Successful rivals

When Tarun Khanna arrived in Princeton in September 1984, he was a curiosity. None of his first-year room-mates could locate India on the world map. One thought it was "right by Arabia", a remark that made Khanna retire to his bunk bed in tears.

Written in first person, this book, despite its expansive subject, is intensely personal, making it stand out in this season of books that bracket India and China together. In addition, Khanna's book presents the two countries as distinct, so distinct that they could be "mirror images" of each other. He has taken care to avoid the term Chindia, whose use is becoming increasingly liberal, notably by Jagdish Sheth in his Chindia Rising.

Khanna has for long been of the view that the two countries, while similar in growth and clout, present and future, are progressing on their own unique paths. In a 2003 article written jointly with Yasheng Huang, he argued that India's domestic corporate sector, strengthened by the country's rule of law, democracy and relatively healthy financial system, was a source of substantial competitive advantage over China.

At that time, the notion was greeted with reactions that were less than charitable. Two years later, things had changed as India's economy entered a boom phase with just half of China's level of domestic investment in new factories and equipment, and only 10 per cent of China's foreign direct investment. Clearly, China's growth was triggered by massive accumulation of resources, while India's came from increasing efficiency.

One cannot call this book entirely original. The India-China story has been told and retold so many times that it is difficult to imagine a book about them being entirely original. But Khanna's approach is entirely refreshing.

The distinction theme runs through the book as it addresses a series of questions that may have occurred to many of us from time to time but we may not have addressed them with Khanna's gift of articulation, or his determination.

Why can China build cities overnight while Indians have trouble building roads? (Those despairing over Mumbai's avowed ambition to match Shanghai will find consonance here.) Why does China prohibit free elections while Indians, in free and fair elections, vote in officials with criminal records? Why do the Chinese like their brethren who settle overseas while Indians apparently do not? Why are many Chinese so unhealthy, but healthier than Indians? Why are there so few world-class indigenous private companies from mainland China despite the creation of a juggernaut of an economy? Why has China out-muscled India in their common backyard? Why has China "Indianised" in the past while India has shunned China? Why do the Chinese welcome Indians to China but Indians do not reciprocate?

Conscious of his India-born status, Khanna has been fierce in his effort to be objective, avoiding the bias "" bordering on jingoism "" that sometimes invades India-China debates. Half the book shows China doing a better job than India, but that cannot be by design. As seen in numbers, that is pretty much the case.

Where India is doing better is presented in all its pomp. Khanna compares TCL, a mass manufacturer of consumer electronics, seen in India as a maker of cheap television sets, with Infosys, which pioneered software offshoring. "In China, entrepreneurship occurs in the shadow of the efficient state ... In India entrepreneurs thrive primarily, or even exclusively, in the interstices inadvertently left untouched by the socialist state... While both TCL and Infosys have tried to go global, TCL and many other Chinese companies have faltered, betraying a misunderstanding of how markets work and inexperience on the global stage. Infosys and other Indian companies, proceed differently, working within the market and with a fuller understanding of international commerce."

Khanna, as he recounts his interaction with a Beijing rickshaw driver humming the Hindi words of "Awaara Hoon", characterises China as a country adept at using "hard power" and its global expansion the "result of premeditated and orchestrated state policy". India's influence, by contrast, "has largely been achieved through soft power": Bollywood, software, spiritual gurus and broader intellectual tradition.

There is another theme in the book that runs as an undercurrent. Reading the book, one can't help feeling Khanna's triumphant glee as he talks of the rise of India and China. Perhaps, at some level, he is still putting together a repartee to his Princeton roommates.

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BILLIONS OF ENTREPRENEURS
HOW CHINA AND INDIA ARE RESHAPING THEIR FUTURES AND YOURS

Tarun Khanna
Penguin/Viking
Rs 595; Pages: 353