India - China: Relations And Developments

[dhu]

<!--QuoteBegin-Husky+May 14 2006, 11:51 AM-->QUOTE(Husky @ May 14 2006, 11:51 AM)<!--QuoteEBegin-->Post 14:
I know several Taiwanese families settled here. They're all either Buddhist or Taoist. They speak of Taiwan as a country full of Buddhism and Taoism. Taiwan is not Christian, as Post 15 has said (of course, it <i>is</i> a Christian target). Otherwise it would be like every other run-down non-Western Christian nation by now.
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Contrary to our common notions, the chinese were sensitive to issues of ethnic diversity. From wiki: "The Manchu authorities tried to limit immigration to Taiwan and barred families from travelling to Taiwan to ensure the immigrants would return to their families and ancestral graves..... The Qing tried to protect aboriginal land claims, but also sought to turn them into tax paying subjects. "

It was japanese and Portugese designs upon the island that forced then to consolidate control over the tribal interior. Interestingly, the church has concentrated on converting the taiwanese tribals (70% converted). This is like prachanda's rural to urban strategy, modeled after mao. kai shek's christian tomb

It would be nice to read a chinese version of the bharatvani.org site: the true history of China ..... anyone know such a site?

[Guest]

"What do Indians think of Chinese" thread merged with this one. Please continue discussions in this thread.

Thanks

[Naresh]

<b>China</b>

<b>Ignoring the past</b>

<b>Forty years on, the government still avoids discussion of the Cultural Revolution</b>

<img src='http://www.economist.com/images/20060520/2006as1.jpg' border='0' alt='user posted image' />

IN THE village of Hongsheng, Li Furong feared trouble when he was summoned one day in August 1966 to a meeting. He had been denounced as a “capitalist-roader” and thought fellow peasants had gathered to attack him. Instead he found himself press-ganged into helping with the murder of octogenarian former landlords in one of the bloodiest orgies of violence in or around China's capital, Beijing, during the Cultural Revolution. Even 40 years later, the authorities are trying to suppress news of what happened in Hongsheng and nearby villages of Beijing's Daxing district.

<b>The Communist Party's unwillingness to confront the horrors of the Cultural Revolution, which was launched on May 16th 1966 and officially ended ten years later with the death of Mao Zedong and the fall of the Gang of Four, means that for Chinese historians as well as for millions of victims that entire period is, in effect, off-limits for debate. The passage of time does not appear to be helping. Chinese scholars say the government has been even more intent on stopping public commemoration of this week's anniversary than it was a decade ago. No mention of it has appeared in the state-controlled media. A group of scholars who held a private symposium in Beijing in March to discuss the Cultural Revolution avoided using e-mail to arrange it for fear their communications would be intercepted by officials.</b>

Partly, it is embarrassment about the scale and brutality of the violence carried out in Mao's name. In Hongsheng, Mr Li, now 75, says village officials told the meeting that former landlords and rich peasants, stripped of their holdings after the Communists took power in 1949, planned to stage a revolt. No evidence was offered. The plan was to kill the alleged plotters and their entire families that night. Mr Li, worried that as a “capitalist-roader” he too would be killed, agreed to use his well-known skills with rope to bind the victims. Two former landlords in their 80s were the first to be dealt with. Mr Li had barely finished his work before the old men were dragged away and beaten to death.

It could have been worse. Mr Li says that, had he not asked the village party chief whether he had written authority for this, other members of the landlords' families would have been murdered that night too. In some neighbouring villages there was much greater bloodshed. The youngest victim was one month old. Bodies were thrown down wells or into pits. In the commune to which Hongsheng belonged, 110 people were slaughtered within 24 hours. This was only one of 13 communes in Daxing district involved in what has become known to locals as the “8/31 [August 31st] massacre”. City officials called a halt to the violence after a couple of brave village officials travelled to the party's headquarters in central Beijing, 35 km (22 miles) away, to complain.

Even today, few in Beijing know anything about this, even though the official death toll, 324, exceeds the conservative government estimate of around 200 killed in the suppression of the Tiananmen Square protests of 1989. A brief mention of the massacre appeared in a book on the Cultural Revolution that was published in 1986 and quickly banned. A detailed government account was published only four years ago in an appendix to the “Daxing County Gazette”, a hefty and little-read tome, but was not reported in any newspaper. Of those killed, the book says, 91 were women. Nineteen entire families were eliminated.

The Daxing killings were part of what some perpetrators boasted of as a “red terror” that gripped Beijing between August and October 1966. Wang Youqin of the University of Chicago says officials have never acknowledged the extent of the bloodshed in the capital. She says that Red Guard mobs, obeying Mao's exhortation to “be violent”, killed some 2,000 Beijing residents in the space of two weeks.

One reason for the government's reticence is that, during this stage of the Cultural Revolution, many Red Guard leaders were the offspring of high-ranking officials who were subsequently purged but who became powerful again after Mao's death. Perpetrators of the violence were barred from influential positions after Deng Xiaoping took control in 1978. But Ms Wang says their family connections often protected them from punishment. The “Daxing County Gazette” says 348 people were “directly responsible” for the murders there, nearly two-thirds of them party members. Only 38 were jailed, the longest for 12 years. Pardons were granted to 246.

Officials fear that closer scrutiny of the Cultural Revolution could destabilise the country by inflaming long suppressed antagonisms. Many scholars now believe that well over 1m were killed or driven to suicide in political struggles between 1966 and 1976. The lives of almost all urban residents were profoundly disrupted. Schools and universities were closed. Educated people were forced to leave cities and work on farms. Family members turned on one another. Many of those now in their 50s belong to a “lost generation” whose education and careers were permanently blighted by the Cultural Revolution.

In 1981 the party leadership issued a long denunciation of the Cultural Revolution, as well as various other “mistakes” made by Mao, though these were portrayed as secondary to his contributions. The “Gang of Four” led by Mao's wife, Jiang Qing, who were deemed responsible for the Cultural Revolution's atrocities, were given lengthy prison terms (the last of the four died in December). Most of those persecuted were officially “rehabilitated” by the early 1980s.

There is, however, no official memorial to the victims. Appeals by some intellectuals for a museum dedicated to the events have gone unheeded. In recent months, private funds have started to remedy this. Last year, a privately run Cultural Revolution museum opened near the coastal city of Shantou in southern Guangdong province. In Anren township, near Chengdu, the capital of the south-western province of Sichuan, a wealthy real-estate developer, Fan Jianchuan, says he is preparing to open another later this month.

These ventures are still modest. The one in Shantou shows pictures of officials and other prominent figures being persecuted, but otherwise sticks to the government line. Mr Fan's will concentrate at first on porcelain artefacts from the period. His vast and lavishly designed complex, opened last year, is already home to a remarkable display of historical daring: a whole building of exhibits concerns the (positive) contribution of the Kuomintang, China's then ruling nationalist party, to the war against Japan. In Communist Party histories the Kuomintang is portrayed as having shirked the war.

But Mr Fan has no plans to display objects relating to the Cultural Revolution's factional warfare and other violence. “It's not just that I'm too cowardly and don't want trouble, but I also think it wouldn't be good for the peace of society,” he says. He may perhaps do so in 20 years.

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->

[Guest]

<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>India and China signs military agreement to move toeards a NATO style Asian military alliance </b>
Media Release
May 29, 2006

India and China Monday [29 May] signed an historic MoU to institutionalise exchanges in military training and exercises with a view to adding more content to their building strategic relations.

The Memorandum of Understanding was signed after visiting Defence Minister Pranab Mukherjee and his Chinese counterpart, General Cao Gangchuan held over two hours of talks here at the Central Military Commission headquarters.

The MoU envisages other contacts between the Armed Forces and Defence Officials and experts of the two countries. The MoU is also expected to serve as an instrument for a regular and sustained dialogue on defence and national defence issues between the two countries. Earlier, Cao accorded a red carpet welcome to Mukherjee and welcomed him to China for a six-day official visit.

"It is my great pleasure to host the welcoming ceremony for you from India, a friendly neighbouring country," he said after a ceremonial welcome and guard of honour by a triservice Chinese military marching contingent.

"Your visit is a big event in the exchanges and cooperation between the militaries and also an important event in the China-India Friendship Year this year," Cao said in his initial comments. "Your visit this time will deepen our mutual understanding and mutual cooperation between the armed forces of the two countries," he said while describing the Indian defence minister as an "esteemed guest."

Reciprocating the warm sentiments expressed by the Chinese General, Mukherjee said that the visit has given him "an opportunity to visit your great country."

"I have heard a great deal about China's achievements. This visit has allowed me to see for myself the achievements. We greatly admire your achievements," he said. "I am bringing greetings from the Indian armed forces to the Chinese People's Liberation Army. I am also conveying the greetings from the people of India to the people of this great nation," Mukherjee said.

Mukherjee also described his meeting with Chinese Foreign Minster Li Zhaoxing as "very productive."<!--QuoteEnd--><!--QuoteEEnd-->

[Guest]

It is a very significant development and will certainly be taken note of by the West particularly the United States.It is the which will indicte the full implecation of this development and its effect on Asia.

[Guest]

This is a really significant development and totally out of the blue ?

[Guest]

<b>Warily, India and China to reopen Silk Route trade</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Just a few yards away bulldozers on both sides of the frontline are building not fortifications but a road, to connect India and China and reopen a historic trade route. New Delhi and Beijing plan to reopen the Nathu-la pass in June after more than 40 years, a potent symbol of rapprochement between Asian giants who fought a Himalayan war in 1962.

<b>For an initial five-year period the pass, at an altitude of 4,310 metres, will handle limited border trade between the tiny northeast Indian state of Sikkim and southern Tibet. It will be a modest start, but it promises much more.</b>

"We are very much looking forward to the opening of the pass," said B.B. Gooroong, adviser to Sikkim's chief minister. "It is symbolic... but we have to break the ice."

<b>The Sikkim government's enthusiasm is not entirely matched in New Delhi,</b> where the establishment still remembers being caught off guard by China's sudden advance across the Himalayas in 1962.

Much of the 3,500-km common border remains disputed, and Indian officials say they are not yet ready to throw open the doors.
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[Guest]

<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>An Inflection Point In China's Banking Problem  </b>
By George Friedman
<b>The month of May witnessed an interesting phenomenon: a spate of reports on China's nonperforming-loan problem. What is most intriguing is that these reports did not come from organizations like Stratfor -- minor outfits that have been talking about this for a couple of years. It came from real, solid, serious mainstream organizations that were, and continue to be in some cases, quite positive about China on the whole</b>. What is important here is not that China has a serious problem with bad loans in its banking system. That's old news. What is important is that mainstream analysts in the West now are taking official notice of it. <b>The wide divergence between the Western perception of Chinese economic health and the realities of China's economy is beginning to close. There will be consequences to that</b>.

The first report came from Ernst & Young, which released a study saying that China had a substantial problem with nonperforming loans (NPLs). We have to confess to not having seen that report, because the accounting firm withdrew it a few days later. The Chinese government blasted the report, using words like "ridiculous" and "distorted." Ernst & Young, which has a substantial practice in China, denied having retracted the report because of pressure from the government. Whatever their reasons for doing so, we wish we had been faster in asking for a copy.

No matter, because May also brought studies on the same subject from PricewaterhouseCoopers (PWC), McKinsey Global Institute, and Fitch. Each said the same basic thing: that Chinese banks have enormous NPL numbers on their books. The PWC report was issued by a group within the company that specializes in making markets in NPLs. Their news was that the water in China was fine and everyone should come in. McKinsey focused on inefficiencies in the Chinese banking system that should be cleared up, so that NPLs could decline and the Chinese gross domestic product could surge. Fitch was the harshest of the three, but that firm also argued that the Chinese had the tools in place to handle the problem. The bottom line was that all three acknowledged that NPLs were a big issue for China, but they took different approaches in trying to put the problem in perspective. In other words, they gave a warning without yelling "Fire!" Some of the reports were criticized by the Chinese, but none were blasted. Meanwhile, Moody's Investors Service has told us that they will be releasing a report in a couple of weeks. It will be interesting to see what their take is.

Let's begin this analysis by looking at a couple of quotes from these reports. McKinsey, for example, writes:

"Underlying these reforms, however, is capital misallocation by the system. Nonperforming loans are the most conspicuous outcome of this misallocation, but our research shows that the much larger volume of loans to underperforming ventures that don't go bad but yield only negligible returns are potentially more costly to China's economy."

<b>Fitch's report states:</b>
<b>"Summing all of these figures, we come up with total official nonperforming loans of US$206 bn and other estimated problem loans of over US$270 bn in the banking system. We would reiterate, however, that a large portion of this latter figure is comprised of estimated Special Mention loans or loans that currently are not classified as nonperforming [emphasis Fitch's]. At the same time, there is an additional US$197 bn in NPL carveouts still remaining on the balance sheets of China's asset management companies, which no longer represent direct losses for banks but are a future liability for the government."</b>

<b>Fitch also states:</b>
"Beyond this, estimating a rate of flow of new nonperforming loans is not an easy exercise given Chinese banks' extremely weak historical data and ongoing deficiencies in accounting and disclosure. Few banks report data on NPL flows, and those that do show recent flow rates in the extremely low single digits. We believe these numbers understate the likely level of ultimate credit losses, given what we know to be the slow evolution of a strong credit culture and risk management practices and our suspicion that China's over-reliance on investment-led growth comes at a cost to bank credit quality."

Fitch is estimating China's bad-loan situation (our term, lumping all these categories together) at $673 billion, but it warns that -- given Chinese accounting and reporting, and the fact that what reporting exists is not credible -- $673 billion is a low number. That's important. If $673 billion was the final number, then measures that are put in place could limit the ultimate losses to a level below that figure. If, however, the total number of bad loans is substantially higher than $673 billion -- which is our view of the situation -- then the system would be lucky to have to write off only this amount.

There are numerous ways to measure the magnitude of the problem, but one of the simplest is this. China is said to hold nearly $819 billion in foreign reserves. Fitch's conservative estimate of the bad loan situation comes close to matching that number, and a more liberal calculation would swallow those reserves up and then some. Put very simply, the Chinese banking system is in deep trouble -- and with it, so is the Chinese economy.

<b>It has become an article of faith that China's economy is booming. The economy certainly is growing rapidly. But growth and size alone don't tell you how healthy an economic entity is. During the Great Depression, the U.S. economy was enormous, but it was crippled. Japan's economy was growing at a phenomenal rate in the 1980s, all the while heading for its disaster. Size and growth are but two measures </b>of an economy -- or of a business. They do not tell you how well it is doing.

The basic problem of the Chinese economy, as in many Asian nations, is that the banks have not made loans with business considerations in mind. They made loans for political reasons and to maintain social stability. In many cases, loans were seen as being more like grants. As a result, they were invested in enterprises that did not make enough money to repay (or even attempt to repay) the loans. Frequently, rather than bankrupting the business or writing off the loan, the banks lent more money to the business -- so that it could repay old debts, and there was an appearance that the loans were viable. Loans went into land speculation or to investments in areas that were already overbuilt. (And this does not attempt to take into account ancillary problems, such as corruption and embezzlement, which also have been significant issues for the Chinese government.)

In the first part of 2006, there has been a huge surge in lending in China. With the economy already growing at rates of more than 9 percent, it would seem structurally impossible to grow it any faster. Shortages in skilled workers, management, buildings -- all these limit the rate of growth. The truth is that a substantial portion of the loans that went out were issued to keep bad loans floating, like using one credit card to pay the monthly payment on another. You can do that for a while, but you can't do it forever.

What keeps the Chinese system alive is not domestic consumption, which is not rising in tandem with overall growth. What keeps China afloat is exports -- exports in ever greater numbers, and with ever-smaller profit margins. Surging exports are critical to China, as they were to Japan before it. They generate the cash that allows the financial system to continue operating.

This is also the Achilles' heel of the Chinese economy, as Fitch points out:

"<b>Given the weaknesses already discussed, we believe Chinese banks remain acutely vulnerable to an economic slowdown, although the analysis above recognizes that much work has been done to tackle these weaknesses and at a minimum suggests that Chinese banks and the government are more equipped today than in the past to deal with problems that may arise."</b>

Here is the problem. The official policy of the Chinese government is to cool off the economy. In fact, the Chinese are attempting to cool growth only in certain sectors, where they perceive particularly dangerous bubbles starting to form. For the most part, however, they are doing everything they can to keep the economy hot, in order to try to manage the financial problem. Now, Fitch argues in its report that the Chinese banks are better equipped than in the past to deal with their problems. We agree with that assessment; they were completely unprepared in the past and now are abysmally prepared. You cannot prepare to deal with a loan situation as bad as that in China. You simply keep cycling as fast as possible and hope that something turns up.

In our view, this spate of reports on China's financial situation marks a turning point.

One of the things that has kept the Chinese economy booming was cheap exports. But another was the perception in the West that, underneath it all, China was sound. This perception induced foreign banks to invest in Chinese banks. There have, of course, been studies detailing the Chinese debt problem for some time: Standard & Poor's, for example, estimated the bad debt in 2002 at $600 million. That part isn't new.

