In China – the world’s factory -- 160m people work in manufacturing, a sector which comprises 35 per cent of the country’s GDP. In India manufacturing, still strangled by bureaucracy and red tape, employs just over 6 million people  and comprises only 15 per cent
of GDP.

India desperately needs employment for its vast, rapidly urbanizing population. Yet, this is one area where the Chinese model has-- so far at least-- had little success. While India’s thriving high tech sector has begun to rub off on older industries (auto manufacturing is one good example) the growth has been based on innovation, automation and high productivity. Many of those hired are the same kind of high quality graduates that might otherwise work in IT. There is nothing yet in India that matches the mass employment of Chinese factories.

The reason is India’s strict labour laws. Whereas Chinese companies are free to hire and fire staff as they see fit, in India employers of over 100 people cannot fire staff without bureaucratic permission, making them reluctant to hire in the first place. Yet reform of these laws – as well as in  other areas - are slowed in India by the political compromise that
accompanies democracy.

The Chinese model, then, depends, at least in part, on the authoritarian control of a one party state. India, it seems, pays for its political freedom with slower economic growth. Yet, this is one area in which Indians are proud of their own path. Tavleen Singh a pro reform columnist and frequent critic of the government wrote a vitriolic article during Hu Jintao’s recent visit entitled The Chinese model and why it is bad. Singh mocks Hu’s offer to make Bombay as modern as Shanghai “In exchange,” she writes, “would he like some help in giving the Chinese a taste of Indian democracy? Would he like advice on how to build the pillars of democracy like a free press, multi-party elections and an independent judiciary?” Singh writes sardonically but perhaps the renewed – and increasingly intensifying – Sino-Indian ties will indeed, one day soon, rest on such mutual reciprocity. When China helps build a futuristic Bombay and in exchange takes lessons from the ‘Indian model’ on how to build a billion person democracy then there will be no doubt that the Asian century has arrived.