Democratic India Versus Disciplined China
In an interview with Aaron Brown of ABC News on June 28, David Pong, Hong Kong industrialist, commented that democracy is a luxury that rich nations can afford, but it is messy and inefficient. Think about India, he said: "There is a country celebrating the 50th year of democratic rule and its gross domestic product is half that of China."
Mr. Pong's comments point to the interesting convergence of attitudes of Hong Kong business elites and Communist leaders in Beijing. Both want stability and order at the expense of freedom. His comments also define a global issue of great importance to the United States: Can democracy and dynamic economies in Asia coexist? Will democratic India or authoritarian China be the model for the Asian future?
India and China have similarities. Each has a substantial part of the world's population. China leads with 1.2 billion, and India is second with 929 million (1995 figures). Both countries represent huge potential markets. Corruption bedevils the political process, and regional stresses threaten national cohesion in both nations. They each struggle with aggravating environmental problems. China has the advantage of an entrepreneurial dynamism, but has serious infrastructure bottlenecks. India has the more developed infrastructure and a firmly established, largely apolitical, legal system.
The statistics favor China, although not as much as Pong suggested. Stimulated by a new commitment to economic reform declared at the 14th Congress of the Communist Party of China in November 1993, China's economic growth rate in 1995 was 8.9 percent
But India is catching up. As a World Bank report notes, "Helped by reforms, a relaxation in fiscal policies, and an unprecedented sequence of good monsoons, growth accelerated to 5 percent in 1992-94, 6 percent in 1994-95, and an estimated 7 percent in 1995-96."
Clearly, economic policies play a major role in the vitality of a nation. The new liberalization introduced in China by Deng Xiaoping and India's move away from a centrally planned economy both stimulated growth. But, beyond these moves, what factors will determine success in this contest between India's democracy and China's discipline?
Beijing is counting on greater opportunities for making money to dull the challenges to one-party dictatorship. But developments in the Republic of Korea and Taiwan have demonstrated that, at a certain point in economic progress, the demand from a growing middle class for a political voice becomes irresistible. The influence of Hong Kong may add to such demands in China.
Pressure for political openness grows, also, as populations suspect that corruption, nepotism, and the greed of a ruling elite are creating intolerable inequities of opportunities for wealth and advancement. Democratic India, although not free of these vices, has safety valves in its free press and boisterous parliamentary system; corruption, even at the highest levels, has been exposed. China, too, has exposed corruption, but only when it has suited the political purposes of those in power.
Long-term stability depends on an absence of serious military challenges to power. In India the military is under firm civilian control. In China the People's Liberation Army, as a significant center of power, including a vast array of business enterprises, represents a potential barrier to liberalization and reform.
Today, international investors, lured by what they see as great opportunities, find their desired model in China. Foreign direct investment in that country grew from $2.3 billion in 1987 to $37 billion in 1995. In 1995-96, India's foreign direct investment was only $2 billion.
Ironically, the United States, despite its emphasis on the spread of democracy, has never enjoyed smooth relations with independent-minded, democratic India. Perhaps the time has come for Washington, if democratization is really a priority, to more actively encourage American investment in Asia's second largest market. If Pong's words are any indication, others are watching the outcome of this contest.
* David D. Newsom, former undersecretary of state, is Cumming Memorial Professor of International Affairs at the University of Virginia.