However, when "irrational exuberance" (to quote Alan Greenspan) is at its peak, it is hard to break through the noise. Markets continue to rise, even as bad news comes out. Last week, for example, we saw the Bank of China make its initial public offering and shares soar, just as these financial reports were emerging. That doesn't mean these reports are wrong or that the Chinese have things under control. It simply means the market is ignoring news and rising on its own giddiness.

Nevertheless, a turning point has been reached that will be difficult to ignore. Reports from Stratfor are, of course, one thing. Reports from a single credit agency are another. But when a series of reports from highly respected, mainstream analysts all come out within a few days of each other -- with each, in their own way, telling the same basic story, it becomes hard for the system to dismiss that. Western companies moving into China have CEOs and CFOs who must exercise due diligence. There are now too many reports out there to be simply ignored. All of them are caveated. None of them write China off. But a critical mass is forming that will cut through the froth in due course.

Obviously, this does not mean that China will implode, disappear or anything like that. It will remain an enormous economy and an important one. But this does mean that the dynamics of the Chinese economy are shifting. The debt issue represents a deep structural problem that China will either deal with -- as South Korea did -- or not, as Japan did not. (Japan reaped more than a decade of economic stagnation as a consequence. It is significant that China lacks the degree of insulation that Japan built up; the economy has more external exposures and would not weather a similar crisis as well.) The point is that, ultimately, the books have to balance everywhere. That means that the huge structural imbalance of China, which these debts represent, must be rectified. And that process, as in all such matters, will be painful.

It is not clear how much pain Chinese society can withstand before it fractures. This is clearly a concern for Beijing as it tries, simultaneously, to reform the economy and to crack down on dissent. The Chinese, like anyone in this fix, try to put the best possible face on the situation. Which is why they exploded at Ernst & Young. But even the government in Beijing couldn't shout down the ensuing tidal wave of financial reports; instead, they grumbled and pointed to the passages that said it could all be managed.

Perhaps it can. But if it can, it won't be easy -- and we doubt that it is possible. We have been writing about this problem for several years now, and people keep asking when the crisis will come. Our answer is simple: If this isn't a crisis, what would a crisis look like? The Chinese financial system is sinking under nonperforming and underperforming loans. Mainstream Western analysts are all writing about the problem and calling for reforms that the Chinese cannot possibly implement in time to make a difference. At some point, the weight of evidence will shift the behavior of the Western financial community, and that will be that.

In the meantime, let the exports flow -- for they surely will, and in breathtaking quantities.
link
Send questions or comments on this article to analysis@stratfor.com. 
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Always suspected this is going to happen. Now question is when. China is delaying revalutation of its currency, they know what it will do to CHINA, another class revolution.

[acharya]

riday, June 09, 2006

The Problem with ‘China Bashing’

By Ronald McKinnon

Pressure on China today to push up the value of the yuan against the dollar is eerily similar to the pressure on Japan 30 years ago to make the yen appreciate. Back then, “Japan bashing” came to mean the threat of US trade sanctions unless Japan softened competitive pressure on American industries. By 1995, the Japanese economy had become so depressed by the overvalued yen (endaka fukyo) that the Americans relented and announced a new “strong dollar” policy. Now “China bashing” has taken over, and the result could be just as bad, if not worse.
<b>
By 2000, China’s bilateral trade surplus was as large as Japan’s; by 2004, it was twice as large. Whereas Japan bashing included “voluntary” restraints on exports that threatened US heavy industries, where lobbies were concentrated and politically potent, recent Chinese exports have mainly been low- to middle-tech products of light industry. Thus, China bashing primarily means pressure to revalue the yuan. However, this demand is as unwarranted now as was pressure on Japan to make the yen appreciate.</b>

The financial press and many influential economists argue that a major depreciation of the dollar is needed to correct America’s external deficit. But the US current-account deficit – about 6% of GDP in 2004 and 2005 – mainly reflects a new round of deficit spending by the US federal government and surprisingly low personal savings by American households (perhaps because of the bubble in US residential real estate).

Moreover, the cure can be worse than the disease. Sustained appreciation of a creditor country’s currency against the world’s dominant money is a recipe for a slowdown in economic growth, followed by eventual deflation, as Japan found in the 1990’s – with no obvious decline in its large relative trade surplus. In a rapidly growing developing country whose financial system is still immature, introducing exchange-rate flexibility in order to insulate domestic macroeconomic policy from the ebb and flow of international payments, as the IMF advocates, is an even more questionable strategy.

If a discrete exchange-rate appreciation is to be sustained, it must reflect expected monetary policies: tight money and deflation in the appreciated country, and easy money with inflation in the depreciated country. But domestic money growth in China’s immature bank-based capital market is high and unpredictable, while many interest rates remain officially pegged. Thus, the People’s Bank of China (PBC) cannot rely on observed domestic money growth or interest rates to indicate whether monetary policy is too tight or too loose.

From 1995 to July 21, 2005, China’s authorities held the now unified exchange rate constant at 8.28 yuan/dollar (plus or minus 0.3%). They subordinated domestic monetary and fiscal policies to maintaining the fixed exchange rate – even during the 1997-98 Asian crisis, despite great pressure to devalue. They also dismantled tariffs and quotas on imports faster than their World Trade Organization obligations required.

Greater economic openness, coupled with the fixed nominal exchange rate, ended China’s inflationary roller-coaster ride, and, after 1994, real GDP growth also became more stable. The government is now seeking to decontrol domestic interest rates, create a more robust domestic bond market, and finally remove capital controls. However, with China’s economy currently threatened by ongoing yuan appreciation, liberalizing the financial system could have perverse short-run consequences.

In a liberalized capital market, the undiminished risk that the yuan might appreciate means that investors must be compensated by a higher interest rate on dollar assets. But interest rates on dollar assets are given in world markets independently of what China does. Thus, the market can establish the necessary interest differential only if interest rates on yuan assets fall below their dollar equivalents.

As the huge buildup of dollar reserves – now almost $800 billion – expands China’s domestic monetary base, short-term interest rates will be driven down, at least until they hit zero. In May 2006, the fairly free domestic interbank rate was just 1.62%, while the US Federal Funds rate was 5%.

Just letting the yuan float upward does not resolve the dilemma. Actual appreciation would lead to actual deflation and further downward pressure on domestic interest rates. If actual appreciation does not reduce China’s trade surplus, pressure to appreciate the yuan further would only continue, as was true for Japan before 1995.

If China is to avoid falling into a Japanese-style liquidity trap, the best solution is to fix its exchange rate in a completely credible way so that there is no fear of currency appreciation. Then financial liberalization could proceed with market interest rates remaining at normal levels. But China’s abandonment of the yuan’s “traditional parity” in July 2005 rules out a new, credibly fixed exchange-rate strategy for some time.

Failing this, China must postpone full liberalization of its financial markets. This means retaining, and possibly strengthening, capital controls on inflows of highly liquid “hot” money from dollars into yuan, and continuing to peg certain interest rates, such as basic deposit and loan rates, to help preserve the profitability of banks.

Such measures are, of course, an unfortunate detour. True, China’s economy is now growing robustly and is not likely to face actual deflation anytime soon, but if China does fall into a zero-interest rate trap, the PBC, like the BOJ, would be unable to offset deflationary pressure in the event of a large exchange-rate appreciation. With short-term interest rates locked at zero, pressure for further appreciation would leave the PBC helpless to re-expand the economy.

China’s monetary and foreign exchange policies are now in a state of limbo. Instead of stable guidelines with a well-defined monetary (exchange rate) anchor and a firm mandate to complete financial liberalization, China’s macroeconomic and financial decision making will be ad hoc and anybody’s guess – as was true, and still is, for Japan. dt-ps

Ronald McKinnon is Professor of Economics at Stanford University. His latest book is Exchange Rates Under the East Asian Dollar Standard

[acharya]

China and America's grand strategy

P. S. Suryanarayana

The U.S. wants China to demystify its military investments, as part of its "obligation" to preserve the existing world system Washington wants to preside over.

UNITED STATES Defence Secretary Donald Rumsfeld says Washington's "grand design is transparent, to coin a phrase." Addressing the `Asia Security Summit,' organised in Singapore by the London-based International Institute for Strategic Studies, Mr. Rumsfeld said, on June 3, that America's "grand design" across the continent, "is to contribute to peace and stability and prosperity in this region." But there is more to this mantra than meets the eye.

Asked by a delegate whether Washington had been able to convince its Asian allies that "the Chinese should be of concern, strategically, in the next 10, 20, 30 years," Mr. Rumsfeld said: "<span style='color:red'>To some extent, where you stand depends on where you sit.</span> So, it is not surprising that some of our friends and allies, that sit in different locations than we do, have somewhat different perspectives about what the world looks like to them. ... Sovereign nations have their own views."

Surely, an admission by the Pentagon chief that all is not all that well with the U.S. camp in Asia. And, during the conference, he rode his hobbyhorse of China-bashing over its alleged "lack of transparency" on military matters. U.S. sources, however, believe that his anti-China remarks at this summit are "pretty moderate" in comparison to some of his previous salvos.

Mr. Rumsfeld did not ignore the perception of Washington's critics that its camp in Asia had already developed fissures. He said "there should be no ambiguity at all on the part of either China or Japan what our interest in the Pacific is." China and a "re-emerging Japan" were regarded at the conference as the "rising great powers" in East Asia today.

Of the two, Official Japan remains firmly within the U.S. camp. And, Mr. Rumsfeld wants China to "demystify" its military investments or face an unspecified "consequence" for any failure to do so.

There was a negative message to China in the atmospherics, as well, of his assertion about a possible "consequence." He theatrically prefaced his answer with an exclamatory "Oh" that sounded as a sarcastic response to the very mention of China as the country that a non-government delegate, Yan Xuetong of Tsinghua University, hailed from. In a significant portion, Mr. Yan's question was as follows: "America's military transparency is better than China's, but Americans have been involved in more wars since the end of the Cold War than China. And so, can you give us more explanation why military transparency can help for world security?"

Responding to a different question from Qingguo Jia of Peking University, Mr. Rumsfeld said: "People's Republic of China is an important stakeholder in the world system, and as such they have an obligation to see that the system is successful because they benefit so enormously from its success."

Now, this answer may appear somewhat conciliatory towards China, in contrast to the near-threat of a "consequence" as regards Beijing's military modernisation. The reality, however, is that Mr. Rumsfeld sees it as China's "obligation" to preserve the existing "world system," which the U.S. wants to preside over as an everlasting "hyper-power." This reinforces his view of America's "grand design" as the pursuit of peace and prosperity in Asia that would sustain the stability of the present "world system."

While Mr. Rumsfeld spoke of an emerging "true partnership" with India, without saying how it was relevant to the Pentagon's "grand design," it is the current China-Japan hiatus that looms on Washington's radar as a challenge and an opportunity. At one level, Tokyo's problems with Beijing suit Washington as it seeks to manage China's rise.

However, Washington is aware that China may be trying to deflect Australia and South Korea off their orbits around the U.S. Surely, Mr. Rumsfeld still counts these two as allies in the U.S. camp, but they fall in his category of "sovereign nations" that may not always see eye to eye with the Pentagon on China.

For the U.S., the new signs of autonomous actions by some of its allies can be somewhat offset by its latest military-related accord with Official Japan. Christopher W. Hughes, a Western specialist on Japan's current "re-emergence as a normal military power," has emphasised how the U.S. is "reinforcing [its] hegemony" in East Asia by strengthening this alliance.

Why? An answer from an altogether different standpoint. Robert Sutter, currently a professor and formerly a U.S. National Intelligence Officer for East Asia and the Pacific, said, in a chat with The Hindu in Singapore on June 9, that Washington "has a very mixed relationship with China, ... lots of areas of positive interdependence and very serious negative areas, too." So, the U.S. would have to "pay attention" to its assessment that China's "exercises, their doctrine and their weapon systems are all focussed on the United States." Is this American view a challenge for China's defence diplomacy?

[acharya]

Monday, June 12, 2006

India and China to open Himalayan pass after 40 years

By Khalid Hassan

WASHINGTON: India and China are rapidly completing work for reopening the Nathu-la pass after 40 years, a symbol of rapprochement between the two countries since the 1962 war, says a report in the Boston Globe.

The opening of the pass at a height of 14,200 feet will facilitate limited border trade between the northeast Indian state of Sikkim and southern Tibet, a “modest” start which “promises much more”.

According to BB Gooroong, adviser to Sikkim’s chief minister, “We are very much looking forward to the opening of the pass. It is symbolic . . . but we have to break the ice”.

The Sikkim government’s enthusiasm is said to be “not entirely matched” in New Delhi, where the establishment still remembers “being caught off guard by China’s sudden advance across the Himalayas in 1962”.

Much of the 2,200-mile common border remains disputed, and Indian officials say they are not yet ready to throw open the doors. Nevertheless a gradual process is under way which could eventually lead to a significant trade route opening up from the Indian port of Kolkata to the Tibetan capital, Lhasa. “They will go slowly, and there is still some distance before we get full-fledged transit trade. But there is potential.” the news report quotes Indian analyst C Raja Mohan as saying.

A study commissioned by the Sikkim government suggested that trade across Nathu-la could reach US$2.8 billion a year by 2015, a figure that appears “a little fanciful” today. The Sikkim government has yet to win Delhi’s approval for its plan to build a new, two-lane $500-million highway from Nathu-la to western India, bypassing the Sikkim capital Gangtok’s already congested streets. But pressure is building from China, as it tries to bring economic prosperity and extend political control over its vast, remote and sometimes neglected west. Lhasa lies just 320 miles by road from Nathu-la; Kolkata is a stone’s throw away compared to Beijing.

The passes between Sikkim and Tibet were once part of the Silk Road.

The Boston Globe report recalls that trade across Nathu-la took off after independence in 1947 and China’s invasion of Tibet in 1950. A decade later, more than 1,000 mules and horses and 700 people took the narrow trail every day. India imported raw wool, animal hide, and yak tails for use in shrines. It sent clothes, petrol, tobacco, soap, watches and even disassembled cars, including one for the Dalai Lama, the other way. Payment came in sacks of Chinese silver dollars. Trade came to an abrupt halt in 1962. Five years later skirmishes at Nathu-la left scores dead on both sides.

The report notes that as India and China rebuilt relations, two minor trade points were opened at the western end of the border in the 1990s, but agreement to open the more significant Nathu-la pass came during then prime minister Atal Behari Vajpayee’s trip to China in 2003.

China indicated that it was ready to drop its claim to Sikkim, which had merged with India in 1975.

“That was a very major landmark agreement from the political perspective,” according to one Indian official. “Now it is the economic side which will come into play.”

There is also the prospect of tourist traffic one day crossing Nathu-la. Officials hope that Sikkim could eventually be the centre of an international Buddhist pilgrimage circuit, from Tibet to Thailand and India to Nepal.

[Guest]

Chinese Reaction to Indo-US Relations

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Henry Kissinger is reported to have remarked <span style='color:red'>while China is a closed society with an open mind, India, though an open society often behaves as though it has a closed mind. </span><!--QuoteEnd--><!--QuoteEEnd-->

[acharya]

Wednesday, June 14, 2006
VIEW: Southeast Asia’s widening arms race —Hideaki Kaneda

Despite deep historical animosity over World War II, there are increasing calls in the region for Japan to expand its influence to counterbalance China. In reality, Japan is not ready for this, because it still strongly adheres to “self-imposed restraints” against “influence over other countries in security and defence”, including weapons exports

Southeast Asia’s return to prosperity since the financial crisis of 1997 has brought a region-wide splurge on new weapons. Most Southeast Asian countries are, indeed, now busy modernising their armed forces. So far, most have done so without compromising their autonomy in security matters. But, with China’s military build-up causing nervousness everywhere, many governments in the region are starting to work with outside powers.

Indonesia’s President Susilo Bambang Yudhoyono has perhaps been the most assertive. In addition to becoming more active in world diplomacy, Yudhoyono will meet Russian President Vladimir Putin in Moscow this month to discuss buying Russia’s newest fighter jets. Indonesia is seeking to form an air-defence squadron of 12 jets, with eight Russian fighters to complement the two Russian Su-27SKs and two Su-30MKMs that it has already bought.

Elsewhere in the region, Singapore has apparently opted to purchase 12 new F-15SG fighter aircraft from the United States. Thailand’s Prime Minister Thaksin Shinawatra met Putin late last year and tentatively agreed to purchase 12 Su-30MKMs. Malaysia has agreed to buy 18 Su-30MKMs over the next two years, while Vietnam has purchased 36 SU-27SKs, 12 of which are already in service.

With the exception of Singapore, it seems that Russian fighter-attack aircraft are the region’s weapon of choice at the moment. Russia’s growing slice of the local arms market worries the US, the world’s biggest weapons supplier and still Asia’s greatest military power. Thus, for example, last November, the US lifted its six-year embargo on military sales to Indonesia, imposed in 1999 in response to human rights abuses in East Timor. Indonesia immediately expressed its intention to purchase C-130 transport aircraft, as well as fast patrol boats to conduct “anti-terrorism and anti-piracy measures”.

