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What the Olympics tell us about China and India

August 19, 2008

Tarun Khanna
The Economic Times (India)
August 18, 2008

China has pulled out all the stops revitalising and cleaning up
Beijing. This includes building several stadia, sprucing up the roads
and other supporting physical infrastructure, and showcasing new-age
architecture of a sort hitherto unseen on the mainland.

The Mobius-strip shaped CCTV (China Central TV) headquarters, a dome
shaped theatre, among others, coexist with the last and
sadly-diminished remnants of traditional Beijing alleyways, hutongs,
creating a pastiche of the architectural styles of different world cities.

There is a good reason why China can build, or revitalise, cities
overnight, in a manner of speaking, while Indians can't even build
roads. Contrast the convulsions, and (long) elapsed time, that
preceded the construction of a new airport in India's answer to
Silicon Valley, Bangalore, with the speed with which pre-existing
facades have been bulldozed to make way for new in Beijing.

There is a simple principle that governs the equanimity with which
the latter works -- whenever there is a conflict between public
interest and private rights, China tends to adjudicate in favour of
public interest at the expense of private rights, while India opts to
protect private rights even if public interest is compromised. With
apology to V S Naipaul, India is, in this sense, the land of a
million vetoes. Unlike in India, no small group of individuals can
veto physical asset creation in China once the Party apparatus has
decreed a course of action.

Normally, the cost of this equanimity is unseen, because the
disenfranchised melt into the background, sometimes adequately
compensated, usually less so. That such concealment is diminished now
is itself a result of China compromising another of its underlying
principles, that governing information access.

As part of their commitment to the International Olympic Committee,
the authorities promised to allow unprecedented media freedom. Thus
media scrutiny has accompanied the inevitable protests sparked by
Beijing's building boom, highlighting the plight of some of Beijing's
ordinary citizens.

For example, migrant workers, on whose backs Olympic Beijing has been
built in no small measure, have been 'asked' to leave until the event
passes, and, in the years leading up to the August 8 opening, scores
of private property owners have been 'persuaded' to relinquish their property.

Protesters from China's provinces normally gravitate to the Beijing
Petition Office on Justice Road, just east of Changan Avenue, within
walking distance of Tiananmen Square. There is a long tradition in
China of appealing to those higher up in the hierarchy for justice.

To some extent, even in normal non-Olympic times, there is a naïve
faith of those protesting in the system  scarcely 2% of the
petitions are heard, not to mention the scores of petitioners that
local authorities prevent from making it to Beijing. Nonetheless, it
is often ordinary citizens' only succour. Even this has been
curtailed with the provinces urged not to permit protests and those
in the city urged away.

In days of yore, legend has it that Bao Gong, a Song dynasty courtier
was given a golden rod, which authorised him to censor the Emperor.
For the disenfranchised, alas, there is no modern analogy to question
the Party's perception of public interest.

While media access has improved, a measure of the system's difficulty
of departing from its core governing principles is afforded by the
reaction to unanticipated events, the unrest in Tibet and protests by
Sichuan's residents at the poor quality of local construction that
did not stand up adequately to a devastating earthquake.

These events have overtaken the party's zeal to deliver on the
literal version of the promise. China tightened the information
spigot in a knee-jerk reaction to preserve stability. Wending yadao
yiqie  stability overrides anything  is a central belief in the
Chinese government, and as a tool for maintaining stability,
censorship has long been justified and accepted.

So the spectacular physical infrastructure is there because public
interest overrides in importance the private rights that might
militate against its construction, and because information controls
help contain anyone who might protest against rights disenfranchisement.

But China's strengths are not purely about physical infrastructure.
Witness the involvement of the state in nurturing its Olympic
contingent. There is a disciplined focus on amassing gold medals in
the Olympics, economic largesse is visited upon gold medal winners by
the government in myriad ways, and long-range planning is legion.
Again, China's strength is India's weakness.

The Indian state's moribund attempt to nurture athletes is sadly
legendary. India punches far below her weight in most global sports.
The decline of Indian field hockey is but one sad example of this
over the past decades.

The contours of another general principle are clear here as well. It
will fall to the Indian private sector to remedy, at least in part,
the shortfalls of the state. This is apparent in the sport, albeit
not one that is part of the Olympics, that most arouses Indians'
passions, cricket. The recent creation of the IPL (Indian Premier
League) has permitted for the first time, corporate sponsorship of
individual cricket teams that compete head-on for sporting dominance.

This is a far cry from the government-bureaucracy mandated,
slow-moving cricket matches (typically played between the national
teams of cricket-playing countries). Many city teams now are
sponsored by blue-chip companies, Bollywood matinee idols, and public
figures. Prize money has skyrocketed. Flair is in the air.

Over time, the possibility of earning a living from such organised
competition will provide incentives for would-be athletes to invest
in their own human capital to an extent that the Indian state has
failed to do. State oversight is, of course, necessary to prevent
excesses, but, by and large, the shot-in-the-arm provided by the IPL
is rightly perceived to be a success story.

Thus, what the state accomplishes in China, the private sector does in India.

The west's engagement with China and India will be constructive if
based upon an appreciation of the principles on which these societies
are organised. Primacy of the state over the private sector, of
public interest over private rights, and of curtailment of
information when it is perceived by the Party to compromise societal
stability, are deep-seated principles.

India's governing principles are the opposite, a noisier version of
that in the west. China's differ from those in the west, and so cause
understandable angst, but the first step to dealing with them is comprehension.

(The author is the Jorge Paulo Lemann Professor at Harvard Business
School and the author of "Billions of Entrepreneurs: How China and
India are Reshaping their Futures and Yours")
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