BOOK REVIEW Reality check for Asian titans India and China: The Battle between Soft and Hard Power by Prem
Shankar Jha
Reviewed by Sreeram Chaulia
Views about the inexorable rise of China and India to global dominance have
multiplied as the two storm ahead with impressive economic growth rates amidst
a worldwide downturn. Speculation that these Asian giants will reconfigure the
international order with their accumulating might has assumed an air of
certainty, a matter of "when" and not "if".
But it is worth inquiring whether the market-based modernization in both
countries is proceeding in a stable direction or setting up an implosion.
Veteran Indian political economist Prem Shankar Jha plays the skeptic in a new
book about China and India's abilities to reconcile economic growth with
equity. Combining
acute analysis of the history of capitalism and domestic weaknesses in the two
fast galloping economies, he offers a caveat to assumptions about their ascent
to greatness.
One paradox of China's record economic growth that Jha highlights is incomplete
privatization. Half of industrial output is still generated by non-market
entities allied to the state. Chinese Communist Party (CCP) cadres of the
central government and from five tiers of local government are engaged in
competition for investable resources, leading to a chaotic misallocation of
capital. Rivalry between these two strata of the CCP has bequeathed a unique
problem of overheating and a struggle to bring down the rate of feverish
investment and GDP growth.
Since "cadre capitalists", who form an "intermediate class", are part and
parcel of the Chinese government, Jha shows how "every corrupt, predatory
action that comes to light threatens the stability of the state" itself. He
contrasts this to India's intermediate class of rent-seeking small and medium
enterprises, which used to leverage the state to the detriment of big
businesses, but "did not become the state". (p 55) Discontent and stress fueled
by economic changes will therefore, Jha argues, be more problematic in China.
China's central government has often failed to mitigate exuberant investment
sprees by local CCP authorities. Provincial administrations are responsible for
unsustainable expansion of bank credit to finance real estate and special
economic zone (SEZ) booms. Jha plots a series of overproduction and excess
capacity bubbles succeeded by recessionary slowdowns to reveal the risks to
stability posed by China's cadre-capitalism. The Chinese economy's inefficient
use of raw materials and energy compared to India is also a harmful offshoot of
cadre-capitalists piling up "dead investments" and duplicating industrial
structures across provinces.
Jha argues that extortion of private land and excessive taxation of the lower
classes has "undermined the legitimacy of the Chinese political system in the
eyes of its people". (p 108) Mass alienation from the regime is the reason, the
author says, "why a country with such an astounding rate of growth should be
suffering so much public discontent". (p 128) The government is aware it is
"living on top of a volcano", he writes, but is determined to stave off the
only genuine solution - democratization. China is thus saddled with what Jha
terms as a "predatory state that does not know how to reform". (p 273)
Resorting to physical violence to quell protests has become common as local
cadre ensure that people's grievances are not taken higher up the party chain.
Jha reproduces the judgment of the purged former CCP leader Zhao Ziyang from
2004 that "what China has is the worst form of capitalism." (p 238)
On the ills of India's economic metamorphosis, the author uses the refrain of
intra-capitalist class conflict between large industrial houses and an
"intermediate bourgeoisie" that flourished on artificial shortages. This tussle
continued even after the economic liberalization of 1991, with myriad product
category restrictions and bureaucratic foot dragging to protect tens of
thousands of parasitic small and medium-sized enterprises. Only after 1997 did
these intermediate firms shut down or reinvent themselves to become competitive
through a managerial revolution.
The advent of an unfettered market economy in the last decade has, however,
wrought new social strains. With the poor feeling abandoned by the state, a
Maoist revolt rages across the breadth of central India. Market-dictated
reorientation of funds from agriculture to industry and service sectors has
triggered a gigantic rural crisis.
State-level governments in India are siding with the "new aggressive capitalist
class" (p 282) on land acquisitions and wage depression, short changing the
poorest sections of the peasantry, unorganized sector workers, and indigenous
communities. In Jha's estimate, the central government's rhetorical ideal of
"inclusive growth" has been undone by "an aversion to any reforms that will
dilute the power of the newly empowered bourgeoisie". (p 309) He attributes the
uptick in armed challenges to state authority in India to "the absolute
powerlessness of the poor to obtain redress through legal expedients". (p 296)
Undemocratic China's time horizon to enact governance reforms for preserving
social equilibrium is shorter than India's, but Jha contends that India too is
facing a ticking bomb. The latter's democratic advantage is, he believes, "in
danger of being lost" (p 328) through coalition politics and diminution of the
central government's capacity to manage market-engendered social conflict.
Neither country, he concludes, is assured of a rosy future bereft of
instability if losers in society are ruthlessly trampled by the process of
capitalist transformation.
A noteworthy contribution of this sobering book is to offer valuable insights
into the multiplier effect of economic recessions on social and political
instability that is inherent to the path of developmental "progress" adopted in
China and India. The dangers of regime collapse in China and intensifying
Maoist war on the Indian state are aggravated when growth engines slow down
periodically and offload more onerous burdens on the shoulders of the
downtrodden.
Jha's healthy dose of pessimism comes at a critical juncture when Asia's two
behemoths are pressing on with astounding pace on the road to modernization.
His book is a reminder that dark realities and high human costs lurk beneath
the glitter of spreading market economies.
India and China: The Battle between Soft and Hard Power by Prem Shankar
Jha, Penguin Books, New Delhi, 2010. ISBN: 9780670083275. Price US$13, 398
pages.
Sreeram Chaulia is associate professor of world politics at the OP Jindal
Global University in Sonipat, India.
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Since "cadre capitalists", who form an "intermediate class", are part and
parcel of the Chinese government, Jha shows how "every corrupt, predatory
action that comes to light threatens the stability of the state" itself. He
contrasts this to India's intermediate class of rent-seeking small and medium
enterprises, which used to leverage the state to the detriment of big
businesses, but "did not become the state". (p 55) Discontent and stress fueled
by economic changes will therefore, Jha argues, be more problematic in China.
