There was a long-held myth that the only manmade object visible from space was the Great Wall of China. Yet astronauts have since confirmed that Chinese cities at night are easier to spot than the great barricade. But when myths turn into beliefs, to question their veracity is to risk being called a heretic. Today, to question the economic stability of a country with the largest foreign-currency reserve in the world borders on blasphemy. But when the ideological bases of the free market and export-led growth are under growing stress, it is difficult to remain sanguine about the future of the production workshop of the world.
It seems the more that is written about the Chinese miracle, the less the world actually knows about what is really happening behind the bamboo curtain. But things are not as rosy as depicted – the Asian Development Bank has predicted that the Chinese economy would grow by seven percent in 2009 – in a country almost completely dependent on export. When banks are not lending and consumers are not spending in the US, where will the Chinese sell their wares in quantities large enough to keep factories humming in Shanghai? This is a question that the mandarins in Beijing have succeeded in hiding below stacks of trade surpluses over the past two decades.
With a slowdown of the Chinese economy, the resulting layoff would push workers out into the streets, as a social system capable of enduring unpredictable upheavals has been replaced with the capitalist creed of ‘greed is good’. Collectives in the countryside were broken up or privatised to increase productivity. Families have become nuclear, individuals atomised. By all accounts, China today is not the Japan of the 1970s in terms of blending tradition with modernity; it is more like the American Wild West of the 19th century, with only the wiliest able to survive. Even wilder chaos will ensue if an all-out recession – not an unlikely possibility if the credit crunch in the US and Europe continues – sets into a polity based on the barter of prosperity-for-stability between the ruler and the ruled.
Deng Xiaoping is credited with kick-starting the economic recovery in China with his famous quip about the irrelevance of the colour of the cat and primacy of its utility value in catching mice. A victim of Mao Tse-tung’s purge, Deng was not satisfied with rewinding the Great Leap Forward once he consolidated power; rather, he introduced a Cultural Revolution in reverse to give birth to ‘Market Maoism’, a form of state capitalism in which executives-in-business suits are soldiers without uniform. These entrepreneurs and managers function with the full backing of the party-military elite, at least as long as they serve the ‘national interest’. And since businesses are nationalists in service of the motherland, whosoever comes in the way of their freedom of operation are enemies of the people. No wonder that multinational companies often claim that hire-and-fire rights for factory owners in China are better than almost anywhere else. That is why foreign direct investment has flowed in torrents to a country that continues to call itself communist.
Beasts of burden
The other Asian giant has chosen the road less traversed in order to cope with the challenges of its heterogeneity. Unlike centralised China, Indians have to sell their economic policies to a diverse population through the mechanism of democracy. There is little that the Central Secretariat of China cannot do if it sets its heart on a particular goal. South of the Himalaya, however, no government can risk steamrolling the collective opposition of the legal system, labour unions, political parties, activists, media or even a lone dissenter determined to challenge executive decisions. Perhaps that is why there has been no Great Leap Forward or Cultural Revolution in India, even though Indira Gandhi did try to implement a milder version of such campaigns during the Emergency. But she soon learned that the Subcontinent was as different from Mainland China as chapattis are from noodles. Even a consumption-based economic model is not as resilient as it is often purported to be, however: there is a limit to what a tiny elite can devour to keep the wheels of production turning.
Statistics – for whatever they are worth when they aren’t damn lies – show that 25 basis-point cuts announced by the Reserve Bank of India, or projected economic growth rate of six percent in 2009, hold little meaning in a country where over three-fourths of the population lives on less than two dollars a day. The feel-good brigade in the media has oversold the strides made by corporate India. The hard reality is that the country now producing the world’s cheapest car is also home to more malnourished children than the rest of the planet put together. The conventional wisdom in corporate boardrooms notwithstanding, India was not a socialist country even at the height of the Nehruvian economy; agriculture and services have remained in private hands since at least the days of the Mughal Empire. But this has neither led to capital formation nor helped to raise productivity. In fact, it was massive government intervention in the farming sector that resulted in the ‘green’ and ‘white’ revolutions transforming a food-deficient country into an exporter of grains.
Unlike the moves of a stealthy dragon, the ambles of a caparisoned elephant are too majestic to ignore. So, a section of the Western media sings paeans in praise of English-speaking entrepreneur-managers of India. An Indo-American belief system of reinventing markets with the complicity of the government is being discussed to challenge the purely multinational-corporation-led model of Chinese-American economic alliance. Both approaches, however, are variations of the core principle that the market is the great leveller.
Tweaking, meanwhile, is unlikely to work in the face of the magnitude of the crisis. Corporate social responsibility can do very little to effectively address global warming. The line between public-private partnerships and crony capitalism is so thin that even regulators with the best of intentions often fall prey to the lure of the market. Whether it is the elephant or the dragon, both are destined to remain beasts of burden if the very fundamentals of the US-led market mechanism are not taken in for a thorough questioning. In the provocative manner of British historian Eric Hobsbawm, “Socialism has failed. Now capitalism is bankrupt. So what comes next?”
Hobsbawm’s prescriptions are often predictable: re-energise the government and everything will turn out all right in the end. The idea of ‘Chindia’ needs something more than misplaced optimism, however, but what exactly? That is the issue worth contemplating at this point, rather than the Shanghai-verses-Bombay debate, and their respective places on the economic map of the future. Presumably, both cities will be visible from the spy satellites of the second- and third-largest economies of Asia.