Yet Indonesia is also trying to align itself with Asia’s rising power, China, by seeking greater defence and security cooperation. As a result of these improved relations, Indonesia has received Chinese short-range missile technology.

The possibility that Southeast Asia’s governments might begin to play America and China off against each other is one of the concerns that most animates the latest US quadrennial defence review, which is intended to “focus on the Pacific Ocean” in awareness of China’s growing naval power. Undoubtedly, the US will try to build closer ties with Indonesia through greater military cooperation, because Indonesia borders the region’s key sea lines of communications.

In particular, Indonesia will inevitably become involved in the tug of war between the US and China for influence over the vitally important Malacca Strait. Because China must import vast quantities of oil through the Malacca Strait, that sea-lane has become a central element in the country’s security strategy. For this reason, China is attempting to use economic and military aid as leverage to improve relations even with countries with which it has had military confrontations in the past, most prominently Vietnam and the Philippines.

India, too, is now joining the military build-up. It has actively led regional multilateral joint exercises, such as the naval joint exercise that it hosted in the Andaman Sea, in the eastern Indian Ocean, earlier this year. Nine Asian-Pacific countries took part, including Indonesia, Malaysia, Singapore, and Thailand.

Both India and China are each seeking greater influence over the strategically important country of Myanmar. For example, after Myanmar signed an agreement with China in 2005 to supply natural gas, India responded by cutting its own gas deal with Myanmar.

South Korea, too, has joined the scramble. President Roh Moo-hyun visited Malaysia and agreed to expand mutual economic cooperation mainly in information technology, bio-technology, and resources and energy. Roh reportedly also discussed exporting defence materials worth $2.3 billion, including training aircraft, destroyers, and armed vehicles. Moreover, in January 2006, Korean Defence Minister Yoon agreed with the Philippines to deliver two used patrol boats.

In this crowded power play, only Japan is left out, choosing for the most part to remain aloof and cultivate its relations with the US. But, despite deep historical animosity over World War II, there are increasing calls in the region for Japan to expand its influence to counterbalance China. In reality, Japan is not ready for this, because it still strongly adheres to “self-imposed restraints” against “influence over other countries in security and defence”, including weapons exports.

In the 1960s, as its economic takeoff was proceeding, Japan initiated a serious dialogue with regional players, aiming to build stronger relations with countries that it had once conquered and occupied. It is no overstatement to say that those efforts, which boosted trade and investment in the region, formed the foundation of Japan’s national power today. But now Japan’s political and economic influence in South East Asia is gradually declining, owing in part to its failure to exert influence over security and defence matters.

For those Asian countries that recall Japan’s moderate and sensible advancement of regional policies since the 1960s, there is a growing expectation that Japan should re-think its stance. At a time of regional uncertainty about Chinese policies — including the looming prospect of China’s first aircraft carrier — Japan’s participation in the evolving Asian security framework is fundamental to stability. The time when Japan could remain on the sidelines is over. —DT-PS

Hideaki Kaneda, a retired vice admiral of Japan’s Self Defense Forces, is director of the Okazaki Institute in Tokyo

[Guest]

Hi, friends, i'm a Chinese,We think India is an emerging big power worldwide, and many Chinese people are happy to see India 's rapid growth in all fields.Chidia (China+India) will probably lead the world at last half of this century,Asia 's century will be coming very soon.
How do you think of China? Does India really regards China as a threat? Will India ally with China?
[Edited - Admin]

[agnivayu]

IMO there are no permanent threats or allies. Historically both India and China have survived side by side for thousands of years, and probably have the longest relationship of any two major civilizations.

I think as long as China doesn't fall into the Abrahamic camp of either Islam or Christianity, the relations between India and CHina can be good. The Communists did great damage to traditional Chinese religions, which hopefully will re-emerge, Hinduism and Daoism have a lot in common and get along well in places like Singapore etc.
Christianity seems to making some inroads into China today. If China becomes a second Korea or Phillipines with fanatical new Christian converts, then things could get ugly in the world.

As far as India allying with China, I think India, China, US and the EU all have an interest now in maintaing the global trading order, and will work together to maintain it as long as the gravy train keeps going.







<!--QuoteBegin-jackkrone+Jun 15 2006, 10:46 AM-->QUOTE(jackkrone @ Jun 15 2006, 10:46 AM)<!--QuoteEBegin-->Hi, friends, i'm a Chinese,We think India is an emerging big power worldwide, and many Chinese people are happy to see India 's rapid growth in all fields.Chidia (China+India) will probably lead the world at last half of this century,Asia 's century will be coming very soon.
How do you think of China? Does India really regards China as a threat? Will India ally with China?
I 'd like to share the opinions from you, you can also log on my personal blog: [edited]
[right][snapback]52516[/snapback][/right]
<!--QuoteEnd--><!--QuoteEEnd-->

[Guest]

<b>Title: Is China a success while India is a failure?</b>
Date: 9/22/2004;
Publication: World Affairs;
Author: Friedman, Edward

China is a success and India is a failure. That conclusion--or is it an unexamined assumption?--has dominated comparative studies of the world's two most populous nations since the establishment of the People's Republic of China and the Republic of India in the aftermath of World War II. Looking at a glitzy Shanghai skyline in 2002, an Indian business reporter, worried how Indian nationalism leads to a pooh-poohing of the advanced nations and a commitment to building on ancient Indian glories, anxiously projects "that maybe the 21st century really does belong to China." (1) It is an important fact that, from the beginning of China's economic reforms in 1978-79 until 1991, when India launched itself on a similar course, China's economy grew to double the size of India's. Still, informed analysts of China see behind the glitz to a more "somber reality," including a "crisis of governance," "the pathologies of both the political stagnation of ... Brezhnev's Soviet Union and the crony capitalism of Suharto's Indonesia." (2)

What is it that people compare when they pit India against China?<b> For many Chinese, it is a matter of Confucianism versus Hinduism</b>. The Chinese assumption is that Confucianism is sober, rational, and practical, and Hinduism is mystical, irrational, and otherworldly, which is why China succeeds and India tails. Chineseness is superior to Indianness. The Chinese "know" that China is a success and India is a failure. It is this presupposition that I will explore in this article. It is merely a presupposition, definitely not a fact.

To Chinese--even in Hong Kong--it is a given that China has succeeded and India has failed. If one tells a Chinese that Chinese popular culture basically is Buddhist and that this <b>Buddhism came from India, one immediately is contradicted</b>.

A strong Chinese tree cannot result from a weak Indian seed. One tends to be told that Indian Buddhism, which was soft, was transformed by Chinese culture into something hard, such that a this-worldly Chinese Buddhism has little in common with an other-worldly Indian Buddhism, a pre-Hindu source of India's failure rooted deep in its civilizational essence. Such civilizational binaries, however, are projections of prejudices, not explanations of rates of growth. After all, for many centuries, both India and China were far ahead of Europe economically.

<b>Sadly, some Indians accept this notion of Confucians as uniquely capable of disciplined frugality and saving, as if India were not also a great commercial civilization. </b>Actually, when Japan began to rise in its Meiji era, the Japanese saw their country as a land of status-conscious wastrels. They therefore copied European banking institutions and savings incentives. Any people can do it. What is decisive are policies and institutions.

The essentialist binary privileging China over India is the presupposition of error after error. The Journal of Asian Studies, the prestigious organ of the Association for Asian Studies, ran a special issue during Mao Zedong's Great Leap Forward from 1958-61, explaining how China had now met and transcended the challenges of rural misery while Indian villagers were still mired in poverty. <b>As always, the question was how to explain the presumed Chinese success and Indian failure</b>.

<b>Yet, it turned out that Mao's Leap engendered the most murderous manmade famine in human history, causing at least thirty million premature deaths, some say more than forty million</b>. One cannot be sure because Chinese statistics, especially the numbers given for the death toll for 1961, are neither credible nor transparent.

Yet, the binary of Chinese success and Indian failure is treated as a fact. Visitors to India see beggars all over the city streets. In China, you need a local friend to direct you to see the pains of the more than one hundred million rural people who have fled without legal documents to cities, with unschoolable street kids sent out to beg. China's Calcutta-like poverty is hidden away in the marginalized countryside. In India, it has exploded into the cities, a dynamic just beginning in China.

To be open to a realistic comparison of the performances of India and China, it is helpful to change the images in one's head that predetermine what the eyes see.

There were two other Mao-era famines after the Great Leap disaster. Picture each of the millions of victims of China's three deadly Mao-era famines:

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->  An inhabitant of a Xinyang village reported at
  that time. "I just came back from our native village....
  Everyone in my family has starved to
  death.... Only my aunt remains. Her son died
  too....  How can she go on living? ... In the
  middle of one night, a pig so starved that it was
  nothing but skin and bones rushed into her
  courtyard. She shut the door at once. Then she
  beat the hunger dazed pig to death. She
  skinned the pig during the night and buried it.
  She got up in the middle of the night, dug up
  the pig and cooked a piece of it to eat. She did
  not give any of it to her five-year-old son to eat
  for fear that he would talk about it. Once they
  found out, those who were still alive in the village
  would come rushing in and threaten to kill
  her. They would beat her to bring out the pig.
  She looked at her son crying that he was hungry!
  Mama, I'm hungry. Mama! This went on
  until he died. (3) <!--QuoteEnd--><!--QuoteEEnd-->

As a police-state dictatorship premised on fear and complicity, the truth did not and does not readily emerge from China. Progressive Indians, seeing their nation trapped in the dilemmas of its less-than-successful first five-year plans, persuaded themselves that India's failures came not from its Soviet Union-like command economy, which it shared with China, but from a bureaucratic, capitalist, landlord elite that exploited India's poor. Actually, in the Mao era, both China and India wounded themselves by entrenching a Soviet-style command economy and by seeking autarky. "In 1970, when inward-looking policies reigned supreme, the [Indian] ratio of trade in goods and services to GDP was a mere eight percent, the lowest in the world, but for China." (4)

That is, as disappointing as India's performance was, Mao-era China did even worse. <b>Learning the truth about China's dictatorship and Mao's famine, however, did not, for most progressive Indian intellectuals, uproot misleading binaries of a good socialism (China) and a bad capitalism (India). Because the Chinese do not highlight their catastrophic experiences, outside analysts too easily overlook the most fundamental and awful realities. </b>

<b>Given Marxist-influenced anticolonialist assumptions, leftist intellectuals in India kept criticizing Indian policies for not being as socialist as China's, even as Chinese died from Mao's utopian socialist dictatorial project.</b> Indians trekked to China to seek the supposed secret of China's purported developmental success.

<b>The presupposition was that (bourgeois) democracy could not compete with (proletarian) dictatorship. Yet India only escaped mass famine, as India's Nobel Prize-winning economist Amartya Sen has shown, because it was a democracy. </b>

In the 1960s, left Indian intellectuals were not alone in imagining Leninist socialism as superior to market-oriented democracies. It was an era in which thinking was shaped by the Soviet Sputnik's winning of the space rocket race and by America's defeat by Fidel Castro at the Bay of Pigs, followed by America's long and bloody involvement in an unwinnable war in Vietnam. American aid to India was "aimed at helping democratic India prevail over China in a 'development contest' and thus prove the superiority of the democratic model to a watchful Third World." (5) But who believed that democratic development was superior?

There was a broad intellectual consensus in America, from Samuel Huntington on the conservative apologetic side to Barrington Moore Jr. on the independent critical side, that Leninists could successfully modernize a poor nation but Indian democracy could not. The conventional wisdom was that, in general, Stalinist big push industrialization worked. North Korea was seen as a success, and South Korea was a basket-case. Thailand was going nowhere while socialist Vietnam was rising. Castro Cuba's turn to Leninism was, of course, a challenge to all of class-polarized Latin America. Only later would such presuppositions be exposed as nonsense. Castro's economy collapsed when it lost Soviet Russian subsidies. Amazingly, many progressive Indians, even in the twenty-first century, somehow imagine Mao's way (or Fidel's) as a success worthy of emulation. Ideological presuppositions are not altered by mere facts.

<b>Mao-era China hid its horrors from view.</b> As a Soviet coal miner's life expectancy was more than twenty years less than an American coal miner's, so, in the Mao era, the life expectancy gap in China between the countryside and the city was larger than the gap between China and India. Leninism created extreme inequality. A Chinese villager was even constrained by the state from leaving the village for the city, forced to grow grain at below-market prices imposed by the state. <b>Such a limit on life choices did not exist in India. </b>

Freedom, both in the sense of knowledge as a basis for rational choice and of physical mobility as a capacity that could be realized or blocked, is central to well-being. The Chinese hinterland villager in the Mao era, limited in information by a single political line, either believed, wrongly, that all Chinese were equal in condition and living better than the supposedly exploited and immiserated of Taiwan or was frustrated and outraged at being kept locked in the equivalent of an apartheid caste society.

<b>The Indian villager, joining an opposition political party, protest movement, or exodus to the city, had capabilities painfully denied to the impoverished Mao-era Chinese villager. In many ways, the Indian villager was better off. </b>

Although all societies are wasteful, it may be that Leninist production numbers uniquely obscure how extraordinarily much of that production never usefully reaches an end-user or consumer, how stupendously much is wasted on the courtly lifestyle of the parasitic and large official stratum of feudal-like rulers, how much goes to the military and especially to the many secret polices with no gain--indeed, with great loss--for individual security. <b>Maoism imposed an abysmally low standard of living. </b>

By the 1970s, as Brezhnev's Russia stagnated and the horrible truth about Mao's China and Pol Pot's Cambodia became known, some concluded that state socialism actually was a dead end for the rural poor in the Soviet Union, China, and elsewhere. Indeed, it was. Some found that Japan-led East and Southeast Asia, with a policy of export-oriented industrialization (EOI), showed the way out of poverty. But proud, self-wounding, anti-imperialist Indian patriots would dismiss Japan and other countries as negative examples, as having lost their independence and as becoming Americanized, a sad Coca Cola-ization. Actually, already in 1919, Gandhi declared, "Japan has been Westernized; one can no longer even speak of China."

Such dismissals, far more reflective of Indian myopia than East Asian reality, of course, were ridiculous distortions of societal reality in Japan, South Korea, or China, which were as Japanese, Korean, or Chinese as ever. (6) <b>Many Indian intellectuals, however, kept repeating Gandhi's 1919 error and, thereby, rationalized not taking a path that could lift the rural poor out of misery.</b> A blinding purist anti-imperialism of urban elites produced policies that fettered the poorest of the poor. Reform-era China, which abandoned its Mao-era economically irrational anti-imperialism, has lifted hundreds of millions of people out of poverty.

It abandoned revolutionary tourism, in which China paid to fool foreigners into thinking socialism was paradise, for money-earning tourism, in which the splendors of ancient China earned tens of billions in hard currency from foreigners.

In the years immediately after Mao died and before reform gains kicked in, some Chinese intellectuals argued that "even" India was doing better than China. That claim hurt Chinese pride. It was meant to. <b>It was inconceivable to the Chinese that India should do better.</b> To argue even for a higher sports budget, one said "even India" spent more. (7) In fact, Mao had devastated Chinese higher education. Female illiteracy had risen to the same rate as Indonesia.<b> "Even" India spent more on education than did China</b>, which was virtually at the bottom of the world rankings of per-capita spending on education. In the era of institutionalized Maoist socialism (1957-77), life only improved for villagers on the average of one pack of cheap cigarettes per year. An unreported famine was ravaging southwest China when Mao died. China had to import grain to feed its people, while India had moved to grain self-sufficiency.

One standard explanation of China's failure and India's relative success in the late Mao era is that Mao, given his war on scientists and other intellectuals, had missed the "Green Revolution" of new and better seeds. Maoism's importation of Stalinist Lysenkoism, rather than "bourgeois" genetics, had lost China the benefits of modern science. This, however, is not true.

Actually, China had moved in the Green Revolution direction starting in 1970. These gains, however, were cancelled by the waste of Mao's war communist autarky, policies such as "the third front" that diverted investment away from modernization projects into war preparations. That quickly ended with Mao's death. By the early 1980s, rural China was booming. <b>The change happened so fast that Indian intellectuals never pondered why Chinese state socialism in the Mao era actually had been a devastating failure. </b>Per-capita income in China at the end of the Mao era was lower than in India. It was worth spending time contemplating that fact in order to free India from Leninist command economy trammels. Instead, by the mid-1980s, the question, once again, was how to explain India's failure and China's success.

Despite China's stagnant misery in the Mao era, many, <b>including Nobel Prize-winning economist Amartya Sen, praise it for revolutionary-era success in reducing poverty, enhancing life expectancy, and equalizing and raising the quality of health care and schooling, especially for the rural poor</b>. Such purported achievements are cited to prod India and others to do more for their rural poor, surely a noble purpose.

However admirable that goal is for India and others and however shameful is India's record on behalf of its rural poor, any Mao-era achievements were, as argued by Justin Lin, the director of the Peking University Center for Economic Research, both artificial and unsustainable. In fact, the rural poor in China were vulnerable and miserable. The real and deep poverty was hidden and latent.

