Sunday, September 29, 2002		Books

Picking only the best from West
Ivninderpal Singh

The Rise of China: Threat or Opportunity?
by Ramgopal Agarwala. Bookwell, New Delhi. Pages xvii+229. Rs 450

CHINA, like India, never came under the control of any single imperial power. The Chinese, who considered foreigners as barbarians, first came into contact with them on being defeated by the British in the Opium Wars. But their real humiliation began after their defeat in the First Sino-Japanese War in 1895. After this began the scramble for concessions among major imperial powers of the world for trade and commerce, known as "cutting of Chinese melon" in world history. In 1912, China was declared a republic under the presidentship of Sun-Yat-Sen. Finally, in 1949, after the Communists came to power under the leadership of Mao-Tse-Tung, the "long march" to development in all spheres began and China is marching steadily towards a "developed country status".

"How has China achieved and sustained rapid growth for all these years? Would this dynamism be sustained in the years to come? Is it possible for other countries to emulate the Chinese model of governance and development strategy? What are the factors responsible for the East Asian miracle and causes of the recent East Asian crisis? Is the Chinese economy free from the weakness of the East Asian economies?" These are the questions the author has attempted to answer in this book.

While discussing the causes of the East Asian crisis, the author has blamed the rigid mindset of "Washington orthodoxy." The East Asian debacle is due to liberalisation of short-term capital inflow and irrationality of the private sector rather than due to the government policies in East Asian countries, he opines.

China’s success in the past two decades has been attributed to its relying on its own resources, unlike other miracle economies that depended heavily on savings from abroad, improvement in productivity and technological progress and formation of human capital through better health, education and family income.

How did the Chinese do it? First, they have not blindly superimposed the western-style liberalisation on their own system. Their leaders created a balance between learning from abroad and letting reforms grow from within. Second, they tried to make every citizen part of the development process. They combined the top-down and bottom-up approaches. In India, the bottom-up approach has been followed with the adoption of the Panchayati Raj system, which is an attempt to empower people at the grassroots level so that they also become part of the country’s development process.

Adopting a gradualist approach in contrast to the shock therapy approach is another reason for China’s success story. The author is highly critical of the wrong sequence, often adopted under external pressure and Washington orthodoxy, and says that it is the bane of reforms in developing countries. "Had China followed Washington orthodoxy in 1978, in all probability, the results would have been no different from what they have been in other transition economies," he says.

Still, China has a long way to go. Among the many challenges, food and employment security, viability of state-owned enterprises, financial stability, effective social security system and the rule of law and democracy are discussed in the book. To maintain its development spree, the author has stressed upon greater transparency and lesser corruption in governance. A case study about shocking corruption in Hong Kong is a real eye-opener and the Indian Government can learn a lot from it, if it wants to suppress its "enemy number 1".

The author says, "The emergence of China will prove to be an asset and a potential opportunity for the world. For developing countries, it can become a source of new investment and for developed countries, a market, and for the world as a whole, it could be a source of new ideas on social, economic and political development of human society."

This is a book which the Indian Government must go through to plan future development policies. Self-examination and a critical analysis of "western-sponsored thoughts and policies" before superimposing them on our system are a must for all developing countries of the world today. Protagonists of western-style liberalisation may term this as "west-bashing," but the author has supported his statements with statistics and graphs. Overall, a good book to read for those who still believe that the oriental world is not far behind the occidental world.