Yogi & the Mandarin: A Tale of Two Asian Revolutions

China and India. Rarely has the economic ascent of two still relatively poor nations been watched with such a mixture of awe, opportunism, and trepidation. [They] possess the weight and dynamism to transform the 21st-century global economy.
August 22, 2005 BusinessWeek

The Yogi

Intuitive
Non-linear Holistic

Introspective

The Mandarin

Efficiency

Order
Goal-oriented Creature of hierarchy

Maps
China 4th largest & most populous country in the world with a population of 1.3 billion people.

India 7th largest & second most populous country in the world with a population of 1.17 billion people.

Historic Silk Route Ties

The Silk Route is a series of trade and cultural transmission routes that ran through the Asian continent connecting the east and west and extended from southern Europe through Arabia, Egypt, Persia, India till it reaches China.
January 2008

50 yrs ago, India and China were among the poorest and economically most isolated countries in the world.

How did China and India emerge as economic giants?

What are India & China famous for today?

Peoples Republic of China 1949

Modern China was established after a violent armed conflict between Chinese nationals and imperialist powers. The communists won under Mao in 1949 giving birth to the Peoples Republic of China. One party rule. No private property. Collectivized farming. State owned 77.6% of the economy and collectives owned everything else.

Religious and cultural practices were suppressed and ethnic minorities were marginalized.
40 million people starved to death between 1959 and 1962. 1966 Mao introduced the Cultural Revolution that involved purging political rivals. 10 million people were killed.

Mao Zedong

Chinas entry in todays Global Economy

After Maos death Deng Xiaoping took over as Chinas leader. Liberalized Chinese economy in 1979. Started with agricultural and economic reforms, set up Special Economic Zones.

Infrastructure
Chinas most visible infrastructure project to date is building new roads and highways. In 1989 China had 168 miles of expressways by 2004 it built 21,500miles. By 2020 it plans to have 55,000 miles, which is the total length of the entire American highway system. To fulfill its growing economy China has built new coal mines for electricity use, increased natural oil and gas consumption and built a modern power grid.

China Economic Fact Sheet

GDP real growth rate: 9.8% (2008) country comparison to the world: 13% (2007) 11.6% (2006) GDP-Per capita (PPP-Purchasing power parity): $6,000 (2008)country comparison to the world: $5,500 (2007) $4,900 (2006) note: data are in 2008 US dollars

GDP composition by sector:

agriculture: 10.6% industry: 49.2% services: 40.2% (2008)

Beijings Skyline

Beijing Olympics Stadium

Chinas One-Child Policy

1980s govt. poster advertizing the One-Child Policy

To accelerate economic growth China decided to curb its population through the implementation of the One-Child Policy in 1979.

Strict Implementation

Urban families can have only one child whereas rural families can have more than one child, if the first one is a girl. Under this policy, the government has conducted 10 million forced abortions and 10 million sterilizations 40 million births have been prevented. 30,000 workers in the Family Planning department implement these policies nationwide.

Indian Independence - 1947

India gained independence from British rule in 1947 under the leadership of M. K. Gandhi.
Non-violence

and peaceful civil disobedience became hallmarks of Indias freedom struggle. Indias Cultural Revolution: - The freedom struggle involved an agenda for emancipation of women and lower castes through democratic empowerment. Indias diverse ethnic and religious population participated in and flourished during the freedom struggle.

Republic of India
India defines itself as a sovereign, socialist, secular, democratic republic that was officially constituted on Jan 26, 1950.

Indias constitution guaranteed fundamental rights and rule of law.

Multiparty democracy with a parliamentary form of government. The Prime Minister is the elected head of the government.

Special laws for the protection of ethnic, linguistic and religious minorities were included in the constitution.

Mixed-Economy

Adopted a socialist-inspired, centrally planned economic model between 1947 to 1991 under which Indias economy grew at about 3.5% (called the Hindu rate of growth). Land reforms were carried out to redistribute land more equitably. This economic era came to be known as the License Raj due to the elaborate licenses and regulations that were required to set up and run business in India. Corruption and red tape flourished under this system.

All these policies and five year economic plans were carried out within the framework of a functioning democracy with routine elections every 5 yrs continuously from 1952 to the present.

Economic Liberalization in India

In 1991 India adopted economic reforms. Current PM and economist Manmohan Singh is the architect of Indias economic reforms. These economic liberalization policies reduced government regulation of and investment in the economy, encouraged private business and invited foreign investment. Quotas and licenses were dismantled.

