By throwing money at Nepal, China limiting India's influence in the region

China can spread a lot of largesse, but India offers its neighbours a valuable ideal that Beijing can't

If things go as planned, one day soon Chinese trains will pull into Kathmandu, Nepal, on a new railroad built to lessen the landlocked Himalayan country’s dependence on India.

The proposed China-Nepal railroad, among a clutch of infrastructure deals signed by Prime Minister Khadga Prasad Sharma Oli in Beijing last week, underscores a new geopolitical reality. China’s ambitious Belt and Road Initiative is extending Beijing’s influence deep inside countries that India sees as part of its sphere of influence. From railroads in Nepal to ports in Sri Lanka to an airport in the Maldives, China’s growing infrastructure footprint is impossible to miss.

For those who look to India as a better example than authoritarian China for smaller developing countries to follow, there’s a deeper message: It’s time to acknowledge that in raw economic terms China has comprehensively outpaced India. If winning regional influence depends on building ports and railroads abroad, or dazzling visitors with skyscrapers and broad boulevards at home, then India’s prospects look bleak.

Compared with China, however, India remains a bastion of free speech, minority rights and judicial independence. New Delhi ought to play to these traditional strengths by deepening them.

Prime Minister Narendra Modi may not have as much largess to spread as President Xi Jinping, but at least the Indian leader doesn’t fear a honey-loving cartoon bear. On Monday, China blocked HBO.com after comedian John Oliver ran a segment that discussed Mr Xi’s alleged touchiness about his purported resemblance to Winnie the Pooh.

In the economic race between Asia’s two largest countries, it wasn’t always a certainty that China would pull ahead. According to the World Bank, as recently as 1990 India’s per capita income ($364) was higher than China’s ($318). Paradoxically, China’s communists unleashed market forces more effectively than their democratically elected counterparts in India.

Four years ago, Mr Modi looked set to enact the sweeping reforms India needs to eradicate poverty and catch up with China. But despite a few successes, such as a national goods and services tax and a bankruptcy law that makes it easier to exit a failed business, the Indian prime minister disappointed. He more resembles his lackluster socialist predecessors than a market-friendly East Asian leader.

India’s archaic labor laws suppress job growth by making it extremely hard to fire workers during a downturn. Politicians across party lines treat a bloated public sector as the spoils of office. The loan pipeline in a largely state-owned banking sector remains clogged, in part because of decisions made for political rather than commercial reasons.

With a per capita income of $8,100, the average Chinese is nearly five times as rich as the average Indian. The gap has widened over the past 10 years.

On most aspects of national achievement—from Olympic medals to number of Fortune 500 companies—the contest is not even close. According to the Skyscraper Center, 48 of the world’s 100 tallest buildings are in China. None are in India.

Some of Mr Modi’s critics exaggerate his allegedly authoritarian bent, drawing comparisons with Turkey and Russia that do not bear scrutiny. But while Recep Tayyip Erdogan and Vladimir Putin would likely pity the Indian prime minister for his meager powers, these concerns are not misplaced. While he mouths the usual platitudes about democracy, Mr Modi shows few signs of believing that it is one of India’s greatest strengths.

Mr Modi’s fans laud his stoicism in the face of countless barbs from cartoonists, commentators and Twitter warriors. But the ruling Bharatiya has earned a reputation for intimidating reporters with massive lawsuits, pressuring media barons to sack unfriendly editors, and using lap-dog television channels and a vicious troll army to smear political opponents.

India’s constitution guarantees religious freedom, but Mr Modi often remains distressingly silent when Hindu mobs lynch innocent Muslims on suspicion of killing a cow.

As in any democracy, India’s judiciary jealously guards its independence. In May the Supreme Court effectively quashed the BJP’s bid for power in the southern state of Karnataka by speeding up a vote to establish a majority in the state legislature. But the government has taken to stalling the appointment of senior judges it does not approve of, raising fears that it will chip away at judicial autonomy.

A well-functioning democracy is obviously good for India’s 1.3 billion people. Eroding it also hurts India’s ability to offer its neighborhood, by way of example, something valuable that China cannot.