Reform-era changes in China make manifest what was always there, even if not easily observable, in the same way that almost two million of twenty-two million people died from famine in North Korea at the end of the twentieth century and were still kept from the eyes of international aid workers. Foreign observers all too readily can be kept from seeing the inhumanity, misery, and inequality of state socialism.

The three Mao-era famines victimized the invisible rural poor. It was Mao's political priorities that killed the rural poor. There also was, in addition to the Leap-era famine, a famine in 1963 in Anhui when Mao halted economic incentives to launch class struggle. A third famine occurred at the end of the Mao era in southwest China, similarly caused by revolutionary fundamentalism of the inhuman variety institutionalized by Lenin and carried to its logical extreme in Pol Pot's Cambodia. Mao's policies did not benefit the rural poor. (8)

Instead, Mao locked up villagers in the countryside, blocking urbanization and modernization that could create higher-value production. <b>In the Cultural Revolution of his last decade in power, Mao destroyed education, turning teachers into targets for degradation.</b> A Chinese junior middle school graduate in the countryside actually received less education than an elementary school student had received in six years in the era before Mao's destructive Cultural Revolution. Chinese figures on years of education in the Mao era, bad as they are, hide how much worse the Mao-era reality was.

The rural workers in export factories in the reform era whose foreign exchange earnings have been central to China's rise were prepared for that work not by good Mao-era education; such education did not exist. <b>It was Confucian culture and socialization, which continued despite revolutionary attempts to destroy it, that produced young people who were hard working on behalf of family enrichment, a value that was the antithesis of Maoism. But, of course, the poor work hard everywhere. </b>

Although the Mao-era educational disaster is well known, there is a stylized rhetoric that hides the similar disaster in health care, a discourse that points to longevity and equal state-subsidized access to medical treatment such that illness did not destroy family finances and cause economic polarization and immiseration, as it does in China's reform era. In fact, that longevity gain was the achievement of the age of New Democracy before Mao's fundamentalist communism took over in 1957-58. The health delivery system put in place between 1949-56, which saw that virtually everyone was vaccinated and inoculated, did, indeed, bring great gains in life expectancy. (9)

Once Mao took control of policy in 1957-58, however, <b>he insisted on self-reliance, meaning self-financing</b>. The poor had to take care of their needs with the most meager of resources. They were not subsidized by the state. Unfunded clinics decayed and declined in the Mao era. They were staffed by untrained people incapable of medical diagnoses. They had no medicines or surgery to offer. It was only the urban and state sectors that were subsidized. The rural poor of the Mao era were abandoned.

Once reform began, villagers looked elsewhere for medical care. Traditional herbal medicines--whose growth was barred in the Mao era, lest such profitable economic crop production led tillers to concentrate on money--suddenly became available. No one would pay for seeing the untrained Mao-era people at the village clinic. I was in rural China interviewing clinic workers and villagers when that artificial and unsustainable system of self-funding disappeared in the early 1980s. The Mao-era rural health clinics were useless, a waste. Villagers abandoned this waste as soon as Mao died and sought real doctors.

The reason why illness in the Mao era did not drive people under and produce great income disparities is because, at that time, no one could go out and earn money, and everyone had to live on collectively distributed, relatively equal survival minimums of food. Thus, no one got ahead when one lay ill and untreated. This leveling down and sharing of misery produced, again, an artificial and unsustainable equality. No villager today would accept living at such a primitive level as in the Mao era.

<b>Social expectations have risen</b>. The poor hate the corrupt gains of the coddled rich. Chinese grow nostalgic about the past and misremember and romanticize it as a way to criticize the lack of national health care today, <b>just as the brilliant and well-meaning Professor Sen and others among the well-meaning Indian left romanticized Mao-era primitive equality. Today's poor in China, like the nostalgic left in India, blame China's market-oriented reforms for its hideous and growing gap between rich and poor.</b>

In fact, the causes of growing inequality in reform-era China lie in the continuation of Mao-era policies and priorities. <b>They are entrenched in powerful identities, interests, and institutions</b>. The biggest source of the rural-urban gap remains the locking up of villagers in the countryside in a state-imposed forced production of low-priced basic crops. As in the Mao era, investment privileges the central cities. State workers, not villagers, get unemployment insurance. Also, as in the Mao era, there still is no health care or pension provision from the central government for the rural poor.

The unaccountable ruling party cares for itself. When property is privatized, right down to the county towns and villages, officials (as in Russia) grab the lion's share of the wealth, as in the Mao era they grabbed the food so that their family members did not die in the three famines. Economic inequality is a reflection of enormous political inequality that denies voice and self-representation to the village poor and the more than one hundred million migrant workers.

In short, the growing polarization and increasingly visible poverty of the reform era in China actually are consequences of Mao-era priorities, institutions, and policies that have persisted because of a lack of political reform. The tendencies were latent in the pre-reform era and manifest when something went wrong in the Mao era and poor villagers, three times, were allowed to starve to death. There was nothing admirable in the Mao era that has anything to teach India about how to grapple with rural poverty.

There is, however, much to learn from reform-era China about growth. The energy and investment in modernizing transportation and communication infrastructure are most impressive. India's relative lack of investment in power and infrastructure deter both Indian and foreign investment. A growing gap in this regard now separates China and India.

But Chinese government statistics that show poverty in the reform era as reduced to but 3 percent of the population are as credible as Mao-era claims of poverty reduction and real equality; that is, they are incredible. In fact, using UN standards of poverty, China's poverty rate is quite ordinary for its level of development, and its inequality is extreme, a manifestation of the absolute power of an unaccountable urban-based party that sees investment in equality as a Mao-era fraud not to be repeated. Reform-era growth actually embodies great continuity with the Mao era, as seen by the suffering in the populous, rural, and poor Henan province. Henan had the most famine deaths in the Mao era. It has the most HIV/AIDS deaths in the reform era. In the popular consciousness of the newly prospering and grossly uncaring, the people of Henan are ridiculed for their suffering. The level of uncaring inhumanity in China is extraordinary.

<b>When one compares India and China, one must take the time to penetrate a fog of false claims about China, both in the Mao and post-Mao eras, in order to see the real China and not be taken in by revolutionary or nationalistic self-serving rhetoric that falsities the record, making it seem that the Communist Party in Beijing holds the secret to eradicating rural poverty. In fact, the PRC's record is disappointing. This failure, however, does not excuse or make less painful slow growth or rural misery in India. </b>

The last defense of <b>India's slow growth is the canard that it is the price of democracy</b>. "Mrs. Gandhi's supporters" believed that "brutality and repressive discipline" made possible "development in China and the Soviet Union." They believed that totalitarian China "advanced faster than" democratic India precisely because China was totalitarian, (10) <b>Democracy was imagined as an obstacle to growth</b>. Even in 1997, the Indian prime minister held to this shibboleth that India had "to pay the economic price for political democracy. (11) Authoritarians could, in this Indian view, grow faster than could free societies whose slow proceduralism combines with vested private interests tied to corrupt bureaucratic and political interests to block rapid development.

Without denying the weight of such negative forces in India, they were worse in the Leninist world. In actuality, it was the entrenched vested interests of Soviet Russia's corrupt, gray, bureaucratic Brezhnevian era that blocked Gorbachev's reform project, leading to Russia's tragic decline. Those interests had reversed Khrushchev's reforms. Authoritarian vested interests are more difficult to overcome than are democratic ones. Likewise, communist Vietnam is confronted by "the unwillingness of the Party to follow its [reformist] words with actions.... If an entrenched and resistant bureaucracy, driven by vested interests, is able to frustrate a meaningful reallocation of scarce national resources, it may prove difficult for the state to sustain economic progress." (12) All statistical studies of growth and the political system conclude that democracy actually is not, in comparative prospective, an obstacle to growth.

American professor Suzanne Ogden mocks the notion that democracy has kept India from developing as quickly as China: <b>"China's commitment to strong economic development is in startling contrast to the Indian government's commitment until recently to 'the Hindu 3 percent rate of growth'--the speed at which the Brahmin class felt India could develop without endangering its privileged elite position."</b> (13) That is, the issue is not a democratic political system as such, but, rather, India's entrenched political interests that benefit from the Leninist command economy, the "license raj," and conservative elites in some of north India's most populous and, therefore, electorally powerful provinces. They have had the political clout to block needed growth and poverty-reducing reform.

This analysis of the impact of a political elite and its socioeconomic base can be found in a sophisticated form in Barrington Moore Jr.'s classic study, <b>Social Origins of Dictatorship and Democracy</b>. (14) All of the so-called East Asian miracle economies enjoyed the advantage of beginning with a good land reform, providing land to market-oriented farmers. India did not. Moore found that China's advantage in having destroyed landlord power in Mao's peasant-based revolution would allow Mao's socialist state to develop much faster than India's, such that marginalized villagers in India, the poorest of the poor, eventually would abandon democracy and, to win the blessings of modernity, would be mobilized to support an authoritarian alternative to reactionary, landlord-based democracy.

Moore was wrong, (15) at least until 1978. <b>Mao's socialist state actually locked China's villagers into stagnant misery.</b> (16) Collectivization in 1955-56 lost the gains of the initial land reform, which had been merely a tactic to win peasant support in China's revolutionary civil war. In fact, at Mao's death, because of market-disregarding collectivism in China, according to UN statistics, per-capita income in India was higher than in China. The previous quarter century of analyses explaining why India failed and China succeeded presupposed something that was untrue.

But, in 1978, economic reformer Deng Xiaoping became China's paramount leader and launched a quarter century of sustained high growth that swiftly made China twice as rich as India. A similar openness to market-oriented reform did not begin in India until 1991 and remains far more constrained. Even if India's growth rate since 1991 had been comparable to China's, because China, by 1991, had an economy already about twice the size of India's because of high growth since 1978, the absolute gap between the two countries will continue to grow. (17) This worries patriotic Indians who anxiously imagine a future where, whatever India does, China might still be able to laud it over India. Once again, Indian patriots are fixated on China supposedly succeeding while India, relatively speaking, still fails. However, it is not obvious why a thirteen-year Chinese head start should be decisive in any historical long run.

One might argue that Moore's analysis of China's advantage in having destroyed landlord power by revolutionary means was merely premature or prescient. He has been proven correct since 1978, when China began to transit out of Soviet-style collectives and into relatively equal households that became the dynamo of China's 1979-84 rise out of Mao-era poverty, a path blocked by entrenched Indian rural elites. Even here, however, comparisons turn out to be far more complex than is suggested by the standard essentialist binary presuming that China is a success and India is a failure.

First, China's rural dynamism ended in 1984-85. The subsequent gap in China between rich and poor, urban and rural, southeast coastal and central hinterland, has grown. However polarized postsocialist Russia seems, income distribution in China is more unequal. Social discontent in China, especially among villagers from central China, is high. Future stability is far from guaranteed. This is a position shared by many academic analysts of China. This rural discontent threatens Chinese stability. (18)

<b>In India, in contrast, the strongest supporters of its democracy are the poorest people.</b> One can debate the diverse sources of this stabilizing legitimation of Indian democracy, assessing the contribution of Gandhianism, policies of positive discrimination, lower caste political mobilization in a second surge of democratization, and so on, but <b>Moore's prediction that peasants in China stabilize an authoritarian political system and those in India destabilize a democratic one seems virtually the opposite of the truth. </b>

As for the poorest of the poor, as badly off as many village women are in an India whose inability to provide them with basic education and health care is a scandal, these women seem worse in China. In fact, more women commit suicide in rural China than in all other nations combined. This occurs especially away from the coast in central China, where the coercive population control has led to extraordinary efforts by families to get around state population restrictions to guarantee themselves male heirs, despite what happens to vulnerable baby girls.

In a Chinese countryside without pensions or healthcare, parents find a survival imperative both in having village sons to earn for them and also in having daughters-in-law who will care for elders in their advanced years. The result is a gender skewing against women that is among the worst in the world.

With so many men and so few women, the females are imagined by men as too powerful and spoiled, as being able to pick and choose, and, therefore, as being in need of discipline and control. A physically cruel resurgent Chinese patriarchy leaves many women who yearn for the blessings of an open modernity with, instead, a hellish life experience of dashed hopes and dreams, such that death comes to seem to be a better option than life. (19) <b>Given the ruling Communist Party's fear that any autonomous group, such as Falun Gong (FLG) spiritual meditators, could be a threat to the Communist Party (CP) regime's power, as Solidarity was in Poland, ruling groups in China do not readily allow women to organize to help or save women. China lacks India's rich civil society of human rights groups trying to ameliorate the inhumanities inherited from history that the government has let fester. </b>

If one takes as one's standard for measuring success or failure the destiny and dignity of the least of them, it is not easy to argue that it is China that is the success, despite India's continuing failure to eradicate poverty.<b> For non-chauvinist Chinese who would have their nation live up to its glorious civilizational promise, it is even possible to look at India as having much to be proud of, much worthy of emulation by China.</b> Thus, a south China defense attorney, who has struggled against China's imposition of capital punishment for relatively minor crimes that lead to execution only in China, finds India a model worth emulating as a society that cares about the dignity of even the least of its citizens, at least in comparison to China.

<b>China executes more people each year than the rest of the world put together. </b>Rising urban Chinese, hating crime, drugs, corruption, and so on, welcome the large number of hasty, often mass executions of members of the "dangerous classes," the rural uprooted. However, the Chinese defense attorney campaigning against these arbitrary abuses that target the poor and vulnerable comments, "The influence of foreign countries is important in this debate. When [Chinese] people say, 'What does it matter if a few die, there are over a billion of us,' I say, what about India? They have only executed five or six people, and there are nearly a billion of them." (20) Of course, both India and China are equally culpable in allowing a potential AIDS epidemic to fester, with India perhaps even slower than China in responding to the crisis.

In showing that it is not true that China is a success and India is a failure, the point is not that China always does worse than India; that would be false. Beyond inaction on AIDS, <b>India can be criticized for its unwillingness to join international human rights efforts on behalf of victims in China on the tired and unpersuasive grounds that human rights universalism </b>is a Western imperialist project for imposing alien values on developing nations. The self-wounding rage of Indian anti-imperialism thereby makes India complicit in inhumanities against the rural poor in China, as well as in India.

<b>Such chauvinism is one of the major forces blocking the fulfillment of India's reform project and slowing Indian growth so that the gap between India and China continues to grow.</b> Without a doubt, China has done far better in export promotion, wooing foreign investment, (21) attracting expatriates to return home to invest, promoting tourism, and absorbing the best practices of the world in science, technology, and business administration. If India continues to dawdle and embrace its purist chauvinism, the gap could grow into a chasm. Should India open to best practices, there is no reason that it cannot catch up with China, but an irrational fear of alien pollution keeps Indians from acting in the interest of their nation's economy.

This self-imposed Indian obstacle, nationalism, has little to do with the democratic political system (just look at the openness and success of democratic Taiwan). Instead, India's problems lie in the political realm.

In Indian nationalism, Indians must be "wary of opening the economy to foreign business for fear of repeating the experience of the East India Company, whose merchants had become rulers" and practiced "extreme protectionism," thereby locking India into one technological moment of industry, incapable of borrowing the knowledge that permitted continuous upgrading to standards of global excellence. Since independence, fearful that market openness meant dependency on imperialism, India has wounded itself, subsidizing waste and producing shoddy goods, rejecting an opening to world markets that rapidly expanded wealth in East and Southeast Asia. (22)

Indians instead clung to the "Nehruvian developmental model ... based on import substituting industrialization leading to self-reliance" while damning export-oriented industrialization as an American "imperial" conspiracy to keep developing nations as "client and protege states" who are forced to "follow the footsteps" of an exploitative America. (23) Socialists in Singapore discredited themselves and inadvertently helped Lee Kuan Yew's party by chanting the same litany. Islamists today wound their people by a similar obsession. For India,

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->  Nehru held most of the countries which later
  ... formed ASEAN in contempt because of
  their alignment with either Britain or the U.S.
  He maintained that they had "Coca-Cola governments"
  and shared none of India's lofty
  vision. <b>Today, more than 30 years later, India,
  as a full dialogue partner, is looking eastward
  to ASEAN, most of whose economies have
  left India's recently liberalized economy
  decades behind</b>. (24) <!--QuoteEnd--><!--QuoteEEnd-->

India can be compared usefully to regions in Asia other than China. These comparisons do not always add to India's luster.

But the big political obstacles to India's rapid rise come from the nationalistic rejection of openness <!--emo&:blink:--><img src='style_emoticons/<#EMO_DIR#>/blink.gif' border='0' style='vertical-align:middle' alt='blink.gif' /><!--endemo--> . Can Indian politics abjure the anticolonialism of K. M. Pannikar, in which the "Portuguese of the 16th and 17th centuries had nothing to teach the people of India except improved methods of killing and bigotry in religion"? Is it possible to re-imagine international exchanges as mutually beneficial? I think the Indian political imagination is moving, albeit slowly, in that direction.

