China’s reforms: lessons for India

China has grown rapidly and remarkably in the last four decades following the economic reforms and opening up initiated by Deng Xiaoping in 1978 in the form of the “open-door” policy, declaring a new turn in China’s management and trajectory. Its economic reforms — initial reforms (1978-92) and deepened reforms (since 1993) — and its accomplishments are a compelling story. Now, China is home to 1.3 billion people, about 20% of the world’s population, and its people are wealthier, better educated and healthier than they have ever been.

China is also rapidly transforming itself in almost every aspect of life, from lifting 500 million people out of poverty to creating modern cities. The Chinese have tried to fit a hundred years of change and development into a few decades and the country has become the manufacturing “workshop of the world” and its explosive industrial growth in the last four decades is hailed as historically unique.

China’s one-party system and effective leadership has helped its GDP to reach 82.71 trillion Yuan in 2017 — that is, 230 times of what it was in 1978. Further, its economic reforms have helped to reap rich benefit in its agriculture sectors, industrial structure, employment structure and the level of innovation in the economy.

It should be noted that China’s economic reform is quite distinct from that of Indian economic reform, which was initiated in the early 1990s under former prime minister P V Narasimha Rao. The institutional foundations of Chinese reform have taken the form of regional experimentation and regional competition; its export structure has to do with improvement in human capital and government policies in the form of tax-favoured high-tech zones.

Regarding the impact of China’s economic reforms on India, Lawrence Prabhakar, an erudite scholar from the Madras Christian College, succinctly observes: “China’s economic transformation was a systematic transformation of a civilisational power that had far reaching impact on governance, social mobilisation, scientific and technological transformation and human growth matrices that were derivatives of the economic reforms; China’s economic reform was a composite constituent of the Four Modernisations programme that galvanised agriculture, industry, science and technology and defence.

In this pursuit, China’s embedding in the international system was a key component — China’s emphasis on merit and achievement criteria is a crucial catalysing impact on its comprehensive reforms. This is a vital lesson for India, that could and would transform India; the reforms of its (China’s) civilian bureaucracy and the adaptation of scientific managerial approaches in its administrative governance was the most critical catalyst in the systemic transformation — on whose foundations it built its economic reforms. India has a lot to learn from this Chinese experience of a transformation process.”

In a recent report, it has been said that nearly 60% of the total sales and exports in the apparel sector in China is produced in relatively small firms (employing fewer than 300 workers or having annual sales revenue of less than 300 million Yuan). India can learn from the Chinese reforms to encourage start-ups in small and medium scale industries by giving special incentives.

Globalisation process

China and India have, of late, become poster children for market reform and globalisation. The process of globalisation has proved to be beneficial for both China and India, the two largest economies in Asia, hence the onus to keep the process going lies on both the countries.

It is not possible for China to stymie India and keep the momentum going, neither is it possible for India to facilitate global growth all by itself without China. Hence, it is important that these two economic powerhouses join their efforts to ensure that the forces of globalisation keep going so that their respective national economies can draw the required sustenance.

Robyn Meredith in her book, The Elephant and the Dragon, emphatically writes that “the rise of India and China has caused the entire earth’s economic and political landscape to shift before our eyes.”

Both China and India have spectacular achievements in the 21st century on several fronts, yet they face enormous challenges. Together, they add up to nearly 40% of the world’s seven billion population, constitute 7.75% of the world’s land mass, yet they still live pretty much in parallel universes.

The business tycoon Ratan Tata once remarked that “China is the factory of the world; India can be the knowledge centre of this region…If we orient ourselves to working together, we could be a formidable force of two nations.” For this to happen both India and China need to learn from each other, and work with each other as allies.

(The writer is Deputy Director, ICSSR North-Eastern Regional Centre and Coordinator, ASEAN Studies Centre, NEHU Campus, Shillong)