The Bird's Nest

China like India is a nation of contrasts; grappling with its dualities - of communism and capitalism, freedom and control, past and present - it can be loathsome and enchanting all at the same time. Nothing represents the opportunity and danger that grips modern China better than the new 'Bird's Nest' Olympic stadium in Beijing. Built on a not too modest budget of 500 million dollars and enmeshed in 34 KMs of steel it is a marvel of engineering. As the Communist party wants, its been portrayed to represent the return of China as a true blue world power. An elegant eagle taking flight into the world from its nest, as it were. But unwittingly it also represents a hornet's nest with lots of problems just waiting to happen.

For the past 25 years China is performing a miracle never seen before in human history. A constant rate of growth of upwards of 8% for 25 years, the kind of growth Japan witnessed in the post-WWII years. This phenomenal growth has enabled China to lift 400 million people out of poverty - a population more than the size of the US which is unparalleled anywhere in the world at any point in time. It has probably the largest reserve of US dollars (last estimates pin it at 3 trillion). The cities of shanghai and hong kong are a buzzword in world financial circles and are growing at a furious pace and will compete with first world financial hubs like New York and London soon. The infrastructure too has taken a huge leap forward with good roads and telecommunication facilities, the crowning glory being the biggest dam in the world (Three gorges dam) and the Railroad between Beijing and Lhasa. The Chinese space program too is gaining momentum as it became the third country after the US and USSR to put a man in space. What more Beijing is hosting the Olympics later this year and could well top the medals tally. Also the real estate boom has made China the largest construction site in the world gobbling up half of the world's cement and cranes! It’s a list of head-spinning achievements.

All these look a far cry from the days of the 'Great leap forward' and 'cultural revolution' when China blinded by Maoist ideology fought with itself and came to the brink of a civil war. However the phenomenal changes over the past 30 years cannot mask the dangers that lurk within. In spite of the rapid economic progress there has been negligible political progress with China still being a Totalitarian state. Both the press and the judiciary are emasculated and serve as extensions of the communist party. If an unreformed China takes over the leadership of the world beating the US - as is predicted - it will bring to fore a moral dilemma. How can the leader of the world, itself being a despot deal with similar oppressive regimes. If China's condonement of Sudan's oppression in Darfur is anything to go by then there is a potential moral vacuum if China comes to head the world. However imperfect the western powers are they are essentially 'democracies' which did not pose any such moral dilemma. It remains to be seen whether China remains a communist despot or reform itself and assimilate into the world power system like Japan.

There are gross violation of human rights with large number of dissenters and political enemies rounded up for capital punishment. Protests of any kind are prohibited and the government still equates protests - however valid they may be - to treason. The media including the internet and mobile text messages are strictly censored and news paper editors are still afraid to criticize the government. In effect, the People's Republic is afraid of its own people. In spite of the capitalistic slant over the years China still does not trust private entrepreneurship and hence there are very few world class Chinese companies unlike India which keeps on adding companies every passing year. Also, the rapid pace of growth has led to severe environmental damages with the cities being some of the most polluted in the world. In fact its tough to get a clear blue sky in Beijing even during summer.


The recipe for China's growth can be explained thus. State-directed banks collecting (or is it forcing?) massive savings from the people and directing them to massive manufacturing projects, under valuing its currency and using cheap labor to the projects and thus become a 'manufacturer for the world' of sorts and reaping profits and foreign capital. This looks fine on paper and actually has worked in the past 30 years BUT there is a chance for the picture to turn ugly. How long can China in spite of the cheap labor keep exporting insane amounts of goods to the World? What if the foreign capital stops flowing in, what if the phenomenal savings rate drops since the banks pay interest occasionally and rarely repay the entire debt, what if the middle class revolts against the establishment for more political freedom, what if undervaluing the currency hits crucial imports. All these are things that could go horribly wrong however slim the chances of them actually happening may be.

Contrast this with India. Though the rate of growth could be slow and rapid progress is tough the fundamentals seem to be right. A vibrant democracy - however imperfect it may be, an open press, democratic Institutions, an impartial judiciary etc. All these ensure that even though India's steps are slow but they are definitely surer. Of course there are lots of things India could borrow from China like thrust on infrastructure, efficiency in enforcing policies etc, however all these do not require major systemic changes. China's problems are more systemic in nature and will involve a complete socio-political upheaval and historically too China has shown a penchant for such upheavals and revolutions. As a leading sociologist pointed out, China will always require a revolution every 100 years to completely change the existing system and make a complete break from the past.

All this said the engine of growth in China chugs along making the whole world sit up in fear and anticipation. Only time will tell what becomes of the Bird's nest that is China - emergence of an elegant eagle flapping its wings or a hornet's nest.