China’s success is cumulative effort of fifty years: Experts

Our Economic Bureau

Bangalore, Jan 7: Even as corporate India is grappling with the new challenges of doing business with China and it’s huge economic successes, top industry representatives and experts believe that the Chinese economic success did not happen overnight just in the last twenty years, but was the result of deliberate steps that it took for a sustained period of half a century.

This was a clear message that came out to India Inc from the panelists that included SKF managing director Arun Bharat Ram, former Indian ambassodor to China CV Ranganathan, JM Morgan Stanley vice president Chtan Ahya, The Financial Express Editor Sanjaya Baru, CII senior advisor TK Bhaumik and Manas Advisory CEO Ravi Bhoothalingam in the CII-Partnership Summit 2002 here on Monday.

Though China and India stood neck-in-neck in terms of their share in world GDP — 5.2 per cent and 3.8 per cent respectively — in 1950, the next fifty years saw China double the figure to stand at 10.9 per cent currently while India has shown marginal growth to stand at 5.1 per cent. And now as both India and China stand on the brink of their full-fledged entry into the WTO, learning lessons from China might well be the right approach for India to take, the panelists said.

Addressing a session on ‘What Drives China,’ experts pointed out that “China’s success does not lie in the last 20 years but in the heavy investments over last 50 years in building human capabilities and infrastructure which created the framework for growth. To say that these steps were taken only in the past two decades is most untrue,” say experts. The challenge for India is to address issues like healthcare, education, infrastructure and productivity.

While China’s entry into the WTO provides a fresh boost to her economy, it also presents an export opportunity for India. China’s total imports market is estimated to reach $600 billion by 2005 from the current $250 billion, thereby presenting a sizeable opportunity for India to track.

Former Indian ambassador to China CV Ranganathan said, “India is being defensive about WTO but China is using it as a tool to quell opposition to economic reforms even in areas such as disinvestment of state-owned enterprises to collect funds for further investment in infrastructure.”

China remains committed to its entry into WTO inspite of the fact that close to 2000 legislative changes need to be in place by 2005 is reason enough for India to act quickly.

Describing the high-level of capital accumulation as an important reason for China’s economic success, JM Morgan Stanley Securities vice-president Chetan Ahya said contrary to popular perception, FDI accounted for just 10 per cent of China’s capital accumulation. The remaining 90 per cent came from domestic sources.