China, not India, Will Be the Next Superpower

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This BusinessWeek article claims that China and India are facing off to see who will become the next superpower.

The author claims that China won’t be the next new superpower because it has an authoritarian regime. India, despite its shoddy infrastructure, still hosts a chaotic democracy, so it should succeed. Here’s an excerpt:

Authoritarian regimes often yield impressive short-term economic results, as seen in Germany in the 1930s, the Soviet Union in the 1950s, Brazil in the 1960s, and China in the 1990s. Unencumbered by such things as property rights, legal recourse, and public debate, the
authoritarian regime can harness significant economic and political resources to create impressive industrial and economic feats.

Conversely, democratic regimes tend to be sloppy
affairs with loud public discourse, a vocal press, stubborn land owners, and a myriad of civil liberties. Far from being able to harness economic resources, the government often must act more as a regulator. The result is that there are very few grandiose government-sponsored projects. Instead, there are countless private-sector initiatives driven by the invisible hand of the market. While the authoritarian regime is envied by some, the fact is that longer term, this type of socioeconomic model has typically led to economic and social distortions.

The author goes on to cite threats such as inflation, lack of property rights, and lack of rule of law as major stunting factors for China’s eventual dominance.

It’s true that India has an active democracy. It’s also notoriously corrupt. (“Rule of law” is an exaggeration in some places.) Half the population doesn’t have access to clean water. You can’t mobilize a sick, starving population without the infrastructure to give them their basic needs. You can, however, argue about their rights in a parliament without actually building them a well.

China, on the other hand, has infrastructure. It’s a communist-capitalist society, whatever that means. As far as I know, more than half its population has enough to eat. China has been showing a few signs of opening up to increased public discourse, at least internationally (Olympics, anyone?).

If China’s trend towards openness continues, it will win hands-down. Infrastructure is key to building a middle class, which is key to being a stable superpower. India needs to get its act together and figure out a way to get more than 50% of its population into livable conditions.

I think the only thing standing in China’s way at this point is itself.
Inflation and a bad reputation are cheaper to fix than a major demographic problem. If innovation is an issue now, it shouldn’t be for long, with the millions of university graduates pouring out of Chinese tech institutes. A few tweaks to the economic model, and we’ll all be learning Mandarin in a few years.

Thoughts, anyone?

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