Similarities and Differences in the Indian and Chinese Model of Development

Professor Lin Minwang

This presentation was given at an India China peace event held by the Intercivilizational Dialogue Project, India and the Thinkers' Forum at Fudan University, China on the 12th of December, 2022 on poverty alleviation and Asian cooperation. 

I will focus this presentation on the question of what is the difference and similarity in the Chinese and Indian path to democracy and economic development since independence.

When I first went to India and worked in New Delhi in 2013, I would always compare China and India. In fact, this trip changed the focus of my research which was then on Europe. I always tried to ask myself why China and India took different paths. The reason this question is so significant is that China and India are very similar in all aspects. Both countries are populous countries with large populations and we have long ancient civilizations. Both countries were powerful countries in the past. Both have been colonized by western powers. Both countries after gaining independence were trying to find a new way for developing and for a prosperous future. Naturally, the same conditions make it easy for the two countries to understand each other. However, I often find that this is not the case. The difference between India and China is often politicized.

I remember one of the articles written by Vijay Gokhale, the former Indian ambassador to China and Foreign Secretary, written after Covid-19 broke out in Wuhan. He argued that India poses a strong challenge to the ideology of Communist China and the Chinese Government. He said India has a strong democracy and this is what leads to economic development. He thus said democracy is India’s greatest asset and the existence of democratic state challenges the Beijing consensus. He argued that India’s success would make it ideologically difficult for the Communist Party of China (CPC) to justify its models.

It seems that Indian elites try to put forth that India has a superior political system to China. Also, in China, many scholars believe that China’s political system is better than India’s. I will not go into detail about these discussions. This is a reflection of the difficulty between China and India’s quest to understand each other.
I personally think we have to get rid of this mentality and try to look at each other rationally. If we do this, we will definitely discover that we each have our own strengths. With this in mind, let me speak of the similarity and difference in India and China’s economic path. I think the similarities are very clear and have at least four aspects:

First, both China and India tried to establish a socialist economic system. The CPC regards socialist ideology as the dominant ideology. Obviously, our aim is to establish a socialist economic system. In the eyes of many Chinese, Indian leaders also favoured socialism in terms of economic development. When India’s first Prime Minister Jawaharlal Nehru visited Moscow, he saw socialism had many advantages over capitalism. After his death, his daughter Indira Gandhi actually continued the socialist ideology. So, India’s economic policy after independence was influenced by its experience under colonialism and also has been greatly influenced by the Soviet Union.

Second, both countries have learnt and borrowed some of the economic lessons from the Soviet Union, especially from the planned economic system. The importance of economic planning for China and India is very clear. At the beginning of 1950, India had its own 5 year plans as did China. India had policies which dictated that the state should be dominant over markets. They pursued the strategy of import substitution and also restricted the development of the private sector with many policies like industrial licensing, credit controls etc. There was a very similar process in China, which also took from the Soviet Union’s planned economic system.

The third aspect is that both countries at the beginning of economic development, gave priority to industrialization and the setting up of factories. Both countries wanted to establish a modern industrial system. This is why these two countries have an independent industrial system today.

The fourth aspect is that both countries have reformed the planned economic system after opening up. For China, it was in 1978 and for India, it was in 1991. They have tried to partially transform the socialist economic system to a capitalist economic system. This is the general similarity between the two countries.

There is also some difference between the path of economic development between the two countries. I think there are three aspects of the difference:

The first aspect is that they have different starting points. When India got independence in 1947, India was the world’s 5th largest economy. It is also currently the 5th largest economy. At that time, China was relatively poorer. We have different starting points.

The second aspect has to do with implementation and has some relationship with the political system. Actually, the Chinese planned economic development goals were implemented both during the socialist era and during reform and opening up, but India was relatively poor in the implementation of its economic goals.
The third aspect is that the Chinese economy transformed much faster than India. India was slow compared with China. During China’s reform and opening up, the degree of marketization is far higher than in India’s. The main reason is that Chinese elites, especially the CCP, had reached a consensus on economic opening and economic development. India’s opening up was partially a technical choice of the political parties. There was no consensus in India’s whole society about economic opening. This is why India did not try to open its economic system to the same extent as China.

These are the similarities and differences in India and China’s paths of economic development. In terms of political development, especially democracy, China and India are quite different. India has learnt from Western style democratic models: the parliamentary democratic model. The major criticism that one hears about India’s political system is that India has elections but no accountability. For Chinese polity, the legitimacy does not depend on elections but actually on its achievement. Before opening up, the political legitimacy depended on the historical role of the CCP which led the Chinese people to independence. After the reform and opening up, political legitimacy depends on economic success.

This may be changing now, when the political legitimacy may depend on the fact that the CCP is leading the Chinese people to achieve national rejuvenation. Maybe we can have a re-assessment on China’s political system. But in any case even though China has no general election, Chinese officials have very strong accountability.
​
These are some of the similarities and differences between China and India’s economy and political system. A rational examination of the two can help us examine our strengths and weaknesses, in a way that can lead to a prosperous future for both countries.
​

Professor Lin Minwang​ is currently the Assistant to Dean and researcher of Institute of International Studies, Fudan University and Deputy Director of the Center for South Asian Studies, Fudan University. He mainly conducts researches on the theory of international relations and international relations in South Asia (including China-India relations).