Not unexpectedly, in France, the support was the lowest with a mere 37 per cent in support of Adam Smith’s construct. It would be a good idea to conduct such a survey in India, twenty years after the 1991 reforms. Being an ardent supporter of reforms and one who thinks that we are doing ourselves a great disservice in India by not pushing the reform agenda forward more vigorously, I am sure that such a poll will show strong support for a more open and decontrolled economic system.
The reasons for the delicious irony of Chinese topping the list of capitalism supporters, were on display in abundant measure during the BRICS summit that concluded in Sanya on Thursday. Sanya is a coastal town at the southern tip of Hainan, a part of China which until 1990 was a backward and under developed and, in Chinese folklore, the end of the world. There is some substance to the folklore because I believe that even after 1949, Hainan was used as a place for exiling undesirable social elements just like the Andamans were used for kala paani by the Indian colonial government prior to 1947.
Hainan has been transformed in the last twenty years. Sanya is a bustling sea-side resort with broad perfectly surfaced boulevards, a shore line that compares favourably to Mumbai’s, gleaming silver beaches with manicured greens lining them, and perhaps more hotel rooms in all categories of hotels than both Mumbai and Delhi or even the two put together. The piece de resistance is the 308 km Hainan East Ring high speed railway that opened on 30 December 2010 and covers the 210 km between Sanya and Boao in 45 minutes. The train ride is smoother, quieter and overall more comfortable the comparable TGV in France or the Shinkansen in Japan, which until seeing it I would have refused to believe could be bettered. The Chinese Railway proudly tell us that up to 2105 the country will have 16,000 km of high speed railways, with the first having started only in 2007. Since then, in around four years, these high speed trains have already carried more than 600 million passengers! And the Shanghai to Beijing line has not even started operating. When it commences operations in June 2011, this 1318 km railway, will have the capacity to carry 80 million passengers one way at 350 km per hour.
Chinese people support their form of capitalism simply because it has delivered and promises to deliver in the foreseeable future as well. The greatest achievement has been to lift more than 400 million people out of abject poverty in three decades through economic growth at breakneck speed.
The most remarkable feature of Chinese capitalism is the complete blurring of the distinction between the public and private sector. The two work completely seamlessly under the overall regulatory gaze of the Chinese Communist Party. This can be seen in the case of companies like Huawei and ZTE, who despite their public sector ownership operate truly like commercial, profit maximizing enterprises. But the best micro-example is Hainan COSCO Boao Co. Ltd, founded in 2006 as a subsidiary of China Ocean Shipping Company (COSCO) which is an undiluted state owned enterprise. COSCO Boao is very private sector in all aspects. It owns the Sofitel Hotel and the International Convention Centre where the Boao Forum is held and three other properties including a golf course. Its owner/executive greeted all participants with more enthusiasm than any proud hotel owner himself and yet at the same time showed due deference to the Party and government functionaries present. In the case of COSCO Boao, which wants to ‘… turn itself in to a leading comprehensive tourist enterprise group that is famous in the world and first-rate in China’, there is no telling where private sector ethos and practices end and public sector control and accountability begins. Chinese capitalism delivers.
In contrast, even in the case of a few designated PPP projects, Indian capitalism operates with strongly entrenched divisions between the public and private sector. There is still a lack of trust between them and the belief that only one side is acting in national interest. This must change much faster than is happening at present if India is to fulfil its national potential. Both sides are perhaps at fault. The government continues to believe that it is the sole repository of wisdom and protector of national interest and thus has the blanket authority to ignore private sector views, chastise it occasionally and generally subject it to overt authority. Private business in turn oscillates between either being a meek supplicant or wrongly believing and proclaiming that the government simply does not matter and the growth will happen despite it. It is time that a more mature, trust-based and mutually accountable and respectful relationship was engendered between the two sides, Failure to do so will result in retrogression that will be damaging to national development goals.
Rajiv Kumar is the Director General of the Federation of Indian Chambers of Commerce and Industry. An earlier version of this essay appeared on Businessline, 16 April 2011.
Dear Rajiv
Easier said than done.
What troubles in India is the gulf still remaining between the public and private sectors.
Despite India having some of the best trained top cadres of public officials in the world with wide experience in divergent Ministries, there is amongst the upper echelons of the public sector, a private despair with a political system that deals unashamedly with vested interests and, frequently, Ministers elected to their posts through short term political posturing and offers of cheap bribes to the poor voting populace. Despairing of this, most well-meaning officials eventually succumb to the daily routine. So progress comes slowly and agonisingly so.
In China, a lot of similar issues are nevertheless simmering quietly beneath the public gaze. China’s government can make bold long-term non-populist decisions as they are not hobbled by the short term expediency of facing regular democratic elections unlike the Indians. The Chinese are also extremely sensitive to the scrutiny of outsiders so large infrastructure projects are carefully monitored and vetted to ensure that any failings are not publically visible. Any decay or neglect is pounced upon as this can reflect poorly on the a statist model of capitalism as practised by Beijing.
Contrast this with India where modernisation of the system evolves in a haphazard organic manner side by side with decades of decay and benign neglect. Rich and poor seemingly mingle but still live in worlds that are poles apart. Centuries of religious teachings based on reincarnation and acceptance of suffering have led successive generations of the poor and wretched to tamely accept their station in life. Slums continue to operate organically with their own brand of politically-savvy advocates who milk the expediencies of the political system to stay alive. Meanwhile travellers on the nation’s roads share passage alongside roaming cows and gleaming new Bentleys flaunted by the noveau riche. Whilst these images may confront the sensisbilities of foreign travellers, I fear that they merely further innure an Indian public to calmly and historically accept fate as it is dealt.
The only hope is that a new generation of Indians who have travelled abroad will stand up and mobilise to transform their society and refuse to accept the status quo.
Encouraging large numbers of Indian citizens and public servants to travel to China and view what is possible may be one way to accelerate the revolution.
I hate to break it to you Rajiv, but your looking at a peculiar situation from a very “glass half-full” perspective. The collaboration which you’ve observed between China’s public and private sector, although you’ve rightly observed can have its advantages, mightn’t actually be all that enviable. For instance, a private enterprise is open to having its freedom and innovation in the free market compromised if the local party cadre catches wind of anything that isn’t CCP kosher. An observer could just as ligitimately describe the situation as the CCP “having a finger in every pie” – which they dubiously try to play down as much as possible. Its basically making the same observation from the pessimist’s point of view, which I strongly suggest is worth consideration when weighing the pros and cons of “Socialism with Chinese characteristics”. Hutton says it best when he describes China as not a unique breed of capitalism, but as a “Leninist Corperatism”.