Communist China turns 60 today, an occasion that will without doubt be celebrated by party loyalists across that country. Unsurprisingly, China rarely wins any accolades for its political system, at least in the free world. That is one accolade we in democratic, pluralistic India are more used to receiving. But, and this is playing devil?s advocate from a liberal perspective,

China?s political system has been a marvel in its own right.

Closed political and economic systems, typified by communism, rarely have the ability to correct themselves from within?that is the great strength of democracy and free markets. And that inability to self-correct is what led to the collapse of communist USSR and the entire eastern bloc.

China?s communists could have easily gone the same way, and until 1978, there was every indication that the Chinese revolution of Mao Zedong would collapse in that most uncultured combination of political repression and economic stagnation. But remarkably enough, Deng Xiaoping and his followers corrected the flawed system by opting to open up the economy, going capitalist, while global communism was arguably still on a high.

Of course, political control and repression continues till today, but the Chinese communist party must take credit for managing political conflict while delivering economic growth and near superpower status to a country, that until 1978 (in fact all the way till the late 1980s) was poorer than India.

In India, we react with a mix of condemnation and great awe towards the Chinese political system. Obviously, we?d like to claim that our democratic system is morally superior to the absolutist and repressive control?which must be condemned?exercised by the CCP across the border. But we also react with awe to the awesome capacity of the Chinese state to deliver economic goods ?chiefly physical and social infrastructure?in a way that the Indian state has been utterly unable to.

So it?s hardly surprising that much like the rest of the world, the thing we envy most about communist China (of the last 30 years in any case) is the economic marvel it is. It isn?t easy to register three consecutive decades of 10% plus growth that transforms a country?s fortunes in a single generation.

That said, what China has achieved, and the manner in which it has achieved it, while being very impressive, isn?t exactly novel. There is actually a case to be made that the economic performance of 62-year-old, mixed up India, is more of a marvel than that of 60-year-old, clear-headed Communist China. Here?s why.

China?s economic experience from 1978 until now isn?t very different from the generic East Asian model, which preceded it. The East Asian model, pioneered by Japan after World War II, perfected by South Korea in the 1960s and 1970s, and adapted superbly by Singapore, Malaysia and Thailand a decade later, produced growth rates of 10% plus over multiple decades in all these countries before the model was replicated by China. In all these countries, like in China, a strong centralised state (often authoritarian) created the enabling conditions for high growth?by investing massively in education, health, roads, ports, airports and other infrastructure. In most of the countries, the public sector played a major role in enterprise but not at the cost of private enterprise?the economic system was capitalist, driven by profit. The basic strategy was to begin the industrialisation process by focusing on labour-intensive manufacturing (like textiles) and then moving up the manufacturing value chain (to electronics, then cars, then aeroplanes) over time. Almost as important was the export-

orientation of industry which ensured that manufacturing was globally competitive from the start. All the countries followed stable macroeconomic policies (low deficits, low inflation, high savings, high investment) and in Singapore and Malaysia, in particular, foreign investment was a priority.

What China did was essentially replicate these strategies, but because of its huge size, at a much larger and more noticeable scale. The timing of China?s coming out was also important. It was the time when labour-intensive manufacturing was ready to move out of the early East Asian industrialisers and Western manufacturing firms were looking for new places to manufacture cheaply. It was all well orchestrated but not original.

Consider India in contrast. We began our tryst with mixed (or mixed up) economy around the same time that China began its tryst with statist economics. It took us a decade longer to open up. And over the last two decades, while we have grown fast, we have always grown at rates 2-3 percentage points less than China. But when you consider the underlying conditions for growth, our path has arguably been more original, and indeed more impressive, than China?s.

The pathetic state of our physical infrastructure?roads, ports, airports, power?is well known. Our social infrastructure indicators, particularly on education and health, are closer in quantum to sub-Saharan Africa than to China and East Asia. Our labour laws are antiquated. Land acquisition for industry is paralysed. Put them all together?if you are an investor, domestic or foreign ?India isn?t a terribly attractive place for investment compared to China, barring the potential market size. Unsurprisingly, China has consistently received more than ten times the foreign direct investment India has (on an annual basis) over the last two decades and more. Yet, despite the complete lack of enabling conditions for high growth, we only trail China by 2 percentage points in growth.

Some of this has to do with the unique development path that India has taken over the last two decades. Instead of industrialising through labour-intensive manufacturing (which is handicapped by lack of enabling conditions) like China and East Asia, we have moved along an interesting services led growth path, more characteristic of rich countries. Our most valuable exports have come from services, mainly IT. Even in industry, we are globally competitive in advanced pharma, but not in children?s toys. We seem to have jumped many of the stages of industrialisation that China and East Asia went through, mostly because Indian entrepreneurs have focused on services rather than manufacturing to subvert the problem of bad infrastructure and bad labour laws, with a bit of help from our English language skills.

But imagine our potential if we get the enabling conditions for manufacturing right. We would grow faster than China, and with democracy. The government would, therefore, be well advised to use this Chinese birthday party to shake off policy lethargy and kickstart internal reforms. Begin with infrastructure, labour laws and land acquisition. It would be well worth the political capital spent, certainly worth more than the time and effort spent issuing clarifications about an invisible border dispute in barren mountains over news television.