Twenty years ago, India, not China, was the object of my absolute and total focus. Back then, I was living in London and working as a European bureau chief for Forbes Magazine. In May 1994, a story I co-wrote called "Now We Are Our Own Masters" appeared on the cover of Forbes (click here to read the article). It was the first time a big American magazine took the risk to suggest India, after so many years of pathetic growth, famine and unending poverty, was ready for an economic take-off. It turned out to be a smart call. Since then, India's economy has surged, growing seven-fold while poverty has declined steeply.
I spent about a month in India researching the article, meeting with political and business leaders. It was my third trip to the country. The first had been in 1978, as a young backpacking college student, on my way back to the US from a summer in Taiwan studying Mandarin. The two most vivid memories of that first trip - nearly dying from untreated amoebic dysentery, and hiding out for days in a place called Aurangabad as masses of Indian men rioted on the streets against the forced sterilization policy of India Gandhi. (Life lesson learned at 19: political popularity will be short-lived wherever a leader orders men at gunpoint to undergo genital surgery.)
It took another three years before I first set foot in China. On a lot of levels, the two countries struck me then as similar back then, both in the extent of the obvious poverty as well as the shared disappointment some thirty years after each had gained full independence as socialist states under charismatic intellectual leaders, Jawarhalal Nehru in India and Mao Zedong in China.
China began its reform process a decade earlier than India. I caught the first stirrings in 1981. When I went to India in 1994 for the Forbes article, it still seemed plausible India might one day emerge as the larger, more vibrant of the two economies. China had suffered a sharp setback in 1989, during the Tianmen Square Protests of 1989, an event I witnessed first-hand in Beijing. At the same time, India had begun at last to liberalize and energize its over-regulated and inefficient state-run economy.
While India's growth has since surpassed my optimistic hopes in 1994, I firmly believe it will never rival China. This chart below shows how far the gap between the two has grown. Since 1994, China has all but left India behind in its tailpipe exhaust.
In per capita PPP terms, China is now almost 2.5 times wealthier than India. Year by year, the gap grows, as China's GDP expands faster than India's, while India's birth rate is now almost triple China's.
I haven't been back to India since 1994. I have no doubt it's changed out of all recognition. Changed for the better. Poverty is down. Exports are way up. It's biggest misfortune may be having to compete for capital, and for attention, with China.
Living full-time and working in China now for more than four years, I'm more impressed than ever how superbly China is engineered for rising prosperity. The comparisons I read between India and China generally give a lot of weight to the difference in political systems, between India's raucous federal democracy with dozens of parties and China's one-party centralized rule. The indisputable conclusion: sound economic policies are easier in China to design and execute.
The few times I've been asked to contrast the two countries, I prefer to focus on their most valuable long-term assets. India has English. China has Confucius.
India doesn't out-compete China in too many industries. But, in two of these - pharmaceuticals and computer software - English is probably the main reason. India's educated population is basically native fluent in the language. China has tried to make more of a game of it, especially in computer software and services. But, China is now and will likely remain an bit player in these two large, global high-margin industries.
India also has, overall, a more innovative financial services industry. This isn't really the result of widespread English, but the fact that India has a more open financial and currency system than China's.
Both nations benefit from having large diasporas. In India's case, it's a huge source of cash, with remittances of over $65 billion a year, equal to 4% of GDP. In China, the benefits are as much in kind as in cash. Companies owned or managed by ethnic Chinese from Southeast Asia, Hong Kong, Taiwan and the US have been large corporate investors in China, with the capital matched by transfer of technologies and manufacturing know-how. This is an ever-renewing remittance, as money pours in each year to finance projects with solid long-term rates of return.
China's trump card, though, is its Confucian value system. Its potency as an economic force is amply demonstrated by the affluence of China's Confucian neighbors, not just Hong Kong, Singapore and Taiwan, but South Korea and Japan. Its impact is measurable as well in the outsized economic clout of Chinese immigrants in Thailand, Philippines, Indonesia. Free market capitalism and Confucianism. Anywhere in the world you find sustained economic success and rising prosperity, you will find at least one. In China, they are entwined in a kind of ideal synthesis.
India, too, has close-knit families and a tradition of thrift and obedience. Confucianism adds to these a reverence for education and practical problem-solving. It contains nothing transcendent, not much, if any, spiritual guidance for a soul-searcher make sense of his place in the cosmos. Honor your ancestors with burnt offerings, sweep their graves at least once-a-year and they'll grease the wheels of success in this life.
The Confucian system hasn't changed much for two thousand years. One vital adaptation over the last century, though, was to accept that women could, and should, play an active role outside the house, reaching the same educational level as men and joining the workforce in equal numbers. Here, India is woefully far behind. China's growth has been on steroids these past twenty years because its 650 million women have contributed exponentially more to economic growth and prosperity than India's.
Of the couple hundred stories I wrote while at Forbes, I'm probably proudest of this India cover story published twenty years ago. It may not seem like it now, but it was a gamble to suggest back then under my byline India was about to come out of its long economic coma. Imagine if instead I'd gone on the record 20 years ago to forecast the coming economic miracle in Russia, Mexico or South Africa - all countries back then seen by some to be "the next great emerging market". I heard afterward the article helped generate more interest in India's economic reforms and ultimately more investment in India by US multinationals. This grew about 30-fold in the ten years after the article appeared.
On a personal level, I made a larger, and I think even safer bet with my own professional life, to move to China and start a business here. Yes, India has English. I work every day in an alien tongue and in a culture steeped in Confucian values that play little or no part in my own ethical code. But, China was, is and shall long remain the great economic success story of all-time. I don't need someone else's magazine cover story to tell me that. I live it every day.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.