Great expectations in China and India

By Frank-Jürgen Richter

Business Times, July 5, 2014

Both governments have high standards to live up to as their people look to their leaders for direction more so than before

Charles Dickens’ book describes the severities of life to be experienced by “young Pip”, its hero. As he grows up, the passage of time lies heavy on newly elected national leaders. While Dickens was a social commentator writing of intrigue and distress with great imagery, new leaders have to “walk the talk” and reach out to manage their citizens’ expectation across all levels of society. Nowhere is the contrast more similar than in today’s India and China, even with their differing forms of constitutional governance: Indian democracy contrasts with the power-sharing single party rule of the People’s Republic of China.

Chinese President Xi Jinping is supported by his State Council led by Li Keqiang and several layers of assistants and vice-chairs. But it is these two leaders who present a public and diplomatic face to the world and promote the policies of the State in accordance with the National People’s Congress under the chairmanship of Zhang Dejiang. The Chinese Communist Party continues to direct progress and initiatives but is somewhat thwarted by the geographical vastness of China and its large social diversity. Nevertheless, over the last decades China has developed rapidly under the guidance of its leaders, lifting hundreds of millions from poverty and creating a huge number of millionaires.

I suspect that the leadership is embarking on a social experiment as they attempt to proactively house rural migrants in new townships. In the recent decades, China has put in place a vast transport infrastructure covering road, rail and air as well as river and sea ports. It is poised to be able to offer work to its citizens no matter where they may live.

What hinders China
There are difficult issues. Very publicly, President Xi has sworn to remove rent-seeking and corruption from public life and to pursue those who have committed crimes. The high-ranking are not immune as we see Xu Caihou, once a vice-chair of the Central Military Commission, expelled by the Politburo for bribery and his case turned over to military prosecutors.

As China is the world’s largest “greenhouse gas” polluter, it faces an unprecedented need to clean up its energy producing systems. It is doing this in far-reaching ways – by installing more nuclear power generation; buying more oil and natural gas from overseas to substitute coal as an energy source. As it demands ever more electrical power, it is also actively pursuing carbon capturing and sequestration research as it must rely heavily on coal-fired energy.

We have just held our annual Global Indian Business Meeting, this time in Liverpool, UK. Of course most Indian leaders applaud the landslide victory of Prime Minister Narendra Modi. They acknowledge that Mr Modi has only just come to power weeks ago (in contrast to the election of President Xi who has been in office since November 2012) and euphoria is widespread across India. He has to convince all people, all the time, that he and his party are right for India. We heard Gregory Barker, the UK’s Minister of State for Energy and Climate Change, who also is the UK Minister for Business Engagement with India, waxing enthusiastically about the potential for increased trade with the “new” India. And Vince Cable, UK Secretary of State for Business, Innovation and Skills, said that he was hopeful for greater trade ties with India.

India’s concerns
Nevertheless, Mr Modi faces many issues. He has vowed to get rid of corruption from public administration and private businesses which, like in China, will be difficult. Across Asia, there is a natural belief in gift-giving as an honour but gifts have risen to gargantuan levels on occasions, and their costs are invariably borne by the poor at the bottom of the economic pile.

Before becoming the head of India’s Central Bank, Raghuram Rajan worried that India could start looking like an oligarchy along Russian lines where “. . . too many people have got rich based on their proximity to government”.

The people of India have voted, and Mr Modi will remain in power as long as they remain happy and perceive his government to be “doing the right thing”. However, there are many fault lines in India, such as the caste system, as well as regional, religious and economic diversity, all of which have to be managed.

Time is not on Mr Modi’s side. We heard at this meeting that the massive infrastructure of earlier years were not all on target, yet a vast new project is well underway to link Mumbai with New Delhi (2,700 km) crossing six states in a high-tech expansion of infrastructure and industry, with another 5,000 km of feeder routes to link West Bengal which will support the “Golden Quadrilateral”: a development launched in 2001. A new corridor from Mumbai to Bangalore (1,000 km) has also been proposed and is expected to create 2.5 million jobs. Throughout these corridors, new cities are proposed as India, like China, is expecting rural-to-urban migration. But I do not think that it has calculated the magnitude of the issue. Some while ago I wrote of the need to give toilets to half the Indian population that the last Indian Census noted were without adequate or often no sanitation facilities, and Mr Modi has promised to address this issue.

The way forward
I fear that outwardly democratic India will haphazardly delay Mr Modi’s plans. He has been elected by the people, but he does not command a majority in India’s Upper House. In contrast, the monolithic Chinese government might be able to almost push any plan through to completion, though they are more subtle than that. Both the Chinese and the Indian populations share great expectations and are looking to their leadership for inspiration.

The writer is the founder and chairman of Horasis, a Zurich-based visions community. Horasis hosts annual meetings on India and China.