The Future of India, the Fate of China

ANALYSIS

 @Gooch700
on January 30 2012 8:49 AM
Shanghai is one of China's many mega-cities
Shanghai is one of China's many mega-cities Reuters

India and China are two giant Asian neighbors which are increasingly dominating global trade and economies. These two countries have each engineered extraordinary social and economic advancements over the past two decades.

However, owing to cultural and other factors, India and China are following dramatically different trajectories in their paths to prosperity. For one thing, China is rapidly urbanizing (more than half the population now live in large cities); while the overwhelming majority of Indians still live in rural villages. This disparity may have drastic implications for both nations.

International Business Times spoke to an expert on demographics in the developing world to discuss these topics.

P. H. Liotta is the Thomas Hawkins Johnson Visiting Scholar at the United States Military Academy, West Point, New York.

IB TIMES: More than half of China's population is now living in urban areas as more migrants move from rural areas. But in India, the population is still overwhelmingly rural (something like 72 percent, according to the Indian census). Does this reflect how far behind India is from China in terms of economic development?

LIOTTA: In a word, no. But there are problems ahead for India. And, unless India can solve these problems - quickly - India will seal her own fate. Unfortunately, given the promise and the ultimate disastrous precedent of the 2010 Commonwealth Games on a far smaller scale in Delhi, the nation has much work to do, and no time to waste.

IBTIMES: What are the demographic trends you foresee for China and India over the next few decades?

LIOTTA: In the next decade, 70 percent of the China's population will live in cities. India, however, will undergo an astonishingly rapid shift in movement from rural to urban centers: although 28 percent of India's population may live in cities today, in the next thirteen years that will almost double. By 2025, 46 percent of Indians will live in cities. By 2030, China will have 221 cities with populations exceeding one million residents each and its total urban population will add 400 million new residents - more than the entire population of the United States then. Similarly, India will have 68 cities with populations exceeding one million each and will add another 221 urban dwellers to its rapidly swelling urban agglomerations.

IBTIMES: How is China preparing for this rapid urbanization?

LIOTTA: Whereas China has been thinking strategically about how to handle this astounding increase in population and its accompanying need for capacity resilience and infrastructure support, India has not. China has specific plans for building metro systems, highways, and high-speed trains for its top 170 cities. In Beijing, for example, from 2004 to 2006 alone (and, yes, the Olympic Games had much to do with this), spending on urban transportation increased over 50 percent. So, for these 170 top Chinese cities that are a strategic priority, China will need 28,000 kilometers of metro rail lines and 5 billion square meters of paved road - and it is likely that China will achieve these goals.

IB TIMES: How is India preparing for these dramatic changes?

LIOTTA: India, on the other, hand is heading for a fall. To even meet the basic capacity and infrastructure needs of its top 35 cities in the coming two decades, India will need to build 400 million square meters of metro rail lines every year from now on until that goal is achieved. But that is twenty times more than what India has been building in the last decade alone. India, to meet the urban transportation requirements of its top 35 cities in the future will require 7,400 kilometers of metro rail lines and 2.5 billion square meters of paved road. Let's be honest; it doesn't look good.

IB TIMES: But, surely China also faces some serious challenges?

LIOTTA: China, of course, has its own problems that could seal her future doom as well. These problems are environmental and demographic. While China may lead the world in wind turbine and solar green technologies, it is also the world's largest CO2 emitter and its pollution is severe. China needs to clean herself up: fast.

IB TIMES: How will China's famed One-child policy impact its demographic future?

LIOTTA: Demographically, China made a serious mistake with implementation of this policy at the height of the Cultural Revolution in the 1960s. At that time, China's annual fertility rate was almost 8.0 percent; by 2000, it had dropped below replacement fertility rate of 2.1 percent. The replacement fertility rate simply means simply what level of population replacement you must have to keep your population sustained. But here is where the problem lies for China. It has to do with something called the dependency ratio which is the relationship between people not of working age (either those who are pensioners or those youth who are being educated and not yet part of the workforce). Clearly, the larger the number of people who are in the workforce - because they pay taxes and contribute to social welfare systems such as government programs for healthcare, education, and so forth - makes for a more prosperous, developing, and sustainably long-term society. However, if the dependency ratio shrinks, then there is trouble. For example, almost all of sub-Saharan Africa, for example, has been mired in a 1:1 dependency ration for decades and thus cannot prosper and cannot develop and cannot sustain itself.

IB TIMES: But China is managing its population at the moment, no?