From this perspective, when European ships reached India in the sixteenth century, "India was enormously productive, wealthy and densely populated.... Indian ports and shipping bad for centuries been tied into the Arabian Sea, Red Sea, and Mediterranean system on one side and into the Bay of Bengal, Straits of Malaka, and China Sea on the other." A decentralized and open India absorbed advanced technologies, and "Indian diamonds, pepper, handwoven cotton and silk textiles, and other commodities kept their old markets and found new ones.... Dutch purchases of textiles in Bengal in the late seventeenth century likely generated 100,000 new jobs for the region." India was a beneficiary of the expansion of the world market, Andre Gunder Frank concluded in 1996, "earlier and more than ... Europe." (25) Should one not imagine premodern India as a global market leader?

In the real world of comparative politics, no nation ever does everything best to enhance growth, yet all have strengths on which to build. In fact, some Chinese are beginning to worry that in the long run, they may not be able to compete with India precisely because India is an English-speaking democracy and China is a dictatorship with grossly underfunded education. This contrast is most potent in information technology (IT) software. India is a world leader, and China has sent missions to find out why. Information technology may prove a weighty factor in the post-Fordist world economy. (26)

One possibility is that political freedom is a major advantage in the information age. Given the Chinese Communist Party's fear of its own people, it tightly controls Internet cafes and Web access. Some argue that this will constrain information technology growth. A democratic India, therefore, has economic opportunities denied to the Chinese people by the ruling Communist Party's dictatorial system. Democracy is not now and never was an obstacle to growth.

<b>This factor favoring India suggests that, as in the past, straight-line projections of Chinese growth in which India seems relegated to defeat should be treated with great skepticism. </b>

This is especially true for our volatile post-Bretton Woods age, where international finance largely is beyond governmental management. China's banking system could collapse. It is bankrupt. The nonstate sector in India, with the largest firms capitalized at $7 billion or so, contrasts with China's largest private firms, which, despite a quarter century of reform, are still only 10 percent of the size of India's behemoths. Also, labor costs in manufacturing in 1995 were the same in India as in China. It is not the case that all positive factors and forces fall on the Chinese side of the scale in a comparison with India. The earlier and more fully that India completes the project of economic reform, the better it will do.

Still, people ask, from the point of view of standard of living and gross national product, how are India and China doing? This is not easy to answer because of the continuing problem of making sense of Chinese statistics. In one researched village,

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->  Official figures during the 1990s became less
  reliable as the rural economy stagnated and village
  cadres come under pressure to inflate their
  achievements ... reported per capita income in
  1997 was 2,700 yuan [US $330], a figure that
  even the villages cadres openly admitted was
  false. The real per capita income in the late
  1990s ... stood at about 1,000-1,100 yuan [US
  $135]. (27) <!--QuoteEnd--><!--QuoteEEnd-->

Although Chinese rural incomes stagnated in the four years from 1997-2000, the PRC's National Bureau of Statistics touted a 17 percent rise. (28) The rich-poor gap in China probably is far worse than statistics suggest, although overall growth in China likely is almost as high as claimed.

My own hunch is that although the PRC's official numbers overstate Chinese growth, this is balanced out by the contribution of the off-the-books economy, which is large and growing. Still, it is very possible that India outgrew China from 1997-2000. Indian statistics may understate India's foreign direct investment (FDI) by a factor of two, while China's FDI, according to World Bank statistics, are overstated by a factor of two. (29)

<b>More worrisome for China than uncertain statistics are polarization and misallocation. The widening gap between rich and poor is rooted in Mao-era continuities discussed earlier, which persist because the Chinese dictatorship resists political reform. </b>The misallocation is inherent in the Chinese Communist Party's attempt to maintain control of statist networks.<b> It, therefore, forces banks to loan money to money-losing state-owned enterprises (SOE). </b>

Bankrolling losers has a negative impact on job creation such that, despite high overall growth, unemployment, polarization, and social tensions all worsen in China because state investment in China largely goes to losers. This tendency to support losers augers ill for China's long-term economic future. (30)

<b>A comparison between China and India, therefore, produces mixed, complex, and contingent conclusions. </b>(31) It certainly is <b>not a matter of explaining a successful China and a failed India</b>. The Asian Development Bank projects higher growth in 2003 for South Asia compared to East Asia. (32) UN statistics show that, measuring from the end of the Mao era, a measure biased to make China's reform growth look best in terms of percentage improvements in health, education, poverty reduction, and life expectancy, India actually has improved faster than China. (33)

The Chinese future remains uncertain. The corrupt political system lacks legitimacy. The most difficult economic reforms--banking, state-owned enterprises, regulation--remain to be addressed. Debt increases. Pensions are unfunded. The banks are bankrupt. Although Beijing has managed its currency brilliantly in the reform era, virtually wiping out the black market in money, there is no guarantee that it will be able to do as well in the future, given the Brezhnevian particularism that increasingly defines the ever more corrupt and self-serving regime, whose brutal greed is outrageous and alienating.

<b>The future cannot be predicted, but should India complete the reform agenda while China remains trapped in the contradictions and constraints of its Brezhnevian authoritarian interests and chauvinistic paranoia, then there is no reason why India should not be able to close the gap with China. The onus lies within the human agencies of the Indian polity. Objectified polar binaries of success versus failure mislead. </b>

This suggests a series of different bases for comparison between India and China beyond Hinduism versus Confucianism or democracy versus dictatorship, matters of political institutions, leadership, and will. The two nations have very different military traditions, different notions of civilian-military relations. They approach federalism and decentralization differently. Their ruling parties work differently.

They handle issues of diversity in language, religion, and ethnicity or regional identity very differently. In all of these realms, the Indian system seems more legitimate and flexible. It is for good reasons that the Chinese are far more worried about their nation falling apart than are Indians. Riven by persistent Leninist creations of regional polarization, the Chinese are anxious that their reform path will lead to national disintegration as in Yugoslavia, the Soviet Union, Czechoslovakia, and Ethiopia.

One of the difficulties in any comparison of India and China is that the problems confronting India are quite public, and those of China are, even now, mainly covered up. One should not romanticize India. The burning of brides by dissatisfied husbands' families is a public scandal in India. It should be. The kidnapping and sale of women into prostitution and forced marriage in China, a large-scale venture with police complicity, is, in contrast, basically kept quiet.

Communal strife is headline news in India. Although China may or may not be heading toward a breakup of the nation, little of analytic value is published in China to help one understand regional and communalist strife. Leninist states marginalize poor minorities and then lock them into their poverty by preventing migration and by state pricing of primary products. The rage of the marginalized in China against those in power hardly can be exaggerated, but it is not readily visible. Indeed, I cannot even recount personal encounters with minority hatred for Han Chinese in this article, for fear of getting those people in serious political trouble.

Evaluating China versus India in terms of the life prospects of the most vulnerable people, one has to assess treatment of minorities, especially religious communities. India's vicissitudes in trying to build a certain kind of secular society are well known. The tragic victims of communalist atrocities and the impact of fundamentalist forces from Gujarat to Delhi on religious minorities are well known and ugly. But rulers in the PRC keep outsiders from knowing just how bad things are for Tibetan Buddhists and Uighur Muslims who are forced to live in virtual apartheid conditions. All international human rights groups find evidence of pervasive and continuing crimes against humanity in China:

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->  Beijing's constant jailings of dissidents, religious
  adherents, environmentalists and others
  who threaten the ruling regime compares to
  India's marvelous tolerance for diverse life
  goals. Unlike GDP, we do not have an indicator
  to show the gains in welfare when an Indian
  is able to, say, join an ayurvedic health
  group run by the Hare Krishnas or parent
  another child. Nor can we measure the loss
  when a Chinese practitioner of the Falun Gong
  meditation sect is forced to recant under threat
  of confinement or a farmer's wife is forced to
  abort an unborn child. If we did, India would
  be the "growth miracle," China the "growth
  debacle." (34) <!--QuoteEnd--><!--QuoteEEnd-->

Chinese in the post-Mao era have joined in an extraordinary revival of faith-based commitment. Religion is growing all over China. The Chinese Communist Party is trying to constrain, control, co-opt, or crush this spreading spiritualism. The ruling Chinese Communist Party does not, however, crack down on lineage or very local temples of Buddhism or Daoism. Scattered, small, and unorganized, they are not threatening. They have flourished.

But the rulers in Beijing, looking on religion as would a half-educated village atheist proud of his narrow materialism, are anxious about this explosion of spiritualism. There is in China "a widening gap between the inability of the political leadership to appreciate religion and the growing fascination with religion." (35) Even Christianity and underground house churches are spreading like wildfire in China. This contrasts with India, finds Tu Weiming, America's leading neo-Confucian. India is a vibrant democracy, a civilization where religious vitality and societal dynamism flourish together, and China "suffers from an
inability to understand religion as an integral part of the complex modernizing process," (36) such that China should "take from" India, understood as one of China's "reference societies." (37)

In so many ways, China's rulers are abysmal failures who make life worse for the Chinese people. It is Machiavellian, paranoid Chinese patriots who now drive themselves and worrying that they may be Coca Cola-ized if they remain open to the best practices the world has to offer. A continuation of the reform project in China cannot be taken for granted. Fearful of the loss of their cultural essence, the Chinese constrain their reform project. As a result, problems pile up.

Opportunities for reform are not grasped. Explosions remain possible. Victory for antireform forces in China remains all too likely. The gains of the post-Mao economic reform era could yet be lost in a Chinese politics where President Jiang was widely seen as traitorously selling out to Americans for doing what is necessary to maintain access to the American consumer in order to earn the foreign exchange that helps drive Chinese growth.

Harvard University professor Roderick MacFarquhar reports,

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->  A leading Chinese scholar-official told me of
  his first trip to India. He marveled that the elite
  all spoke English, dressed in Western garb, sent
  their kids to English--or American--type
  schools, or even to foreign countries to be educated.
  In a few places you could still see road
  names and statues put up by the conqueror. And
  yet ... these people were without question
  Indians. What, he asked, had the Chinese been
  worried about...? (38) <!--QuoteEnd--><!--QuoteEEnd-->

The normally human in India is still unreachable in China.

But it is not just that China has constructed such scary demons to frighten itself that the success of its reform project remains quite iffy, still threatened by chauvinistic forces and unreformed, politically powerful, very conservative, entrenched Brezhnevian interests. Even more, Indian minds have, for a long time, been contributing to global civilizational richness. Although the Chinese, their creativity crushed by a repressive political system, whine that the supposedly racist and politicized Nobel Prize Committee for Literature refuses to recognize Chinese greatness, ignoring the fact that Nobel laureate Gao Xingjian had to flee Communist Party repression in the PRC to write in Chinese and publish in Taiwan and Hong Kong, Indian authors regularly produce numerous masterpieces of world excellence, enriching all humanity. On so many global cultural debates, Indian voices must be heard and heeded, <b>while repression makes brilliant Chinese seem stupid because of political fears. </b><b>It is mind-boggling that people could ever consider this abnormal China that represses its people's capacities a success and a vibrant and democratic India a failure. </b>

<b>NOTES </b>
(1.) Manjeet Kripalani, "An Indian's Epiphany in China," Business Week Online, February 14, 2002.
(2.) Minxin Pei, "China's Governance Crisis," Foreign Affairs (September/October 2002): 97, 99.
(3.) "Bai Hua Speaks His Mind," Dongzhang (Hong Kong), nos. 45 and 46 (December 1987, January 1988), translated in JPRS-CAR-88-009, March 4, 1988, 9.
(4.) "Survey on India," Financial Times, June 24, 1997, 2.
(5.) Noam Kochaxi, "Limited Accommodation, Perpetual Conflict," Diplomatic History 26, no. 1 (Winter 2002): 101.
(6.) James Watson, Golden Arches East (Palo Alto, CA: Stanford University Press, 1997).
(7.) Susan Brownell, "The Changing Relationship between Sports and the State in the PRC," in Sports ... The Third Millenia, ed. Fernand Landez et al. (Saintes-Foy: Les Presses de l'universite Leval, 1991), 296.
(8.) Edward Friedman, Paul Pickowicz, and Mark Selden, Chinese Village, Social State (New Haven, CT: Yale University Press, 1991); and Friedman et al., Revolution, Resistance and Reform in Village China (New Haven, CT: Yale University Press, 2005).
(9.) I would tell villagers who complained about China's polarized health-care system that continued in the reform era that, in fact, the rural health delivery system created upon the founding of the PRC was among the few best in the entire developing world and that its virtually universal delivery of vaccination and inoculation had raised life expectancy in China to among the world's highest. That, however, was not the villagers' experience. They would tell me stories of untrained practitioners in Mao's Cultural Revolution era who operated on Zhang San (John Brown) and tied off his wrong tubes. I felt--I had no empirical data--that these stories were built from the kind of gossip that treated worst case events as paradigmatic. But villagers knew that higher officials with serious medical problems did not use the primitive rural facilities to which villagers were consigned. Those officials instead could go to specialized urban, especially military, hospitals, which provided international-level care for China's power elite. Even if villagers found a way into one of those urban facilities, they were relegated to a section that was crowded, lacked medicines, was noisy, understaffed, and harried, while the elite monopolized a special and separate section of the hospital hidden from the hoi polloi. It was spacious, tranquil, and staffed with more medical personnel per patient than most hospitals in industrialized democracies. This polarized health system of the Mao era has changed somewhat in the reform era. Now, nonofficials with money can buy quality service--and do. There is, thus, a new and growing middle stratum. Poor villagers without money, on the other hand, cannot afford health care because health care workers, in contrast to the Mao era, cannot be coerced to work for virtually nothing. The poorest people have gone from very bad Mao-era care to unaffordable reform-era medicine. In either case, China is not a model for India. In fact, the Indian government spends more on health care (and also on education) than China's government.
(10.) Shashi Tharoor, India: From Midnight to the Millenium (New York: Arcade, 1999), 209, 303.
(11.) Inder K. Gejral, "Democracy is the Key," Far Eastern Economic Review, August 21, 1997, 40.
(12.) Ronald Bruce St. John, "Reviews," Bulletin of Concerned Asian Scholars 28, nos. 3-4 (1996): 117.
(13.) Suzanne Ogden, Inkling of Democracy in China (Cambridge, MA: Harvard University Asian Center, 2002), 371. Ogden errs, as do many others, in not seeing that, at the end of the Mao era, India was ahead of China.
(14.) Barrington Moore Jr., Social Origins of Dictatorship and Democracy (1966; repr. Boston: Beacon Press, 1993).
(15.) Edward Friedman, "Development, Revolution, Democracy, and Dictatorship: China versus India?" in Democracy, Revolution and History, ed. Theda Skocpol, 102-23 (Ithaca, NY: Cornell University Press, 1998).
(16.) Friedman, Pickowicz, and Selden, Chinese Village; and Friedman et. al., Revolution, Resistance and Reform.
(17.) If both grow at 6 percent per year but China begins at two hundred and India at one hundred, then, in year one, China adds twelve and India adds only six, increasing the absolute gap between the two.
(18.) David Zweig, Democratic Values, Political Structures, and Alternative Politics in Greater China (Washington, DC: United States Institute of Peace, 2002).
(19.) Xinran Xue, The Good Women of China (New York: Pantheon, 2002).
(20.) Jesper Becker, Christian Science Monitor, July 3, 2002, 6.
(21.) Nirupam Baipei, Tianiun Jian, and Jeffrey Sacks, Economic Reforms in China and India (Cambridge, MA: Harvard Institute for International Development, 1997).
(22.) Tharoor, India, 162, 172-73.
(23.) Sudipta Karirag, "Dilemmas of Democratic Development in India," in Democracy and Development, ed. Adrian Leffwich (Cambridge, MA: Blackwell, 1996), 132, 181.
(24.) Shiraz Sidhva, "Trading Positions," Far Eastern Economic Review, August 21, 1997, 96.
(25.) John Richards, "Early Modern India and World History," Journal of World History 8, no. 2 (1997): 205, 206, 208.
(26.) In contrast, Confucian China does not experience the same ethical obstacles to cloning as are felt in Hindu and Christian civilizations. This could advantage the Chinese economy.
(27.) Yun Xiang Yan, "Courtship, Love and Premarital Sex in a North China Village," China Journal, no. 48 (July 2002): 31.
(28.) Sources from economist Thomas Rawski. See Rawski, "Measuring China's GDP Growth" (in Chinese), China Economic Quarterly, Peking University Chinese Center for Economic Research (forthcoming).
(29.) Edward Luce, "India Stirs," Financial Times, August 29, 2002.
(30.) Thomas Moore, China in the World Market (Cambridge: Cambridge University Press, 2002).
(31.) "View from the Silk Road: Comparing Reform in China and India," Standard and Poor's Credit Week, February 6, 2002.
(32.) Alan Yonan Jr., "Rebound Speeds Up for Most of the Asian-Pacific Region," Asian Wall Street Journal, April 15-21, 2002, 2. India did, in fact, outgrow China in the fourth quarter of 2003.
(33.) Bruce Gilley, "What's Miraculous? Asia's Tortoise and Hare Story," Asian Wall Street Journal, February 26, 2002.
(34.) Bruce Gilley, "Who's Miraculous?," Asian Wall Street Journal, February 26, 2002.
(35.) Tu Weiming in "Whither China?" Bulletin (American Academy of Arts and Sciences) (Spring 2002), 86-87.
(36.) Ibid., 86.
(37.) Ibid., 85.
(38.) Ibid., 89.

