China vs. India

The story of modern China must always begin with the 1793 British diplomatic mission to China under Lord Macartney. The goal of the mission was to establish formal ties with the Qing Dynasty under then-emperor Qianlong, who promptly rejected all British demands, as China recognized only tributary states, never equals. Though thoroughly rebuffed, the British made many observations of Qing China, most importantly that its haughty attitude was incongruent with its backwardness and corruption.

Thus the seeds were planted for a "Century of Humiliation" for China at the hands of foreign powers, starting with the First Opium War and lasting until (according to the Communists) the establishment of the People's Republic in 1949. But with humiliation came humility and a desire for reform, starting with the purchase of Western weapons and technology, then more forceful attempts at institutional reform after China's shock defeat by millenia-old tributary state Japan during the First Sino-Japanese War. The ultimate failure of these reforms, frustrated by an imperial court fearful of losing power, led to revolution and even more aggressive attempts at modernization, which in turn produced the most radical group of all, the Communists.

So what's the point of flipping through all this history? It's to show that the driving force of China since the mid-19th century hasn't been authoritarianism but modernization. The Republic of China, established in 1912, is the first constitutional republic in all of Asia, preceding Turkey by 11 years. Deng's reform and opening up in 1979 was the first among Communist countries, preceding USSR and Vietnam by a half decade. The iron fists of Manchus and Mao were not responsible for Chinese development; rather, they brought China to low points from which reformers had to uplift the country.

Those who believe that China's more authoritarian turn under Xi Jinping is conducive to economic development should pay attention to the numbers. Economic growth has slowed nearly monotonically since his ascension in 2012, reaching a 27-year low in 2019. Debt-to-GDP has doubled since 2008, reaching over 300%, far higher than any country of comparable level of development. In particular, Chinese household debt has doubled in 7 years, reaching one of the highest levels relative to income in the world. Bond defaults hit a record, including the biggest offshore default in 20 years. Consumer inflation is at the highest level in 8 years, led by pork, which has doubled in price year on year.

It's certainly not the case that Xi's harder grip on China is the cause of all these problems; in fact, it's more a reaction to issues that have accumulated in China since 1979, and particularly the global financial crisis in 2008. But the idea that greater control from Beijing will lead China to greener pastures is an ahistorical idea that should be binned.

"World's biggest democracy" is a slogan that India and its Western supporters use often to describe the country. It's certainly true that India holds plenty of elections and devotes tons of resources to making sure that people can vote. But is this all that democracy entails?

India's literacy rate is below 75%. Its labor force participation rate is below 50%; for women it's below 25%, one of the lowest the world. The caste system is alive and well despite decades-old attempts by everyone from founding fathers Gandhi and Ambedkar to the modern Hindu-nationalist RSS to progress beyond it. Tens of million of court cases are backlogged in the justice system, leading to popular support for swift vengeance instead of justice. Colonial-era policing methods such as the lathi charge and imposition of Section 144, which bans public gatherings, are used with enthusiasm by regional governments; in addition, modern methods of stifling dissent, such as suspending internet services, find more purchase in India than anywhere else.

The point is this: liberal democracy in India is a reality, however imperfect, for only a small group of Anglophone urban elite in Delhi, Mumbai, and Bangalore. The vast majority of Indians, particularly in rural areas, live a wholly different life of poverty, casteism, and repression. It is precisely under these conditions that Chinese Communists were able to trounce the Nationalists, so it's no surprise that India has its own Maoist insurgency. Though India's not at risk of revolution, it needs to expand the political base if it wants to live up to "biggest democracy" title.

What about the economic front? During the Cold War, India was officially non-aligned, but de facto a Soviet ally. Despite not being ruled at the national level by a Communist Party, it zealously pursued nationalization of industries and central planning, with predictable results. Whereas China began opening up in 1979, India did not reform until 1991, when a financial crisis (and the collapse of the Soviet Union) forced New Delhi to change its ways.

India is not China, especially in its commitment to modernization and reform. It started later and is moving more slowly. Blaming democracy for these woes, or selling it as a cure, will only tarnish the name of democracy without solving any problems.

More generally, what is the purpose of democracy? And what is its relationship to economic development?

First, democracy is clearly not a prerequisite to economic development. Plenty of kingdoms and empires throughout history enjoyed periods of prosperity without an ounce of democracy. From Peter the Great's Russia to Meiji Japan, the driving force for development was modern thinking and institutional change spearheaded by enlightened monarchs, not the ballot box. More recently, South Korea and Taiwan both developed their economies under military dictatorships, with democracy coming along much later on the backs of strong unions and student groups made possible by the prosperous economy.

So what's democracy good for? To answer this question, it's worth going to the "first document" of democracy, the Magna Carta. The Magna Carta says absolutely nothing about elections. Instead, it's a peace treaty between King John of England and rebellious barons that established legal protections against arbitrary imprisonment, property rights, limits on the king's ability to tax, and a council of nobility to approve the king's directives. In short, it restricted the State's power against (a small section of) the population.

Democracy, then, is the ability of people to limit the degree to which they are ruled. The ballot box is merely a mechanism in that process, allowing the public to remove unpopular rulers in nonviolent (or at least minimally violent) fashion. Courts are another mechanism, protests a third, and so on. A strong democratic tradition prevents egregious government action. India, viewed as "chaotic" by most Chinese, has never experienced an Anti-Rightist Campaign, Great Leap Forward, or Cultural Revolution, even when under a state of emergency. This is an under-appreciated accomplishment of democracy which never comes up in any India-China comparison.

Economically speaking, India is roughly 20 yrs. behind China. That's basic arithmetic–if India grows at >7% per year for 20 yrs., its GDP will be roughly what China's is today (modulo currency effects). Whether India can sustain that rate of growth for that amount of time remains to be seen (recent figures paint a dull picture), but when all is accounted for, 20 years is actually not that bad.

Modern India was established in 1947, 37 years after the Republic of China. It began economic reforms in 1991, 12 years after Deng Xiaoping. It's a much more complex country in terms of ethnicities, languages, religions, etc. In fact, China would be much further ahead if it weren't for Mao's economically ruinous political movements.

If India wants to unlock its potential, it needs to be committed to modernization. Out with the caste system, raise the status of women, and embrace a much more business-friendly attitude towards foreign investors. None of these things requires giving up democracy; in fact, they're more likely to happen with increased democratic participation. But democracy is only a means, not an end–don't treat it as a panacea, excuse, or crutch.