Ideas@TheCentre
The Dragon & the Elephant: Five myths about China versus India
Myth 1: China's authoritarian system sacrifices rights for social order
In fact, there is far more chaos and unrest in China than there is in India. According to the latest available official figures, there were 124,000 instances of ‘mass unrest’ (defined as 15 or more people protesting against officials) in 2008 in China. India has fewer than 5,000 such instances. Beijing spends more on 'internal security,' which does not include the normal police forces, than it does on the People’s Liberation Army.
Myth 2: India enjoys more freedom but at the price of economic inequality
In fact, using the commonly accepted standard of the GINI coefficient, China's score is around 0.55–0.60, while India's is around 0.33–0.36 ('0' is perfect income equality and '1' is perfect income inequality. This makes China the most unequal society in all of Asia and the trend is worsening.
Myth 3: Given China's spectacular rise, its private sector multinationals are due to dominate Asia, and then the world
True, there are 34 Chinese companies in the Fortune 500 list – all state-controlled except for one – compared to India's eight. Size is one thing. But by 'return on assets' (to measure profitability) and 'number of patents filed' (to assess innovation), Indian firms do significantly better. Tellingly, the Indian firms spend about 5% of revenues on R&D on average while Chinese firms spend about 1% of revenue.
Myth 4: China is leaving India behind in the urbanisation stakes
China is definitely ahead of India: about 48% versus 35%. But the rate of urbanisation in India is actually neck-and-neck with China at about 1.5% per year.
Myth 5: China and India are making Western models of political-economy obsolete
There is a saying in both countries about their own respective developmental approach: Western knowhow with Chinese/Indian essence. But even Beijing and New Delhi admit that they are still speculating what this actually means. China and India are still outside the world’s top 100 for GDP per capita. The jury is well and truly still out on this one.
Dr John Lee is a foreign policy Research Fellow at The Centre for Independent Studies. He will be presenting The Dragon & the Elephant: Five Myths about the Chinese and Indian Economies this Tuesday at the CIS.