<i>Edward Friedman is a professor in the Department of Political Science at the University of Wisconsin, Madison, where he specializes in Chinese politics, international relations, and democratization. </i>
<b>COPYRIGHT 2004 Heldref Publications</b>

[Guest]

<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Booking a passage to India</b>.
Investment Adviser; 4/24/2006

India has re-discovered its self confidence and the entrepreneurial spirit is freely flowing once again. This entrepreneurialism, in combination with some reform and a light-handed government, has led to single digit gross domestic product growth for the past few years. <b>It is the local economy that is driving growth, unlike China, which is more reliant on export-led growth</b>. This growth is driven by a consumption boom from the rapidly growing Indian middle class.

There is an important confluence of factors: in addition to this entrepreneurial flair pervading the economy, there is a hunger to be competitive through productivity. The knowledge and manufacturing bases are brimming with dynamism, private consumption is strong and driving GDP growth -" not exports -" and this creates more stability given that growth is not so reliant on global growth.

<b>Compelling </b>

It is a compelling picture. But how should the investment management industry respond to the India story? Nearby, we have China grabbing many of the corporate headlines, perhaps justifiably considering the extraordinary growth that has been witnessed. But perhaps an even more positive story is unfolding in India.

Certainly, the top-down (economic) and bottom-up (corporate) changes that have been propelling the Sensex, India's most widely followed equity index, has been sending out an extremely attractive message to investors. At the beginning of April it breached the 11,000 mark for the first time.

<b>Story </b>

Even if we acknowledge that the Indian story is a large and fast moving one, the investor is still faced with plenty of decisions about where to invest. The question that any investor in India has to ask themselves is: has India changed and if so, what price are they prepared to pay for this change?

In other words, is all the good news already priced into a stock market that has risen 150 per cent since the shock election result in early 2004? This spectacular growth needs to be understood through a careful analysis of what is happening on the ground in India.

India has the most attractive demographic profile in Asia, if not across the globe: 60 per cent of her population is aged below 30, and 100m people will be added to the 25 to 44 age group by 2009. The increase in the urban population alone between 2005 and 2015 is the same as adding 1.4 times the UK's population, so the demand for raw materials will remain robust for some time to come. In the past 12 months, India's population has grown by 20m. Consumer spending is growing at a rate of between 15 per cent to 25 per cent. 40m new mobile phones were bought in 2005. The list of statistics reflecting the consumer boom is impressive.

<b>Restructuring </b>

Corporate India is impressive, particularly in comparison with some other Asian corporate cultures. Indian companies have managements that speak English, respect the rule of law and understand the concept of the shareholder. These companies have undergone a significant amount of restructuring and rationalisation over the past 10 years. <b>The breadth, quality and sheer number of companies that are available for investment are bettered perhaps only by Japan. </b>But of course, like every other country in the world, careful stock selection is still paramount.

Although India has become known as a leading market for outsourcing with a heavy reliance on innovation in IT systems and services, this is possibly not the market that delivers most value for investors. <b>Instead, the emphasis should be on the domestic growth story in India, sectors such as financial services and retailing, where there has been massive growth and the stocks that benefit from the investment in the infrastructure by government, the road building projects and power grids. </b>

While a few of the positives have been highlighted and more could be mentioned, it must also be added that the picture is not entirely rosy. Poverty and illiteracy remain a huge problem. It is estimated anything from 25-35 per cent of the population live below the poverty line, on less than $1 a day.

<b>Infrastructure </b>

The other big issue facing India is its straining infrastructure system previously referred to. There is a lack of clear vision and a stark need for investment. Estimates suggest at least $60bn (AGBP34.4bn) of investment is needed over the next five years. <b>The economy could well be held back without this urgent spending, as there is already a significant demand-supply gap in power, roads, railways and ports. </b><i> {Medha Patkar will take care of this problem}</i>

So what price are we prepared to pay for this domestic Indian growth story? From a short-term perspective, the stock market by its own historical standards is looking expensive. Add to this a background of rising interest rates and slowing corporate profit growth and it is easy to argue that this is generally not a recipe for further short-term gains, so a certain amount of caution is warranted.

From an investment perspective and on a longer-term basis, it is a good idea to remain firmly in the bullish camp on India. Any short-term correction would provide an excellent buying opportunity for investors with a longer investment horizon and investment managers should be looking to add significantly to positions in this eventuality.

While the frenetic growth of the Indian equities market over the past two years may slow somewhat in 2006, the longer term view remains decidedly upbeat, with GDP growth in the region of 7 per cent over the next two years.

<b>Fundamentals</b>

The country's positive underlying economic fundamentals are gaining increasing attention among foreign investors, particularly from Japan, where a recently launched Indian investment fund attracted more than $750m (AGBP430m) in one morning. <b>The Indian situation is a long way from being played out. The long-term potential is still immense. </b>

Evidence for India's growing role in the global political and economic picture is also mounting, not least the recent accord signed by India and the US. Such moves add to the positive outlook for India as an investment region of choice for many shrewd investors and it should remain an important part of a competitive global investment portfolio.

<i>Jonathan Schiessl is investment manager for Ashburton Investment Management</i>

COPYRIGHT 2006 FT Business
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[Guest]

The economic growth of the Indian middle class cannot be attributed only to the domestic factor.Growth in export from India has been an important factor as it has defficately contributed to the overall economic growth of India in recent years.The BPO activity also falls under export category.

[acharya]

Title: Is China a success while India is a failure?
Date: 9/22/2004;
Publication: World Affairs;
Author: Friedman, Edward

China is a success and India is a failure. That conclusion--or is it an unexamined assumption?--has dominated comparative studies of the world's two most populous nations since the establishment of the People's Republic of China and the Republic of India in the aftermath of World War II. Looking at a glitzy Shanghai skyline in 2002, an Indian business reporter, worried how Indian nationalism leads to a pooh-poohing of the advanced nations and a commitment to building on ancient Indian glories, anxiously projects "that maybe the 21st century really does belong to China." (1) It is an important fact that, from the beginning of China's economic reforms in 1978-79 until 1991, when India launched itself on a similar course, China's economy grew to double the size of India's. Still, informed analysts of China see behind the glitz to a more "somber reality," including a "crisis of governance," "the pathologies of both the political stagnation of ... Brezhnev's Soviet Union and the crony capitalism of Suharto's Indonesia." (2)
<span style='color:red'>
What is it that people compare when they pit India against China? For many Chinese, it is a matter of Confucianism versus Hinduism. The Chinese assumption is that Confucianism is sober, rational, and practical, and Hinduism is mystical, irrational, and otherworldly, which is why China succeeds and India tails. Chineseness is superior to Indianness. The Chinese "know" that China is a success and India is a failure. It is this presupposition that I will explore in this article. It is merely a presupposition, definitely not a fact.</span>

To Chinese--even in Hong Kong--it is a given that China has succeeded and India has failed. If one tells a Chinese that Chinese popular culture basically is Buddhist and that this Buddhism came from India, one immediately is contradicted.

A strong Chinese tree cannot result from a weak Indian seed. One tends to be told that Indian Buddhism, which was soft, was transformed by Chinese culture into something hard, such that a this-worldly Chinese Buddhism has little in common with an other-worldly Indian Buddhism, a pre-Hindu source of India's failure rooted deep in its civilizational essence. Such civilizational binaries, however, are projections of prejudices, not explanations of rates of growth. After all, for many centuries, both India and China were far ahead of Europe economically.

Sadly, some Indians accept this notion of Confucians as uniquely capable of disciplined frugality and saving, as if India were not also a great commercial civilization. Actually, when Japan began to rise in its Meiji era, the Japanese saw their country as a land of status-conscious wastrels. They therefore copied European banking institutions and savings incentives. Any people can do it. What is decisive are policies and institutions.

The essentialist binary privileging China over India is the presupposition of error after error. The Journal of Asian Studies, the prestigious organ of the Association for Asian Studies, ran a special issue during Mao Zedong's Great Leap Forward from 1958-61, explaining how China had now met and transcended the challenges of rural misery while Indian villagers were still mired in poverty. As always, the question was how to explain the presumed Chinese success and Indian failure.

Yet, it turned out that Mao's Leap engendered the most murderous manmade famine in human history, causing at least thirty million premature deaths, some say more than forty million. One cannot be sure because Chinese statistics, especially the numbers given for the death toll for 1961, are neither credible nor transparent.

Yet, the binary of Chinese success and Indian failure is treated as a fact. Visitors to India see beggars all over the city streets. In China, you need a local friend to direct you to see the pains of the more than one hundred million rural people who have fled without legal documents to cities, with unschoolable street kids sent out to beg. China's Calcutta-like poverty is hidden away in the marginalized countryside. In India, it has exploded into the cities, a dynamic just beginning in China.

To be open to a realistic comparison of the performances of India and China, it is helpful to change the images in one's head that predetermine what the eyes see.

There were two other Mao-era famines after the Great Leap disaster. Picture each of the millions of victims of China's three deadly Mao-era famines:

An inhabitant of a Xinyang village reported at
that time. "I just came back from our native village....
Everyone in my family has starved to
death.... Only my aunt remains. Her son died
too.... How can she go on living? ... In the
middle of one night, a pig so starved that it was
nothing but skin and bones rushed into her
courtyard. She shut the door at once. Then she
beat the hunger dazed pig to death. She
skinned the pig during the night and buried it.
She got up in the middle of the night, dug up
the pig and cooked a piece of it to eat. She did
not give any of it to her five-year-old son to eat
for fear that he would talk about it. Once they
found out, those who were still alive in the village
would come rushing in and threaten to kill
her. They would beat her to bring out the pig.
She looked at her son crying that he was hungry!
Mama, I'm hungry. Mama! This went on
until he died. (3)

As a police-state dictatorship premised on fear and complicity, the truth did not and does not readily emerge from China. Progressive Indians, seeing their nation trapped in the dilemmas of its less-than-successful first five-year plans, persuaded themselves that India's failures came not from its Soviet Union-like command economy, which it shared with China, but from a bureaucratic, capitalist, landlord elite that exploited India's poor. Actually, in the Mao era, both China and India wounded themselves by entrenching a Soviet-style command economy and by seeking autarky. "In 1970, when inward-looking policies reigned supreme, the [Indian] ratio of trade in goods and services to GDP was a mere eight percent, the lowest in the world, but for China." (4)

That is, as disappointing as India's performance was, Mao-era China did even worse. Learning the truth about China's dictatorship and Mao's famine, however, did not, for most progressive Indian intellectuals, uproot misleading binaries of a good socialism (China) and a bad capitalism (India). Because the Chinese do not highlight their catastrophic experiences, outside analysts too easily overlook the most fundamental and awful realities.

Given Marxist-influenced anticolonialist assumptions, leftist intellectuals in India kept criticizing Indian policies for not being as socialist as China's, even as Chinese died from Mao's utopian socialist dictatorial project. Indians trekked to China to seek the supposed secret of China's purported developmental success.

The presupposition was that (bourgeois) democracy could not compete with (proletarian) dictatorship. Yet India only escaped mass famine, as India's Nobel Prize-winning economist Amartya Sen has shown, because it was a democracy.

In the 1960s, left Indian intellectuals were not alone in imagining Leninist socialism as superior to market-oriented democracies. It was an era in which thinking was shaped by the Soviet Sputnik's winning of the space rocket race and by America's defeat by Fidel Castro at the Bay of Pigs, followed by America's long and bloody involvement in an unwinnable war in Vietnam. American aid to India was "aimed at helping democratic India prevail over China in a 'development contest' and thus prove the superiority of the democratic model to a watchful Third World." (5) But who believed that democratic development was superior?

There was a broad intellectual consensus in America, from Samuel Huntington on the conservative apologetic side to Barrington Moore Jr. on the independent critical side, that Leninists could successfully modernize a poor nation but Indian democracy could not. The conventional wisdom was that, in general, Stalinist big push industrialization worked. North Korea was seen as a success, and South Korea was a basket-case. Thailand was going nowhere while socialist Vietnam was rising. Castro Cuba's turn to Leninism was, of course, a challenge to all of class-polarized Latin America. Only later would such presuppositions be exposed as nonsense. Castro's economy collapsed when it lost Soviet Russian subsidies. Amazingly, many progressive Indians, even in the twenty-first century, somehow imagine Mao's way (or Fidel's) as a success worthy of emulation. Ideological presuppositions are not altered by mere facts.

Mao-era China hid its horrors from view. As a Soviet coal miner's life expectancy was more than twenty years less than an American coal miner's, so, in the Mao era, the life expectancy gap in China between the countryside and the city was larger than the gap between China and India. Leninism created extreme inequality. A Chinese villager was even constrained by the state from leaving the village for the city, forced to grow grain at below-market prices imposed by the state. Such a limit on life choices did not exist in India.

Freedom, both in the sense of knowledge as a basis for rational choice and of physical mobility as a capacity that could be realized or blocked, is central to well-being. The Chinese hinterland villager in the Mao era, limited in information by a single political line, either believed, wrongly, that all Chinese were equal in condition and living better than the supposedly exploited and immiserated of Taiwan or was frustrated and outraged at being kept locked in the equivalent of an apartheid caste society.

The Indian villager, joining an opposition political party, protest movement, or exodus to the city, had capabilities painfully denied to the impoverished Mao-era Chinese villager. In many ways, the Indian villager was better off.

Although all societies are wasteful, it may be that Leninist production numbers uniquely obscure how extraordinarily much of that production never usefully reaches an end-user or consumer, how stupendously much is wasted on the courtly lifestyle of the parasitic and large official stratum of feudal-like rulers, how much goes to the military and especially to the many secret polices with no gain--indeed, with great loss--for individual security. Maoism imposed an abysmally low standard of living.

By the 1970s, as Brezhnev's Russia stagnated and the horrible truth about Mao's China and Pol Pot's Cambodia became known, some concluded that state socialism actually was a dead end for the rural poor in the Soviet Union, China, and elsewhere. Indeed, it was. Some found that Japan-led East and Southeast Asia, with a policy of export-oriented industrialization (EOI), showed the way out of poverty. But proud, self-wounding, anti-imperialist Indian patriots would dismiss Japan and other countries as negative examples, as having lost their independence and as becoming Americanized, a sad Coca Cola-ization. Actually, already in 1919, Gandhi declared, "Japan has been Westernized; one can no longer even speak of China."

Such dismissals, far more reflective of Indian myopia than East Asian reality, of course, were ridiculous distortions of societal reality in Japan, South Korea, or China, which were as Japanese, Korean, or Chinese as ever. (6) Many Indian intellectuals, however, kept repeating Gandhi's 1919 error and, thereby, rationalized not taking a path that could lift the rural poor out of misery. A blinding purist anti-imperialism of urban elites produced policies that fettered the poorest of the poor. Reform-era China, which abandoned its Mao-era economically irrational anti-imperialism, has lifted hundreds of millions of people out of poverty.

It abandoned revolutionary tourism, in which China paid to fool foreigners into thinking socialism was paradise, for money-earning tourism, in which the splendors of ancient China earned tens of billions in hard currency from foreigners.

In the years immediately after Mao died and before reform gains kicked in, some Chinese intellectuals argued that "even" India was doing better than China. That claim hurt Chinese pride. It was meant to. It was inconceivable to the Chinese that India should do better. To argue even for a higher sports budget, one said "even India" spent more. (7) In fact, Mao had devastated Chinese higher education. Female illiteracy had risen to the same rate as Indonesia. "Even" India spent more on education than did China, which was virtually at the bottom of the world rankings of per-capita spending on education. In the era of institutionalized Maoist socialism (1957-77), life only improved for villagers on the average of one pack of cheap cigarettes per year. An unreported famine was ravaging southwest China when Mao died. China had to import grain to feed its people, while India had moved to grain self-sufficiency.

One standard explanation of China's failure and India's relative success in the late Mao era is that Mao, given his war on scientists and other intellectuals, had missed the "Green Revolution" of new and better seeds. Maoism's importation of Stalinist Lysenkoism, rather than "bourgeois" genetics, had lost China the benefits of modern science. This, however, is not true.

Actually, China had moved in the Green Revolution direction starting in 1970. These gains, however, were cancelled by the waste of Mao's war communist autarky, policies such as "the third front" that diverted investment away from modernization projects into war preparations. That quickly ended with Mao's death. By the early 1980s, rural China was booming. The change happened so fast that Indian intellectuals never pondered why Chinese state socialism in the Mao era actually had been a devastating failure. Per-capita income in China at the end of the Mao era was lower than in India. It was worth spending time contemplating that fact in order to free India from Leninist command economy trammels. Instead, by the mid-1980s, the question, once again, was how to explain India's failure and China's success.

Despite China's stagnant misery in the Mao era, many, including Nobel Prize-winning economist Amartya Sen, praise it for revolutionary-era success in reducing poverty, enhancing life expectancy, and equalizing and raising the quality of health care and schooling, especially for the rural poor. Such purported achievements are cited to prod India and others to do more for their rural poor, surely a noble purpose.