Manmohan Singh

India Economic Fact Sheet

GDP- real growth rate: 6.6% (2008) 9% (2007) 9.6% (2006) GDP per capita (PPP Purchasing power parity) $2,800 (2008) $2,700 (2007) $2,500 (2006) note: data are in 2008 US dollars GDP Composition by sector: agriculture: 17.2% industry: 29.1% services: 53.7% (2008)

Comparing India and Chinas Growth Stories

Indicators Political System India
Multi-party Democracy started in 1991. Average 6% growth rate in past two decades. Rising power in software, design, services, and precision industry.

China
One-party authoritarian rule

Speed of Growth Economic reforms

Areas of Specialization

Economic reforms started in 1978. Average 9.5% growth rate in past two decades. Dominant in mass manufacturing, electronics and heavy industrial plants

Comparing India and Chinas Growth Stories

Indicators Gini index (standard measure of inequality) Foreign Direct Investment Future Areas of growth India
36.8
6.8% (up from 0.3% in 2004)

China
47.0 (up 10 points from 15 yrs ago) 17.8%

R&D, bioIT business, services technology, highand continued value IT enabled manufacturing services (legal, medical, engineering architecture), manufacturing, agrobased industry

Comparison

India lags behind china in infrastructure. China has a weak banking and legal system. India has the advantage of the English language which has made it easier to participate in the global economy. What holds India back are bureaucratic red tape, corruption and its inability to build infrastructure fast enough. According to Peter Drucker, India has managed rural to urban transition in a relatively smooth and peaceful manner, which China is still struggling to do.

The of Costs Growth Human rights

500 million Chinese people have been lifted out of poverty in a generation.but this has come with a cost.

Suppression of Dissent: In 1989, students protesting against Communist rule in Tiananmen Square were killed by the Chinese military. No Freedom of Expression: Internet and media is state controlled.

No Freedom of Religion: Minorities are marginalized Uighar and Hui Muslims, Tibetans and Falun gong.

Indias Experiment with the Mandarin Model

In Nandigram village, West Bengal, against the ruling communist governments planned to seize 10,000 acres of land from farmers for a chemical plant. The farmers protested. 4,000 heavily armed police tried to stamp out protests and shot dead at least 14 villagers and wounded 70 more. The Communist party cadres also participated. The Indian media and civil society protested. The communists were defeated in subsequent local and national elections in West Bengal.

Urban-Rural Divide- China

Extreme income disparity in rural and urban china. The coastal and urban locations have benefited disproportionately from the economic policies. There has also been an increase in inequality of education and access to health services. Poor households have not been able to afford the high private cost of basic education and healthcare. Tens of millions of farmers have become landless in China as developers and government officials seize farm land without compensation to farmers. There were 87,000 local protests in 2005

Urban-Rural Divide - India

27.5% of Indias population was living below the poverty line in 20042005, down from 51.3% in 19771978, and 36% in 1993-1994.

75% of the poor are in rural areas, most of them are daily wagers, self-employed householders and landless laborers.

Rule of Law

The authoritarian control of the Communist Party over all spheres of Chinese society has meant weak rule of law. Poor people have little chance of getting their grievances redressed if they have a dispute with the Chinese state or powerful businesses. E.g. Sprucing up of Beijing for the 2008 Olympics Corruption exists in India as well and the judiciary is overworked but India has a strong rule of law.

Democracy & Economic Growth

Does economic prosperity lead to democracy? No evidence to suggest that prosperity leads to democracy or vice versa. However, democracy may slow down economic growth but it provides essential checks on excessive power. Nobel Laureate economist Amartya Sens theory of famine and Democracy: "No famine has ever taken place in the history of the world in a functioning democracy. (Freedom as Development)

Elections and Olympics

Chinese Olympics 2008 cost $44 billion.

It was a spectacular achievement for any country, particularly one that was only a generation ago predominantly poor and economically isolated.
In

May 2009, the worlds largest exercise in democracy took place in India. - 714 million eligible voters - 828,804 polling centers were set up, including one in Gujarat's Gir lion sanctuary for a single voter -1055 political parties - 6.1 million civil and police officials were on duty - Electronic voting machines were lugged across the length and breadth of India on trains, trucks, cattle and bullock carts in some of the remotest areas. -131 seats reserved for backward castes and tribal groups

The Jury is still out!

As the 21st century unfolds, will the Yogi and the Mandarin learn from the positive qualities of each other?

Some Class room Questions

What are the different strengths of India and Chinas economies? What does economic liberalization or opening up an economy mean? How did this process occur in India and China? What are the drawbacks and challenges facing Indias growth? What are the concerns about Chinas economic growth? Economic growth often pulls people out of poverty and brings about an improved standard of living to those who benefit from it. Does it necessarily benefit all sections of society? How do the stories of India and China throw light on this question? What are the human costs involved in economic growth?

The End