China’s western development programme was launched with great fanfare
in 2000. It covers eleven administrative units: the five autonomous
regions of Inner Mongolia, Tibet, Guangxi, Xinjiang and Ningxia, the
five provinces of of Gansu, Guizhou, Shanxi, Sichuan and Yunnan and
the Chongqing municipality. These all together account for something
line 70% of the land area of the country but for less than a third of
the population. These provinces are resource-rich and like the autonomous
regions are home to China’s numerous ethnic minorities. The focus in
the programme is infrastructure and some of the more visible of the
projects include the Qinghai-Lhasa railway and the west-east natural
gas pipeline to exploit Xinjiang’s rich hydrocarbon reserves.

According to an IMF study Centripetal Forces in China’s Economic Take-off
by Anuradha Dayal-Gulati and Aasim Husain published in May 2000 “after
declining in the late 1970s and 1980s, the dispersion of provincial
per capita incomes has increased steadily”. They estimate that
in 1978 real per capita income in the richest province was around nine
times that of the poorest; by 1997 the multiple had risen to over eleven.
When economic reforms were first launched by Deng Xiaoping, barring
perhaps Shanghai the more advanced provinces of China were in its northeast,
the region much like our own eastern region that received significant
doses of public sector investment in coal and steel-based industries
in the 1950s and the 1960s. But in two decades time, China’s coastal
provinces of Shandong, Guangdong, Fujian, Jiangsu, Zhejiang and Hainan
along with the city-province of Shanghai surged ahead on the backs of
foreign investment (largely from near-by Hong Kong and Taiwan), exports
and the growth of township and village enterprises (TVEs) that ensured
diffusion of prosperity within the regions. In India, when we talk about
China we automatically think of foreign investment and foreign trade.
But the role of the TVEs has been equally crucial and they contrast
with our own failed subsidy-based, protection-driven, scale-hampered,
investment-starved rural industrialization efforts carried out in a
romantic Gandhian framework.

Regional disparities in India take on a different meaning. In China,
even in the poor regions, real per capita incomes have increased by
5-7% compound per year over the past twenty years as compared to between
1-2% in states like Assam, Bihar, Orissa and UP. While regional disparities
persisted during 1950-1990 in the heyday of the planning era and in
some cases, paradoxically, even increased, the dispersion of real per
capita incomes went up in the 1990s. The decade of the nineties brought
them into sharper focus and in some cases accentuated them. But the
normal perception that poor states became poorer and rich states became
richer is not entirely true. This conclusion has to be nuanced somewhat.
Punjab’s compound annual growth rate decelerated from 5.7% in the 1980s
to 4.9% in the 1990s. Haryana took an even steeper fall from 6.1% to
4.7%. Among the poorer states, Madhya Pradesh improved its performance
from 4.2% to 5.4%. In India, the real per capita income of the richest
state is about six times that of the poorest state. That is because
there is really no state in India that can match China’s growth performance.

Even after accounting for exaggeration, real per capita incomes in the
coastal provinces of China have increased by anywhere between 7-8% per
year for 20 years which means a quadrupling. In India, by contrast,
real per capita income in Gujarat and Maharashtra, our two most dynamic
states, have increased by 4-5% per year. Goa is perhaps the only state
to have Chinese-type growth numbers in the 1990s but it hardly conveys
the image of a booming region. Relative rankings have been more stable
in India than in China although West Bengal’s rank has come down sharply
much like China’s northeast and Tamil Nadu, Andhra Pradesh and Karnataka
have all improved their positions, Tamil Nadu most dramatically from
number 11 three decades back to number five now. But even here, you
don’t get a feel of a boom-perhaps because urban renewal does not take
place as spectacularly in this country as in China. The national bird
of any booming economy, it is said, is a crane. But construction technology
in this country is such tbhat cranes are hardly visible in our cities!

China’s western development programme is of more than academic interest
to India. Historically, this region of China was traversed by the famous
Silk Route that led to enormous cultural, economic and technological
cross-fertilisation between the Indic and Sinic civilizations in which,
it is largely forgotten that Kashmir has played a crucial role. But
more than history, the improvement of connectivity to provinces like
Tibet, Yunnan and Sichuan will boost Sino-Indian trade. The Chinese
have also been pushing the so-called “Kunming Initiative”
named after the Yunnanese capital. This envisages investment and trade
cooperation between Yunnan, Bangladesh, Myanmar and India’s northeast.
This initiative has meandered along for two-three years not the least
because of lukewarm support from the Indian establishment suspicious
of Chinese motives. What is unusual about this move is the keen interest
being evinced by the province of Yunnan.

What will happen if sub-regional cooperation is fostered? India’s northeast
cannot develop except in a regional context. Even Bihar and UP need
closer cooperation with Nepal on water management. Three years ago,
India too came up with its grand Ganga-Mekong project to promote a broad
range of cooperation in that region involving India, Myanmar, Thailand,
Laos, Cambodia and Vietnam. How this will work leaving out China through
which the Mekong runs and Bangladesh where the Ganges ends is a separate
issue. But lofty announcements have to be backed by money allocations
and expenditures on specific projects particularly in infrastructure
like roads and highways. This has yet to materialize.