However admirable that goal is for India and others and however shameful is India's record on behalf of its rural poor, any Mao-era achievements were, as argued by Justin Lin, the director of the Peking University Center for Economic Research, both artificial and unsustainable. In fact, the rural poor in China were vulnerable and miserable. The real and deep poverty was hidden and latent.

Reform-era changes in China make manifest what was always there, even if not easily observable, in the same way that almost two million of twenty-two million people died from famine in North Korea at the end of the twentieth century and were still kept from the eyes of international aid workers. Foreign observers all too readily can be kept from seeing the inhumanity, misery, and inequality of state socialism.

The three Mao-era famines victimized the invisible rural poor. It was Mao's political priorities that killed the rural poor. There also was, in addition to the Leap-era famine, a famine in 1963 in Anhui when Mao halted economic incentives to launch class struggle. A third famine occurred at the end of the Mao era in southwest China, similarly caused by revolutionary fundamentalism of the inhuman variety institutionalized by Lenin and carried to its logical extreme in Pol Pot's Cambodia. Mao's policies did not benefit the rural poor. (Cool

Instead, Mao locked up villagers in the countryside, blocking urbanization and modernization that could create higher-value production. In the Cultural Revolution of his last decade in power, Mao destroyed education, turning teachers into targets for degradation. A Chinese junior middle school graduate in the countryside actually received less education than an elementary school student had received in six years in the era before Mao's destructive Cultural Revolution. Chinese figures on years of education in the Mao era, bad as they are, hide how much worse the Mao-era reality was.

The rural workers in export factories in the reform era whose foreign exchange earnings have been central to China's rise were prepared for that work not by good Mao-era education; such education did not exist. It was Confucian culture and socialization, which continued despite revolutionary attempts to destroy it, that produced young people who were hard working on behalf of family enrichment, a value that was the antithesis of Maoism. But, of course, the poor work hard everywhere.

Although the Mao-era educational disaster is well known, there is a stylized rhetoric that hides the similar disaster in health care, a discourse that points to longevity and equal state-subsidized access to medical treatment such that illness did not destroy family finances and cause economic polarization and immiseration, as it does in China's reform era. In fact, that longevity gain was the achievement of the age of New Democracy before Mao's fundamentalist communism took over in 1957-58. The health delivery system put in place between 1949-56, which saw that virtually everyone was vaccinated and inoculated, did, indeed, bring great gains in life expectancy. (9)

Once Mao took control of policy in 1957-58, however, he insisted on self-reliance, meaning self-financing. The poor had to take care of their needs with the most meager of resources. They were not subsidized by the state. Unfunded clinics decayed and declined in the Mao era. They were staffed by untrained people incapable of medical diagnoses. They had no medicines or surgery to offer. It was only the urban and state sectors that were subsidized. The rural poor of the Mao era were abandoned.

Once reform began, villagers looked elsewhere for medical care. Traditional herbal medicines--whose growth was barred in the Mao era, lest such profitable economic crop production led tillers to concentrate on money--suddenly became available. No one would pay for seeing the untrained Mao-era people at the village clinic. I was in rural China interviewing clinic workers and villagers when that artificial and unsustainable system of self-funding disappeared in the early 1980s. The Mao-era rural health clinics were useless, a waste. Villagers abandoned this waste as soon as Mao died and sought real doctors.

The reason why illness in the Mao era did not drive people under and produce great income disparities is because, at that time, no one could go out and earn money, and everyone had to live on collectively distributed, relatively equal survival minimums of food. Thus, no one got ahead when one lay ill and untreated. This leveling down and sharing of misery produced, again, an artificial and unsustainable equality. No villager today would accept living at such a primitive level as in the Mao era.

Social expectations have risen. The poor hate the corrupt gains of the coddled rich. Chinese grow nostalgic about the past and misremember and romanticize it as a way to criticize the lack of national health care today, just as the brilliant and well-meaning Professor Sen and others among the well-meaning Indian left romanticized Mao-era primitive equality. Today's poor in China, like the nostalgic left in India, blame China's market-oriented reforms for its hideous and growing gap between rich and poor.

In fact, the causes of growing inequality in reform-era China lie in the continuation of Mao-era policies and priorities. They are entrenched in powerful identities, interests, and institutions. The biggest source of the rural-urban gap remains the locking up of villagers in the countryside in a state-imposed forced production of low-priced basic crops. As in the Mao era, investment privileges the central cities. State workers, not villagers, get unemployment insurance. Also, as in the Mao era, there still is no health care or pension provision from the central government for the rural poor.

The unaccountable ruling party cares for itself. When property is privatized, right down to the county towns and villages, officials (as in Russia) grab the lion's share of the wealth, as in the Mao era they grabbed the food so that their family members did not die in the three famines. Economic inequality is a reflection of enormous political inequality that denies voice and self-representation to the village poor and the more than one hundred million migrant workers.

In short, the growing polarization and increasingly visible poverty of the reform era in China actually are consequences of Mao-era priorities, institutions, and policies that have persisted because of a lack of political reform. The tendencies were latent in the pre-reform era and manifest when something went wrong in the Mao era and poor villagers, three times, were allowed to starve to death. There was nothing admirable in the Mao era that has anything to teach India about how to grapple with rural poverty.

There is, however, much to learn from reform-era China about growth. The energy and investment in modernizing transportation and communication infrastructure are most impressive. India's relative lack of investment in power and infrastructure deter both Indian and foreign investment. A growing gap in this regard now separates China and India.

But Chinese government statistics that show poverty in the reform era as reduced to but 3 percent of the population are as credible as Mao-era claims of poverty reduction and real equality; that is, they are incredible. In fact, using UN standards of poverty, China's poverty rate is quite ordinary for its level of development, and its inequality is extreme, a manifestation of the absolute power of an unaccountable urban-based party that sees investment in equality as a Mao-era fraud not to be repeated. Reform-era growth actually embodies great continuity with the Mao era, as seen by the suffering in the populous, rural, and poor Henan province. Henan had the most famine deaths in the Mao era. It has the most HIV/AIDS deaths in the reform era. In the popular consciousness of the newly prospering and grossly uncaring, the people of Henan are ridiculed for their suffering. The level of uncaring inhumanity in China is extraordinary.

When one compares India and China, one must take the time to penetrate a fog of false claims about China, both in the Mao and post-Mao eras, in order to see the real China and not be taken in by revolutionary or nationalistic self-serving rhetoric that falsities the record, making it seem that the Communist Party in Beijing holds the secret to eradicating rural poverty. In fact, the PRC's record is disappointing. This failure, however, does not excuse or make less painful slow growth or rural misery in India.

The last defense of India's slow growth is the canard that it is the price of democracy. "Mrs. Gandhi's supporters" believed that "brutality and repressive discipline" made possible "development in China and the Soviet Union." They believed that totalitarian China "advanced faster than" democratic India precisely because China was totalitarian, (10) Democracy was imagined as an obstacle to growth. Even in 1997, the Indian prime minister held to this shibboleth that India had "to pay the economic price for political democracy. (11) Authoritarians could, in this Indian view, grow faster than could free societies whose slow proceduralism combines with vested private interests tied to corrupt bureaucratic and political interests to block rapid development.

Without denying the weight of such negative forces in India, they were worse in the Leninist world. In actuality, it was the entrenched vested interests of Soviet Russia's corrupt, gray, bureaucratic Brezhnevian era that blocked Gorbachev's reform project, leading to Russia's tragic decline. Those interests had reversed Khrushchev's reforms. Authoritarian vested interests are more difficult to overcome than are democratic ones. Likewise, communist Vietnam is confronted by "the unwillingness of the Party to follow its [reformist] words with actions.... If an entrenched and resistant bureaucracy, driven by vested interests, is able to frustrate a meaningful reallocation of scarce national resources, it may prove difficult for the state to sustain economic progress." (12) All statistical studies of growth and the political system conclude that democracy actually is not, in comparative prospective, an obstacle to growth.

American professor Suzanne Ogden mocks the notion that democracy has kept India from developing as quickly as China: "China's commitment to strong economic development is in startling contrast to the Indian government's commitment until recently to 'the Hindu 3 percent rate of growth'--the speed at which the Brahmin class felt India could develop without endangering its privileged elite position." (13) That is, the issue is not a democratic political system as such, but, rather, India's entrenched political interests that benefit from the Leninist command economy, the "license raj," and conservative elites in some of north India's most populous and, therefore, electorally powerful provinces. They have had the political clout to block needed growth and poverty-reducing reform.

This analysis of the impact of a political elite and its socioeconomic base can be found in a sophisticated form in Barrington Moore Jr.'s classic study, Social Origins of Dictatorship and Democracy. (14) All of the so-called East Asian miracle economies enjoyed the advantage of beginning with a good land reform, providing land to market-oriented farmers. India did not. Moore found that China's advantage in having destroyed landlord power in Mao's peasant-based revolution would allow Mao's socialist state to develop much faster than India's, such that marginalized villagers in India, the poorest of the poor, eventually would abandon democracy and, to win the blessings of modernity, would be mobilized to support an authoritarian alternative to reactionary, landlord-based democracy.

Moore was wrong, (15) at least until 1978. Mao's socialist state actually locked China's villagers into stagnant misery. (16) Collectivization in 1955-56 lost the gains of the initial land reform, which had been merely a tactic to win peasant support in China's revolutionary civil war. In fact, at Mao's death, because of market-disregarding collectivism in China, according to UN statistics, per-capita income in India was higher than in China. The previous quarter century of analyses explaining why India failed and China succeeded presupposed something that was untrue.

But, in 1978, economic reformer Deng Xiaoping became China's paramount leader and launched a quarter century of sustained high growth that swiftly made China twice as rich as India. A similar openness to market-oriented reform did not begin in India until 1991 and remains far more constrained. Even if India's growth rate since 1991 had been comparable to China's, because China, by 1991, had an economy already about twice the size of India's because of high growth since 1978, the absolute gap between the two countries will continue to grow. (17) This worries patriotic Indians who anxiously imagine a future where, whatever India does, China might still be able to laud it over India. Once again, Indian patriots are fixated on China supposedly succeeding while India, relatively speaking, still fails. However, it is not obvious why a thirteen-year Chinese head start should be decisive in any historical long run.

One might argue that Moore's analysis of China's advantage in having destroyed landlord power by revolutionary means was merely premature or prescient. He has been proven correct since 1978, when China began to transit out of Soviet-style collectives and into relatively equal households that became the dynamo of China's 1979-84 rise out of Mao-era poverty, a path blocked by entrenched Indian rural elites. Even here, however, comparisons turn out to be far more complex than is suggested by the standard essentialist binary presuming that China is a success and India is a failure.

First, China's rural dynamism ended in 1984-85. The subsequent gap in China between rich and poor, urban and rural, southeast coastal and central hinterland, has grown. However polarized postsocialist Russia seems, income distribution in China is more unequal. Social discontent in China, especially among villagers from central China, is high. Future stability is far from guaranteed. This is a position shared by many academic analysts of China. This rural discontent threatens Chinese stability. (1Cool

In India, in contrast, the strongest supporters of its democracy are the poorest people. One can debate the diverse sources of this stabilizing legitimation of Indian democracy, assessing the contribution of Gandhianism, policies of positive discrimination, lower caste political mobilization in a second surge of democratization, and so on, but Moore's prediction that peasants in China stabilize an authoritarian political system and those in India destabilize a democratic one seems virtually the opposite of the truth.

As for the poorest of the poor, as badly off as many village women are in an India whose inability to provide them with basic education and health care is a scandal, these women seem worse in China. In fact, more women commit suicide in rural China than in all other nations combined. This occurs especially away from the coast in central China, where the coercive population control has led to extraordinary efforts by families to get around state population restrictions to guarantee themselves male heirs, despite what happens to vulnerable baby girls.

In a Chinese countryside without pensions or healthcare, parents find a survival imperative both in having village sons to earn for them and also in having daughters-in-law who will care for elders in their advanced years. The result is a gender skewing against women that is among the worst in the world.

With so many men and so few women, the females are imagined by men as too powerful and spoiled, as being able to pick and choose, and, therefore, as being in need of discipline and control. A physically cruel resurgent Chinese patriarchy leaves many women who yearn for the blessings of an open modernity with, instead, a hellish life experience of dashed hopes and dreams, such that death comes to seem to be a better option than life. (19) Given the ruling Communist Party's fear that any autonomous group, such as Falun Gong (FLG) spiritual meditators, could be a threat to the Communist Party (CP) regime's power, as Solidarity was in Poland, ruling groups in China do not readily allow women to organize to help or save women. China lacks India's rich civil society of human rights groups trying to ameliorate the inhumanities inherited from history that the government has let fester.

If one takes as one's standard for measuring success or failure the destiny and dignity of the least of them, it is not easy to argue that it is China that is the success, despite India's continuing failure to eradicate poverty. For non-chauvinist Chinese who would have their nation live up to its glorious civilizational promise, it is even possible to look at India as having much to be proud of, much worthy of emulation by China. Thus, a south China defense attorney, who has struggled against China's imposition of capital punishment for relatively minor crimes that lead to execution only in China, finds India a model worth emulating as a society that cares about the dignity of even the least of its citizens, at least in comparison to China.

China executes more people each year than the rest of the world put together. Rising urban Chinese, hating crime, drugs, corruption, and so on, welcome the large number of hasty, often mass executions of members of the "dangerous classes," the rural uprooted. However, the Chinese defense attorney campaigning against these arbitrary abuses that target the poor and vulnerable comments, "The influence of foreign countries is important in this debate. When [Chinese] people say, 'What does it matter if a few die, there are over a billion of us,' I say, what about India? They have only executed five or six people, and there are nearly a billion of them." (20) Of course, both India and China are equally culpable in allowing a potential AIDS epidemic to fester, with India perhaps even slower than China in responding to the crisis.

In showing that it is not true that China is a success and India is a failure, the point is not that China always does worse than India; that would be false. Beyond inaction on AIDS, India can be criticized for its unwillingness to join international human rights efforts on behalf of victims in China on the tired and unpersuasive grounds that human rights universalism is a Western imperialist project for imposing alien values on developing nations. The self-wounding rage of Indian anti-imperialism thereby makes India complicit in inhumanities against the rural poor in China, as well as in India.

Such chauvinism is one of the major forces blocking the fulfillment of India's reform project and slowing Indian growth so that the gap between India and China continues to grow. Without a doubt, China has done far better in export promotion, wooing foreign investment, (21) attracting expatriates to return home to invest, promoting tourism, and absorbing the best practices of the world in science, technology, and business administration. If India continues to dawdle and embrace its purist chauvinism, the gap could grow into a chasm. Should India open to best practices, there is no reason that it cannot catch up with China, but an irrational fear of alien pollution keeps Indians from acting in the interest of their nation's economy.

This self-imposed Indian obstacle, nationalism, has little to do with the democratic political system (just look at the openness and success of democratic Taiwan). Instead, India's problems lie in the political realm.

In Indian nationalism, Indians must be "wary of opening the economy to foreign business for fear of repeating the experience of the East India Company, whose merchants had become rulers" and practiced "extreme protectionism," thereby locking India into one technological moment of industry, incapable of borrowing the knowledge that permitted continuous upgrading to standards of global excellence. Since independence, fearful that market openness meant dependency on imperialism, India has wounded itself, subsidizing waste and producing shoddy goods, rejecting an opening to world markets that rapidly expanded wealth in East and Southeast Asia. (22)

Indians instead clung to the "Nehruvian developmental model ... based on import substituting industrialization leading to self-reliance" while damning export-oriented industrialization as an American "imperial" conspiracy to keep developing nations as "client and protege states" who are forced to "follow the footsteps" of an exploitative America. (23) Socialists in Singapore discredited themselves and inadvertently helped Lee Kuan Yew's party by chanting the same litany. Islamists today wound their people by a similar obsession. For India,


Nehru held most of the countries which later
... formed ASEAN in contempt because of
their alignment with either Britain or the U.S.
He maintained that they had "Coca-Cola governments"
and shared none of India's lofty
vision. Today, more than 30 years later, India,
as a full dialogue partner, is looking eastward
to ASEAN, most of whose economies have
left India's recently liberalized economy
decades behind. (24)

India can be compared usefully to regions in Asia other than China. These comparisons do not always add to India's luster.

But the big political obstacles to India's rapid rise come from the nationalistic rejection of openness blink.gif . Can Indian politics abjure the anticolonialism of K. M. Pannikar, in which the "Portuguese of the 16th and 17th centuries had nothing to teach the people of India except improved methods of killing and bigotry in religion"? Is it possible to re-imagine international exchanges as mutually beneficial? I think the Indian political imagination is moving, albeit slowly, in that direction.

