Column : Weak economies, hesitant governments

Jan 14 2013, 00:30 IST
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SummaryTwo things that India and China have in common. That may yet change, but don’t hold your breath.

A simple India-China comparison to begin with. I left Delhi last Monday sailing through T3 with no problem. I returned to London T4; again no issue. I arrive at Beijing airport by Wednesday morning and the contrast was sharp. The luggage took ages to arrive, around twenty minutes. The distance between the place where the plane docked to where the luggage is delivered is too long. Then, all manner of confusion while trying to get out of the airport. No one, even on the airport information desk, knew enough English to direct me to the exit—I tried in my best ‘bada sahib’ style to speak loudly and slowly, but it didn’t work. Only the cleaning ladies helped with a grunt after I had gestured my helplessness. Out in the open, the pollution was worse than in Delhi.

Otherwise, there are more similarities between China and India than one normally admits to. Both the economies have slipped from their spectacular growth performance earlier in the new century. China has just installed a new team in power. By all appearances, it will be weaker than the predecessors. An article in The China Quarterly explains that there is a sharp division between the princelings and the appartchiks. Xi Jinping is a princeling who has risen without any trace of ability thanks to who his father was (remind you of anyone?) while Li Keqiang has been clawing his way up by sheer ability. But the two factions have evenly divided all the top spots and the tension between them is likely to persist till one faction wins. Bo Xilai, who was a princeling, fouled his copybook and thus weakened the princeling camp, among whom was Hu Jintao. This is why Hu resigned all his positions including chairmanship of the military commission, unlike Jiang Zemin had done. The immediate result will be a stalling of reforms. China badly needs to rebalance its economy away from exports and towards domestic consumer spending. As of now, it does not look likely there is the capacity to do so. The investment bubble launched three years ago still has its after effects; there are 78 million housing units built but unoccupied and yet the regional satraps ask for more loans to keep building infrastructure. It may be a dictatorship, but it is not one in charge of the economy.

India is not very different. The elections are yet sixteen months off,

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