Ten years ago, I asked Dr Inderjit Singh, an economist in the World Bank what he found was the main difference between dealing with China and with India. He replied, “The Chinese are anxious to learn, the Indians think they know everything already.”
The late Prof Raj Krishna put it more succintly. “We are knowledge-proof,” he declared. The Chinese are not. And that has made all the difference.
Listen to what Chinese Vice-Premier Zhu Rongji said at the annual World Bank-IMF meeting last week.
“The Chinese people’s late leader Deng Xiaoping said in his meeting in April 1980 with Mr Robert McNamara, the then president of the World Bank, ‘We’re very poor. We have lost contact with the outside world. We need the World Bank to help us catch up with the outside world.’ I believe this is also true with the International Monetary Fund. Over the years, the two institutions have offered valuable assistance to China’s economic development and reforms, including funding and policy consultation, helped China open up to the outside world at a faster pace and helped the outside world enhance its understanding of China. The Chinese government cherishes this mutually beneficial cooperation.”
Can you imagine Indira Gandhi or Jawaharlal Nehru admitting to the Bank that they had lost contact with the outside world? That they needed World Bank advice on how to catch up? Can you imagine them saying openly that foreign policy consultation could help accelerate economic growth? No, even Dr Manmohan Singh will go out of his way to say that the reform programme is indigenous and not undertaken at the behest of the World Bank.
After the collapse of the Soviet Union, the Indian Left has changed tack. Having long denounced the East Asian economies as neo- colonial puppets, it now suddenly hails these miracle economies as masterpieces of state intervention, which steered clear of World Bank notions of free markets and instead resorted to wise government intervention. In fact, all these countries, and China too, have paid tribute to their policy dialogue with the Bank, which has guided their gradual opening up. China does not accept advice blindly, and adapts this to its own conditions. But it has always placed a high value on external advice, and happily acknowledges it. Our swadeshi brigade does not.
Mr Zhu has a few words for those who still swear by the virtues of self-sufficiency. He says that in 1978, when China’s reforms began, its economy was ‘in a state of complete seclusion.-.Under such a system, the national economy lacked vitality, which resulted in poor economic returns, stagnation of production and restraint on people’s natural demands for consumption. Shortage was the most typical trait of the economy then.’
Indian Marxists still adore Mao’s iron rice bowl. But Mr Zhu makes it clear that Maoist egalitarianism was a recipe for shortages, so that 250 million Chinese (a quarter of the population) lived in absolute poverty. Economic liberalisation has now reduced that figure to 50 million, says Mr Zhu. So much for constant disinformation that market-friendly reforms deepen poverty.
Mr Zhu boasts that China has been the largest recipient of foreign investment in the world ($ 170 billion in foreign investment). In India, even a modest inflow of$ 2.6 billion last year evoked strident calls of alarm from the Bombay Club. But China, with a much larger inflow, has no Shanghai Club demanding that Chinese entrepreneurs must be given decades to catch up before foreigners are allowed in.
Chinese liberalisation has taken place in stages, and its economy is still some way from capitalism as practised in the West. China’s path has been gradualist, but never timid. Individual components of policy have always been bold. Nothing illustrates this better than Deng Xiaoping’s slogan ‘to get rich is glorious.’ That is not a gradualist but a truly revolutionary slogan, as will be admitted even by those who disagree with it. The means adopted to attain this aim have been gradual, but the aim has never been in doubt.
Above all, the means have been decided on after consulting experts from all the corners of the world, not from China (or even the World Bank) alone. China has the self-confidence to declare that it does not have all the answers, is sorely lacking in expertise after years of self-sufficiency, and so wants to scow the whole world for ideas. It ha& no hang-ups about videshi ideas overpowering swadeshi ones.
This is where India constantly loses out to China. Too many Indians, especially in the BJP and Left, believe that videshi advice comes straight from hell. Some time ago the industry ministry hired the Harvard Institute of International Development (headed by Prof Jeffrey Sachs) as a consultant. There was an uproar from the BJP, Left, and their acolytes. They declared indignantly that plenty: of highly knowledgeable Indian economists were available, within and outside the country, so why should we hire a foreigner?
Mr Zhu would be astounded by this attitude. So am I. We need, to draw on the entire panoply of the world’s knowledge, from Newton to Einstein, from Adam Smith; to | Marx. No policy can be right be-1 cause it is has been suggested by Indian, or wrong because it has | been suggested by a foreigner. We need to examine ideas from every comer of the globe. The final decision, of course, will be our own. Nobody is suggesting that ye should contract out our industrial policy. But we certainly need §to hire consultants on an extremely wide range of subjects to fill the many gaps in our knowledge.
Indian companies understand this, even those which are members of the Bombay Club. They have been hiring consultants like Mckinsey, Coopers and Lybrand, and AT Kearney to advise them on how to restructure their holdings and meet the challenges of the globalised economy. Far from seeing this in terms of jingoistic nationalism, Indian companies believe (like Mr Zhu) that they badly need inputs from abroad to teach them more. They know it is a delusion of grandeur to believe that all desirable or relevant knowledge exists with Indian consultants.
I do not wish to go into the merits of any particular consultant, foreign or Indian. What I wish to emphasise is that good advice must never be seen seen in terms of Indian versus foreign. We should be concerned with whether a suggestion is good or bad, not whether it is swadeshi or videshi.
Deng Xiaoping said, famously, that it does not matter whether a cat is white or black as long as it catches the mice. Perhaps that is not the sort of advice that will move our swadeshi brigade: After all, it comes from a foreigner.