From this perspective, when European ships reached India in the sixteenth century, "India was enormously productive, wealthy and densely populated.... Indian ports and shipping bad for centuries been tied into the Arabian Sea, Red Sea, and Mediterranean system on one side and into the Bay of Bengal, Straits of Malaka, and China Sea on the other." A decentralized and open India absorbed advanced technologies, and "Indian diamonds, pepper, handwoven cotton and silk textiles, and other commodities kept their old markets and found new ones.... Dutch purchases of textiles in Bengal in the late seventeenth century likely generated 100,000 new jobs for the region." India was a beneficiary of the expansion of the world market, Andre Gunder Frank concluded in 1996, "earlier and more than ... Europe." (25) <span style='color:red'>Should one not imagine premodern India as a global market leader?
</span>
In the real world of comparative politics, no nation ever does everything best to enhance growth, yet all have strengths on which to build. In fact, some Chinese are beginning to worry that in the long run, they may not be able to compete with India precisely because India is an English-speaking democracy and China is a dictatorship with grossly underfunded education. This contrast is most potent in information technology (IT) software. India is a world leader, and China has sent missions to find out why. Information technology may prove a weighty factor in the post-Fordist world economy. (26)

One possibility is that political freedom is a major advantage in the information age. Given the Chinese Communist Party's fear of its own people, it tightly controls Internet cafes and Web access. Some argue that this will constrain information technology growth. A democratic India, therefore, has economic opportunities denied to the Chinese people by the ruling Communist Party's dictatorial system. Democracy is not now and never was an obstacle to growth.

This factor favoring India suggests that, as in the past, straight-line projections of Chinese growth in which India seems relegated to defeat should be treated with great skepticism.

This is especially true for our volatile post-Bretton Woods age, where international finance largely is beyond governmental management. China's banking system could collapse. It is bankrupt. The nonstate sector in India, with the largest firms capitalized at $7 billion or so, contrasts with China's largest private firms, which, despite a quarter century of reform, are still only 10 percent of the size of India's behemoths. Also, labor costs in manufacturing in 1995 were the same in India as in China. It is not the case that all positive factors and forces fall on the Chinese side of the scale in a comparison with India. The earlier and more fully that India completes the project of economic reform, the better it will do.

Still, people ask, from the point of view of standard of living and gross national product, how are India and China doing? This is not easy to answer because of the continuing problem of making sense of Chinese statistics. In one researched village,

QUOTE
Official figures during the 1990s became less
reliable as the rural economy stagnated and village
cadres come under pressure to inflate their
achievements ... reported per capita income in
1997 was 2,700 yuan [US $330], a figure that
even the villages cadres openly admitted was
false. The real per capita income in the late
1990s ... stood at about 1,000-1,100 yuan [US
$135]. (27)


Although Chinese rural incomes stagnated in the four years from 1997-2000, the PRC's National Bureau of Statistics touted a 17 percent rise. (2Cool The rich-poor gap in China probably is far worse than statistics suggest, although overall growth in China likely is almost as high as claimed.

My own hunch is that although the PRC's official numbers overstate Chinese growth, this is balanced out by the contribution of the off-the-books economy, which is large and growing. Still, it is very possible that India outgrew China from 1997-2000. Indian statistics may understate India's foreign direct investment (FDI) by a factor of two, while China's FDI, according to World Bank statistics, are overstated by a factor of two. (29)

More worrisome for China than uncertain statistics are polarization and misallocation. The widening gap between rich and poor is rooted in Mao-era continuities discussed earlier, which persist because the Chinese dictatorship resists political reform. The misallocation is inherent in the Chinese Communist Party's attempt to maintain control of statist networks. It, therefore, forces banks to loan money to money-losing state-owned enterprises (SOE).

Bankrolling losers has a negative impact on job creation such that, despite high overall growth, unemployment, polarization, and social tensions all worsen in China because state investment in China largely goes to losers. This tendency to support losers augers ill for China's long-term economic future. (30)

A comparison between China and India, therefore, produces mixed, complex, and contingent conclusions. (31) It certainly is not a matter of explaining a successful China and a failed India. The Asian Development Bank projects higher growth in 2003 for South Asia compared to East Asia. (32) UN statistics show that, measuring from the end of the Mao era, a measure biased to make China's reform growth look best in terms of percentage improvements in health, education, poverty reduction, and life expectancy, India actually has improved faster than China. (33)

The Chinese future remains uncertain. The corrupt political system lacks legitimacy. The most difficult economic reforms--banking, state-owned enterprises, regulation--remain to be addressed. Debt increases. Pensions are unfunded. The banks are bankrupt. Although Beijing has managed its currency brilliantly in the reform era, virtually wiping out the black market in money, there is no guarantee that it will be able to do as well in the future, given the Brezhnevian particularism that increasingly defines the ever more corrupt and self-serving regime, whose brutal greed is outrageous and alienating.

The future cannot be predicted, but should India complete the reform agenda while China remains trapped in the contradictions and constraints of its Brezhnevian authoritarian interests and chauvinistic paranoia, then there is no reason why India should not be able to close the gap with China. The onus lies within the human agencies of the Indian polity. Objectified polar binaries of success versus failure mislead.

This suggests a series of different bases for comparison between India and China beyond Hinduism versus Confucianism or democracy versus dictatorship, matters of political institutions, leadership, and will. The two nations have very different military traditions, different notions of civilian-military relations. They approach federalism and decentralization differently. Their ruling parties work differently.

They handle issues of diversity in language, religion, and ethnicity or regional identity very differently. In all of these realms, the Indian system seems more legitimate and flexible. It is for good reasons that the Chinese are far more worried about their nation falling apart than are Indians. Riven by persistent Leninist creations of regional polarization, the Chinese are anxious that their reform path will lead to national disintegration as in Yugoslavia, the Soviet Union, Czechoslovakia, and Ethiopia.

One of the difficulties in any comparison of India and China is that the problems confronting India are quite public, and those of China are, even now, mainly covered up. One should not romanticize India. The burning of brides by dissatisfied husbands' families is a public scandal in India. It should be. The kidnapping and sale of women into prostitution and forced marriage in China, a large-scale venture with police complicity, is, in contrast, basically kept quiet.

Communal strife is headline news in India. Although China may or may not be heading toward a breakup of the nation, little of analytic value is published in China to help one understand regional and communalist strife. Leninist states marginalize poor minorities and then lock them into their poverty by preventing migration and by state pricing of primary products. The rage of the marginalized in China against those in power hardly can be exaggerated, but it is not readily visible. Indeed, I cannot even recount personal encounters with minority hatred for Han Chinese in this article, for fear of getting those people in serious political trouble.

Evaluating China versus India in terms of the life prospects of the most vulnerable people, one has to assess treatment of minorities, especially religious communities. India's vicissitudes in trying to build a certain kind of secular society are well known. The tragic victims of communalist atrocities and the impact of fundamentalist forces from Gujarat to Delhi on religious minorities are well known and ugly. But rulers in the PRC keep outsiders from knowing just how bad things are for Tibetan Buddhists and Uighur Muslims who are forced to live in virtual apartheid conditions. All international human rights groups find evidence of pervasive and continuing crimes against humanity in China:

QUOTE
Beijing's constant jailings of dissidents, religious
adherents, environmentalists and others
who threaten the ruling regime compares to
India's marvelous tolerance for diverse life
goals. Unlike GDP, we do not have an indicator
to show the gains in welfare when an Indian
is able to, say, join an ayurvedic health
group run by the Hare Krishnas or parent
another child. Nor can we measure the loss
when a Chinese practitioner of the Falun Gong
meditation sect is forced to recant under threat
of confinement or a farmer's wife is forced to
abort an unborn child. If we did, India would
be the "growth miracle," China the "growth
debacle." (34)

<span style='color:blue'>
Chinese in the post-Mao era have joined in an extraordinary revival of faith-based commitment. Religion is growing all over China. The Chinese Communist Party is trying to constrain, control, co-opt, or crush this spreading spiritualism. The ruling Chinese Communist Party does not, however, crack down on lineage or very local temples of Buddhism or Daoism. Scattered, small, and unorganized, they are not threatening. They have flourished.</span>

But the rulers in Beijing, looking on religion as would a half-educated village atheist proud of his narrow materialism, are anxious about this explosion of spiritualism. There is in China "a widening gap between the inability of the political leadership to appreciate religion and the growing fascination with religion." (35) Even Christianity and underground house churches are spreading like wildfire in China. This contrasts with India, finds Tu Weiming, America's leading neo-Confucian. India is a vibrant democracy, a civilization where religious vitality and societal dynamism flourish together, and China "suffers from an
inability to understand religion as an integral part of the complex modernizing process," (36) such that China should "take from" India, understood as one of China's "reference societies." (37)

In so many ways, China's rulers are abysmal failures who make life worse for the Chinese people. It is Machiavellian, paranoid Chinese patriots who now drive themselves and worrying that they may be Coca Cola-ized if they remain open to the best practices the world has to offer. A continuation of the reform project in China cannot be taken for granted. Fearful of the loss of their cultural essence, the Chinese constrain their reform project. As a result, problems pile up.

Opportunities for reform are not grasped. Explosions remain possible. Victory for antireform forces in China remains all too likely. The gains of the post-Mao economic reform era could yet be lost in a Chinese politics where President Jiang was widely seen as traitorously selling out to Americans for doing what is necessary to maintain access to the American consumer in order to earn the foreign exchange that helps drive Chinese growth.

Harvard University professor Roderick MacFarquhar reports,

QUOTE
A leading Chinese scholar-official told me of
his first trip to India. He marveled that the elite
all spoke English, dressed in Western garb, sent
their kids to English--or American--type
schools, or even to foreign countries to be educated.
In a few places you could still see road
names and statues put up by the conqueror. And
yet ... these people were without question
Indians. What, he asked, had the Chinese been
worried about...? (3Cool


The normally human in India is still unreachable in China.

But it is not just that China has constructed such scary demons to frighten itself that the success of its reform project remains quite iffy, still threatened by chauvinistic forces and unreformed, politically powerful, very conservative, entrenched Brezhnevian interests. Even more, Indian minds have, for a long time, been contributing to global civilizational richness. Although the Chinese, their creativity crushed by a repressive political system, whine that the supposedly racist and politicized Nobel Prize Committee for Literature refuses to recognize Chinese greatness, ignoring the fact that Nobel laureate Gao Xingjian had to flee Communist Party repression in the PRC to write in Chinese and publish in Taiwan and Hong Kong, Indian authors regularly produce numerous masterpieces of world excellence, enriching all humanity. On so many global cultural debates, Indian voices must be heard and heeded, while repression makes brilliant Chinese seem stupid because of political fears. It is mind-boggling that people could ever consider this abnormal China that represses its people's capacities a success and a vibrant and democratic India a failure.

NOTES
(1.) Manjeet Kripalani, "An Indian's Epiphany in China," Business Week Online, February 14, 2002.
(2.) Minxin Pei, "China's Governance Crisis," Foreign Affairs (September/October 2002): 97, 99.
(3.) "Bai Hua Speaks His Mind," Dongzhang (Hong Kong), nos. 45 and 46 (December 1987, January 1988), translated in JPRS-CAR-88-009, March 4, 1988, 9.
(4.) "Survey on India," Financial Times, June 24, 1997, 2.
(5.) Noam Kochaxi, "Limited Accommodation, Perpetual Conflict," Diplomatic History 26, no. 1 (Winter 2002): 101.
(6.) James Watson, Golden Arches East (Palo Alto, CA: Stanford University Press, 1997).
(7.) Susan Brownell, "The Changing Relationship between Sports and the State in the PRC," in Sports ... The Third Millenia, ed. Fernand Landez et al. (Saintes-Foy: Les Presses de l'universite Leval, 1991), 296.
(8.) Edward Friedman, Paul Pickowicz, and Mark Selden, Chinese Village, Social State (New Haven, CT: Yale University Press, 1991); and Friedman et al., Revolution, Resistance and Reform in Village China (New Haven, CT: Yale University Press, 2005).
(9.) I would tell villagers who complained about China's polarized health-care system that continued in the reform era that, in fact, the rural health delivery system created upon the founding of the PRC was among the few best in the entire developing world and that its virtually universal delivery of vaccination and inoculation had raised life expectancy in China to among the world's highest. That, however, was not the villagers' experience. They would tell me stories of untrained practitioners in Mao's Cultural Revolution era who operated on Zhang San (John Brown) and tied off his wrong tubes. I felt--I had no empirical data--that these stories were built from the kind of gossip that treated worst case events as paradigmatic. But villagers knew that higher officials with serious medical problems did not use the primitive rural facilities to which villagers were consigned. Those officials instead could go to specialized urban, especially military, hospitals, which provided international-level care for China's power elite. Even if villagers found a way into one of those urban facilities, they were relegated to a section that was crowded, lacked medicines, was noisy, understaffed, and harried, while the elite monopolized a special and separate section of the hospital hidden from the hoi polloi. It was spacious, tranquil, and staffed with more medical personnel per patient than most hospitals in industrialized democracies. This polarized health system of the Mao era has changed somewhat in the reform era. Now, nonofficials with money can buy quality service--and do. There is, thus, a new and growing middle stratum. Poor villagers without money, on the other hand, cannot afford health care because health care workers, in contrast to the Mao era, cannot be coerced to work for virtually nothing. The poorest people have gone from very bad Mao-era care to unaffordable reform-era medicine. In either case, China is not a model for India. In fact, the Indian government spends more on health care (and also on education) than China's government.
(10.) Shashi Tharoor, India: From Midnight to the Millenium (New York: Arcade, 1999), 209, 303.
(11.) Inder K. Gejral, "Democracy is the Key," Far Eastern Economic Review, August 21, 1997, 40.
(12.) Ronald Bruce St. John, "Reviews," Bulletin of Concerned Asian Scholars 28, nos. 3-4 (1996): 117.
(13.) Suzanne Ogden, Inkling of Democracy in China (Cambridge, MA: Harvard University Asian Center, 2002), 371. Ogden errs, as do many others, in not seeing that, at the end of the Mao era, India was ahead of China.
(14.) Barrington Moore Jr., Social Origins of Dictatorship and Democracy (1966; repr. Boston: Beacon Press, 1993).
(15.) Edward Friedman, "Development, Revolution, Democracy, and Dictatorship: China versus India?" in Democracy, Revolution and History, ed. Theda Skocpol, 102-23 (Ithaca, NY: Cornell University Press, 1998).
(16.) Friedman, Pickowicz, and Selden, Chinese Village; and Friedman et. al., Revolution, Resistance and Reform.
(17.) If both grow at 6 percent per year but China begins at two hundred and India at one hundred, then, in year one, China adds twelve and India adds only six, increasing the absolute gap between the two.
(18.) David Zweig, Democratic Values, Political Structures, and Alternative Politics in Greater China (Washington, DC: United States Institute of Peace, 2002).
(19.) Xinran Xue, The Good Women of China (New York: Pantheon, 2002).
(20.) Jesper Becker, Christian Science Monitor, July 3, 2002, 6.
(21.) Nirupam Baipei, Tianiun Jian, and Jeffrey Sacks, Economic Reforms in China and India (Cambridge, MA: Harvard Institute for International Development, 1997).
(22.) Tharoor, India, 162, 172-73.
(23.) Sudipta Karirag, "Dilemmas of Democratic Development in India," in Democracy and Development, ed. Adrian Leffwich (Cambridge, MA: Blackwell, 1996), 132, 181.
(24.) Shiraz Sidhva, "Trading Positions," Far Eastern Economic Review, August 21, 1997, 96.
(25.) John Richards, "Early Modern India and World History," Journal of World History 8, no. 2 (1997): 205, 206, 208.
(26.) In contrast, Confucian China does not experience the same ethical obstacles to cloning as are felt in Hindu and Christian civilizations. This could advantage the Chinese economy.
(27.) Yun Xiang Yan, "Courtship, Love and Premarital Sex in a North China Village," China Journal, no. 48 (July 2002): 31.
(28.) Sources from economist Thomas Rawski. See Rawski, "Measuring China's GDP Growth" (in Chinese), China Economic Quarterly, Peking University Chinese Center for Economic Research (forthcoming).
(29.) Edward Luce, "India Stirs," Financial Times, August 29, 2002.
(30.) Thomas Moore, China in the World Market (Cambridge: Cambridge University Press, 2002).
(31.) "View from the Silk Road: Comparing Reform in China and India," Standard and Poor's Credit Week, February 6, 2002.
(32.) Alan Yonan Jr., "Rebound Speeds Up for Most of the Asian-Pacific Region," Asian Wall Street Journal, April 15-21, 2002, 2. India did, in fact, outgrow China in the fourth quarter of 2003.
(33.) Bruce Gilley, "What's Miraculous? Asia's Tortoise and Hare Story," Asian Wall Street Journal, February 26, 2002.
(34.) Bruce Gilley, "Who's Miraculous?," Asian Wall Street Journal, February 26, 2002.
(35.) Tu Weiming in "Whither China?" Bulletin (American Academy of Arts and Sciences) (Spring 2002), 86-87.
(36.) Ibid., 86.
(37.) Ibid., 85.
(38.) Ibid., 89.

Edward Friedman is a professor in the Department of Political Science at the University of Wisconsin, Madison, where he specializes in Chinese politics, international relations, and democratization.
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Jackkrone (post 174):
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->How do you think of China? Does India really regards China as a threat? Will India ally with China?<!--QuoteEnd--><!--QuoteEEnd--> See also posts 147, 148, 149, 153, 155, which have been merged with this.