LIOTTA: China, right now, is in the midst of its demographic sweet spot. In the next two years it will peak with a 1:2.6 dependency ratio - that is, 2.6 people working who support every person who is not. But in the next fifteen years, one-third of China's population will be retired, assuming things stay as they are with retirement ages. No more than two decades after that, and likely much sooner, China will have a dependency ratio of 1:1.5. This will be disastrous and likely kill China's prosperity.

IB TIMES: How is the Chinese government coping with these troubling trends?

LIOTTA: China, the most strategically forward looking state on the face of this earth, knows this. This is why China seems, and is, so ruthless, on the global financial stage. These demographic pressures, to be blunt, could lead to future war. The bottom line: China is in a race to get rich before it gets old.

IB TIMES: India is unprepared?

LIOTTA: India, on the other hand, has yet to hit its demographic and dependency ratio sweet spots. Despite the insanely foolish and short-lived forced male sterilization policy under Indira Gandhi in 1976, India remains the world's largest democracy. People have the freedom and the will to make a choice about when to have children and how many to have. As a result, even as India is on track to soon become the world's most populous state, her birth rates have been steadily declining as India's economy grows and her prosperity becomes ever more evident to the world.

IB TIMES: Why are so many people in India flocking to cities?

LIOTTA: The most eloquent answer comes from an Indian columnist name Anand Giridharadas, who wrote about Mumbai: If the elite live in virtual exile, seeing Mumbai as a port of departure, the city teems with millions of migrants who see it in exactly the opposite way: as a mesmeric port of arrival, offering what is missing on the mainland, a chance to invent oneself, to break with one's supposed fate. . . . They arrive from the 660,000 villages of India. Perhaps the monsoon failed and crops perished. Perhaps their mother is ill and needs money for surgery. Perhaps they took a loan whose mushrooming interest [that] even cow-milking and wheat-sheafing cannot repay. Perhaps they are tired of waiting for the future to come to them. . . . The longer you remain, the less you notice what Mumbai looks, smells, sounds like. You think instead of what it could be. You become addicted to the companionship of 19 million other beings. Surrounded by hells, you glimpse paradise.

IB TIMES: Isn't it necessary for a country's population to become more urban in order to establish an advanced economy?

LIOTTA: Absolutely not -- I can say this unequivocally. But it also depends on who you are - by this I mean how strong you are in terms of population, economic, political, and economic power (and clearly India and China are mega-powers) - and where you are located. India, for example, was written off for much of the twentieth century by economic geographers as being unable to progress because of its geography: too much of it was located in a tropical temperate equatorial band. These geographers were wrong. They were simply oblivious to the advantages that technology would bring about and the sheer genius that Indian and Chinese innovation would bring in working comparative economic advantage to their best use. Let me illustrate the significant differences between India and China visually as well.

At the turn of this century, the United States National Imagery and Mapping Center completed a project that represents a composite of the earth's landscape at night, showing energy use, population distribution, and states where obvious power centers lie.

Using these images, here's the good news: India - with the exception of Bihar and the vast desert region in western Rajasthan - has an almost completely uniform distribution in terms of energy use, population, and distribution. China, visibly, does not.

IB TIMES: Overall, how does the near future look for China's population?

LIOTTA: China faces daunting urban demographic challenges. Even as the People's Republic has rapidly extended its strategic reach and massive investment in South Asia and in Africa, the challenges at home are best described as frightening. More than 100 Chinese cities have populations exceeding one million, as opposed to only nine cities in the United States. China now has five mega-cities: Chengdu (approaching 35 million residents), Chongqing, Shanghai, Beijing, and Shenzen. Many of these cities are new creations. The mega-city of Shenzhen in southeastern China (across the straits from Hong Kong), for example, did not even exist prior to 1979 except as a simple fishing village. Today, its population is 14 million. The movement of peasant populations from the west to the mega-cities of eastern China represents the largest-and most rapid-migration in human history.

IB TIMES: What about India's other big neighbor, Pakistan?

LIOTTA: It is not so long since 1947, when India and Pakistan were freed from the British Empire and secured independence. But, according to those satellite images I referred to earlier, Pakistan, as opposed to India, is almost completely in darkness. This tells us two critical things: 1) Pakistan is not a strategic competitor for India (China is); and 2) India and Pakistan have made very different choices since Partition. One nation is prospering; one nation is not. The meaning for global security is this: Every single security problem we have in the world -and will have in the future-is in the places where the lights are out. Interestingly, when Christopher Columbus discovered America in 1492, India and China collectively owned 75 percent of the world's gross domestic product. Perhaps what we are witnessing in the twenty-first century, with the emergence of these two superpowers, is simply a natural return to a previous reality.

