Thursday, August 21, 2014

How central planning has groomed China

Traveling to China is always a somewhat depressing experience for an Indian of my generation. That is because till my middle-age, both were what was unfashionably called underdeveloped countries and today it would seem that China is another planet.
In 1990, China’s GDP was roughly the same as India’s and parts of its infrastructure, such as its railway system, were considered inferior. Today, China’s GDP is around $9 trillion and India’s is $2 trillion.
Last week when I rode the high speed train travelling at 300 kph from Shanghai to Beijing, the extent to which China had pulled away from India hit home again.

While China is evolving with central planning, the Modi govt is planning to do away with the Planning Commission. Pic/PTIWhile China is evolving with central planning, the Modi govt is planning to do away with the Planning Commission. Pic/PTI

The railway station was little different from the Shanghai Hongqiao International Airport terminal next door. The train was, of course anything beyond what you get in India. On the 1,500 km track from Shanghai to Beijing there were no signs of the distressing poverty an urban squalor you see in India.
This brings me to the main subject of this column which is the talk about how the new Modi government is planning to do away with the Planning Commission. The body is viewed as being archaic talking shop used to park loyalists.
But just what sophisticated central planning can do is visible in China. Despite talk of increasing marketisation of the Chinese economy, there should be no doubt that the Chinese miracle is a product of careful and sophisticated central planning.
The Shanghai-Beijing train or the modern terminal are not a stand-along prestigious project, but part of a system that covers or will cover most of China. Indeed, the ambitious Chinese want to build high-speed trains around the world.
Planning is afoot for trains connecting China with Europe via Central Asia, Iran, Turkey and Bulgaria and to Singapore via Laos, Thailand and Malaysia. A proposal to fund a line in India was turned down by the Planning Commission last year because it would not be economical. Already there is regular freight train service between China and Europe.
The railway technology was acquired in the 1980s and early 1990s from France, Japan and Germany and “indigenised”. Being relatively unsophisticated, the Chinese quickly mastered it and are now major players in the high-speed train markets, displacing those very countries that initially supplied it technology.
But it is not just by the metrics of railway construction that China is defined. With just 2/3 the arable land as compared to India, China is by far the larger agricultural output. China was not an exporter of fruit in 1990, whereas today, it is the largest producer and exporter of apples.
Indeed, the Chinese variety of the Fuji apple is the super-star of Indian markets, outpricing the products coming from the US or New Zealand and our own Himachal and Kashmir. China may not be an innovator in the scale of the US, Germany or Japan, but it is getting there.
In the area of IT, China has produced companies like Alibaba and its rival Tencent which are world class. Alibaba is bigger than Amazon as an online retailer. Indeed, in Internet, the Chinese have created their own universe and are now blocking western companies like Google.
As a result I could neither access Gmail, nor use the search engine in my week in China. Reports are that the next target is Microsoft. Chinese products like instant messaging app WeChat have now gained popularity abroad.
All this has come through central planning, not of the stodgy Soviet/Indian style, but a sophisticated and agile one that China has pioneered. A lot of this has its origins in a plan drawn up based on a letter received by the Chinese supremo, Deng Xiaoping on March 3, 1986. This plan, called 863 Program (in the Chinese style, 86 is for the year and 3 for the date).
The gist of the letter from top nuclear weapons and missile scientists was that China risked being left behind if it allowed its science and technology to be overly focused on military issues. What it needed was a broad thrust across several key science and technology fields.
As a result of this, big money, in terms of billons of dollars was pumped into laboratories, universities and research institutes in fields ranging from biotechnology, information and communications technology, to deep sea research, lasers and robotics. In 2001, clean energy was added to the list.
The programme, reviewed periodically not only by Chinese, but also foreign experts, has provided China with its space capsule Shenzhou, the deep submersible Jiaolong, Longson processor and thousands of patents. In addition to this, there have been important spinoffs for the military like the hyper technology vehicle.
Of course, these efforts have been supplemented by cyber-theft and espionage on a grand scale, but that should not diminish the effort and investment that has gone in projects that aim to make China a high-tech power.
In this period, India also sought to do what China did. In the Rajiv Gandhi government (1984-1989), mission areas were selected and fields like supercomputers and telecom were targeted through agencies like CDAC and C-DOT, and mission areas identified for oilseeds, water, immunisation, literacy and so on. But these programmes imploded with the Rajiv government.
An important difference has been the political stability and continuity provided by the authoritarian Chinese system, and the lack of focus of the Indian one. The difference is actually less with regard to the system, but more the leadership that was provided, both at the political, as well as the mission level.
Most of India’s S&T bureaucrats have proved to be as shoddy as the politicians who led us. I need not take names, some are still around.
There were important exceptions like Verghese Kurian, who enabled India to become a “milk” power. But in most other areas we have lost our way because of the inability of the political system to provide the right kind of leadership to the country.
Mid Day July 8, 2014

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