Saturday, January 18, 2014

Book Review: SUPERPOWER? The Amazing Race Between China’s Hare and India’s Tortoise

Author: Raghav Bahl
Publisher: Penguin Group
MyRating: 4.5/5

China’s growth story has always been the fuel of discussion for opposition parties in India and for everyone who chooses to criticize India’s way of growth. Undoubtedly, China’s hare is far away than Indian tortoise when we compare the gigantic Chinese GDP with India’s GDP. But comparing two countries on the basis of only one parameter i.e. economic fundamentals is not quite apt when we are comparing these contenders for the next superpower. The emergence of these two potential neighboring superpowers came out from the ironic different paths of history explains Raghav Bahl, the author of this book; “SUPER POWER? The Amazing Race Between China’s Hare and India’s Tortoise

Raghav Bahl is the founder and Editor-in-Chief of Network 18. He was hailed as the Global Leader of Tomorrow by the World Economic Forum and selected by Ernest & Young as Entrepreneur of the year for Business Transformation in 2007. The book starts with the notion of doubt that prevailed long among the western countries about the survival of India as the world’s largest democracy. But with the existence of universal adult franchise (It is the right of all adult citizens to vote without any discrimination), equal fundamental rights, a daringly free press, a genuinely autonomous judiciary, a bustling entertainment and information society, a strong English-speaking middle class, a high quality technological and education infrastructure and the culture of liberal thoughts; the west could not discount the contender-ship of India, like China, as a future super power.

The book is comparing India and China on five parameters which are explained in five parts of the book; the race begins, geo-politics, entrepreneurs, consumers and English speakers, urbanization and infrastructure and social infrastructure. In the epilogue section, the author bets fifty-fifty on India and China stating the reasons for not underestimating India’s potential of growth and overestimating China’s capabilities. The book ends with answering the questions related with the future of India and China, which is supported by the experience of the author, not with any forecasting model. It makes this book more comprehensible and easy-to-read for anyone who wants to know the history and growth model of both the countries, without any technicality.

Both India and China were giants in the seventeenth and eighteenth century and accounted for 50 per cent of world GDP in 1600. But two hundred years of colonial domination shrunk their economies and political space on the globe. The British describe their rule as one which ‘civilized’ India whereas China’s colonial history was far more turbulent several rulers without a similar ‘institutional osmosis’. India attained freedom in 1947 and Mao Zedong founded the People’s Republic of China at a massive rally in Beijing. India became a parliamentary democracy and China became a totalitarian state. Till 1978, both the hare and the tortoise were at the starting line but hare had started it reforms at this time while tortoise didn’t realize this till 1991, a decade later after China stared to leap in the race. Nearly two and a half decades after hare has become a $5.9 trillion gorilla while tortoise is a 1.6 trillion cub.

The robustness of the two models was tested in 2008 during Leyman Brothers collapse. When whole world got panic India’s stock market reacted the other way allowed its investor to short the stocks while China, whose stock markets had not even been introduced the concept until then, chose to go ahead with a trial experiment in short selling just a month later.

When religion is the main force behind geopolitics played by America, Britain, Saudi Arabia, Iran and other countries, it is clearly not driving the geopolitical reflexes of India or China. But economic ambition is. Raghav Bahl equalizes both India and China on geo-political parameter. I think, he should also mention the effect of China’s ‘veto’ power in United Nations in world’s geopolitics.

When George Soros (a well-known investor) visited India in 2006, he said in his interview that the one word that makes India far ahead of China is ‘Entrepreneurship’. China has over 2,000 listed companies and more than 80 percent of these are state-owned and India has over 6,000 listed companies and over 95 percent are privately owned. The demography of India is far more conducive to the India’s growth as compare to China. By 2020, US could be short of 17 million people of working age, China 10 million, Japan 9 million and Russia 6 million. Only India will have a surplus of 47 million people in the working age. If India can harness this population then it could become the job exchange of the world. But if it fails to do that, India could become the job graveyard, explains Raghav Bahl.

The sector where China made progress by leaps and bounce is urbanization and infrastructure. China has become the standard for India can be seen in the PM’s statement when he wishes to transform Mumbai as the Shinghai of India. The author keenly studied the basis of this difference which lies in the approach of both the governments. While Chinese mayors may be accused of overreach, Indian Municipal leaders lacks ambition. China has added 20,000 km of railways tracks in last two decades and India done a 860 km in same period. China’s rail investment was $133 billion in 2010, fourteen times that of Indian railways. China has 18,000 km of coastline against India’s 7,500 km. China also has 1300 ports against India’s 200 making China a bigger seafaring nation. In 2010 China has 960 GW of installed capacity, five times more than India.

The race between China’s hare and Indian tortoise will depend on the China’s not-yet-fully tested model of ‘escape velocity’ and India’s classical and sustainable model of development. When China is investing nearly half of its GDP in its factories and creating infrastructure, India is struggling to hit the meagre targets in investment. Paul Krugman, a Noble Laureate, explains that the answer will not be quite as simple as who is investing more and growing faster today but a lot will depend on who has superior innovation? Who has more entrepreneurship savvy? Who is expanding in intensely competitive conditions?

The growth potentials of the two countries are measured on tangible and intangible abilities of India and China but, I feel, Raghav Bahl should also have covered the available natural resources in both the countries and their approach in acquiring the world’s resources. The growth model of United States resides on its huge natural resource base and their strategies in acquiring resources in other parts of the world. If any country wants to achieve and maintain double digit or close to double digit growth rate then the sustainability will largely depends on the fulfillment of its energy requirements.

 The book has been praised by Anand Mahindra (VC & MD, Mahindra and Mahindra), N.R Naraina Murthy (Chairman, Infosys), Mukesh Ambani (Chairman and MD, Reliance Industries), Bimal Jalan (former governor RBI), K.V Kamath (Chairman, ICICI) and many more authors, policy makers and entrepreneurs. I found the complements from Mr. N.R Naraina Murthy are most apt in the description of this book. He says ‘In his inimitable way, Raghav Bahl has painted very insightful and highly data-rich perspective on the history and potential of India and China. His powerful story-telling, backed with analytical research………..’.

The author disclaims that he is not writing this book as academician or economist or policy maker so he recommends reading this book as a work of instruct, intuition and his experience. But I didn’t find any arguments or statement, given in the book, that is not supported by any data or available fact.