IB TIMES: What is the rural-urban distribution in the US? At what point did the urban population here exceed its rural population?

LIOTTA: For the last five decades, the U.S. urban versus rural population has held fairly steady at 75 percent urban and 25 percent rural. But, in many ways, this cannot and should not be a basis of comparison for either India or China, both of which are growing rapidly - too rapidly in terms of mega-urbanization. Moreover, much of the United States' population tends toward what is called urban sprawl-where neighborhoods and communities spread out - not move into - cities. Thus, we see the deaths of cities such as Detroit and Flint in Michigan with the concomitant death of the American auto industry as it migrates elsewhere on the global stage.

IB TIMES: Could we see American-type urban sprawl in India?

LIOTTA: No, there is not enough space and land is too precious and too expensive in Mumbai and Delhi. But we are seeing gated communities that represent the simulacra of America's wealthy gated communities, as well as faux Victorian estates now springing up outside of Shanghai and Beijing. Also, during the height of the Cold War, the Eisenhower administration built the American Interstate Federal Highway System, which was actually intended as emergency landing fields for jets returning from nuclear war with the Soviet Union in the event their home airfields and bases were destroyed by incoming nuclear weapons. Although American infrastructure is decaying and has been neglected for decades, this infrastructure capacity is so strong it will last through the twenty-first century. China is working toward building capacity. India, as I stress above, is not - and may suffer permanent damage in the long run for it.

IB TIMES: Economically, how far behind is India compared to China (by years, or whatever other parameter there is).

LIOTTA: Actually, the reverse is true. No one seems to have noticed, but in 2011 India's gross GDP exceeded China's. I am far more optimistic about India's future - not only economically, but overall - than I am about the People's Republic. The PRC cannot simply sustain itself at an expected minimum GDP growth rate of 8.5 percent per annum. The built-in expectation is that should GDP growth in China fall below that level, the Central Committee will take - and indeed, has taken, after the 2008 global financial meltdown - active measures to control the economy. These measures include price controls of the Yuan, which frustrates the U.S. Treasury and international globalization markets, but is a clear protectionist measure on China's part. Any state that considers itself as falling into chaos if its GDP falls below 6 percent GDP per annum is in serious trouble in the long term. And that is precisely the fear that China lives with. India, on the other hand, can get by with beautiful chaos (my invented term.) Despite its major problems as the world's largest democracy - and India's largest problem is inherent corruption at almost every level of bureaucracy, business, and administration - India is nonetheless, the world's largest democracy. Centralized government - especially dictatorships -- are very good at hiding their faults; democracies are very good at exposing their weaknesses. India is already a twenty-first century superpower. Obviously, so is China. But India will grow and prosper. I am not so confident about China's future, despite the dire, fear-filled projections that it will be the world's largest economy by 2015.

IB TIMES: How does India compare to China in terms of literacy and health care?

LIOTTA: China has a superb education system. But India is uneven is its education distribution. In India, Kerala, Tamil Nadu, and Uttar Pradesh are leaders in twenty-first century development, largely because of superb education systems. Gujarat and Bihar might as well be considered as locked in the fifteenth century in terms of education and their complete lack of development. As far as health care goes, China has crushed India. I can say that Socialism - for all its wretched faults - does maintain superb health care systems. When I was sick in Communist Yugoslavia, no matter what time of night or day, I had a family doctor come to me - immediately. That is simply unthinkable in the United States, where health care costs are obscenely high and health care service is obscenely inadequate. When India gave up its Socialist ways under Prime Minister P. V. Narasimha Rao in the early 1990s and privatized and opened its economy to the world and began almost immediately to prosper, it assured its economic and political future. But it also lost its way in terms of health care. With so few Indians actually paying taxes, so many Indians are impoverished and left to die. There is no overall health care system. It is a crime.

IB TIMES: On the one hand, you say India is doomed if it doesn't develop infrastructure quickly enough. On the other hand, you say you're more optimistic about India's future than China's. Do you mean this will happen if and only if India builds up infrastructure? LIOTTA: Yes, pretty much. For example, I was so optimistic about the Commonwealth Games and it proved to be a disaster. I do strongly believe, nonetheless, that in the long run India will win. Despite all her problems, she is a true state and people will have their voice heard. Yes, I'm an optimist.

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