Winds Of Change

China’s long and chequered journey from "a thousand years of poverty" and feudalism to the phenomenal “opening up” of its economy to the international markets, is what inspired T. K. Bhaumik to compile Old China's New Economy (Sage Publication, 2009). However, in the wake of the ubiquitous financial crisis, that has “engulf(ed) the global economy like flu,” the resurgent Chinese economy is bowed down by the forces of economic meltdown in the West. In an interview with Anjana Saproo, the author talks about China’s role in the current geo-political context, his developing interest the culture of management and entrepreneurship in the country and reposes faith in the power of its people who have realised monumental revolutions throughout history.

There is a fear that if China's economy slows down so will India’s — is this justified?
Not necessarily. There is very little linkage between the two economies except through trade. However, a lot depends on investor’s confidence. If investors lose confidence following the slowdown in Chinese economy, they may be careful about investing in the Indian economy or any emerging market economy for that matter.
 
China was booming in consumer goods. What will they have to do now to cope with the slowdown?
China needs to encourage growth in domestic consumption. So far the economy was highly dependant on the external market. The current slowdown in the emerging market economies and especially in China, once again reveals the risk of excessive dependence on external market. Here, there is a lesson for India as well. It is imperative that we focus on domestic market growth through higher domestic consumption, if we have to achieve sustained high growth and insulate the economy against the impact of external economy.
 
How has the recent ban on Chinese toys and diary products affected the economy? What is your view on how it would affect the ancillary units supplying goods to China?
 Let me tell you that the recent ban is primarily on technical grounds and not due to any other reason. I believe the Chinese authorities themselves are aware of the problem that these products have created health concerns in their domestic markets as well foreign markets. I don’t think there are going to be any serious repercussions on ancillary units anywhere in the world, due to this factor. However, I must point out that China does not sub-contract/ outsource products from India or from any other country for that matter.
 
One place where China succeeded while others failed was when, the country opened to the world economically and not politically. But is this true even today?
Obviously, you open economy and not politics to the outside world. However, as far as I understand, China is increasingly accepting the idea of internal political reform. This would be done in such a way that would soft serve the greater concern of growth with stability.
 
Where do see China's New Economy in the next three years?
I finished the book two years ago. I have said in my book that China would continue to register double digit growth for some more years to come. However, at that time no one could predict that the world economy crisis would unleash and engulf the global economy like a flu. So currently, the economy is in crisis and struggling to maintain 8 per cent growth. Once the crisis is over, the economy may not take much time to bounce back to double digit growth.
 
China's strategic cooperation with Pakistan is disturbing. What, according to you, should be India's stance? How should the Indian government treat this?
We cannot interfere much in one country’s partnership with another. There is nothing wrong in it, though in this case China chooses Pakistan instead of India – it has a historical backdrop of relationships between China and India. I believe, the Indo-Chinese bilateral relationship is consistently improving and don’t think we should let that be hampered by a partnership between China and Pakistan. Both India and China realised that they have a bigger role to play in the global geo-politics and they should be, as they are already doing, promoting and nurturing the role they can play towards mitigating several global issues such as terrorism and other issues. More importantly the two countries can play an important role in pulling the developing economies out of the economic crisis and encouraging meaningful leadership.
 
Can you elaborate on the reason for coming out with a book on the Chinese economy?
I had started writing it in 2005 and finished the manuscript in 2007 Chinese history and development have been always fascinated me for some personal reasons which I have explained in the book. However, what I wanted to tell people through this book is that when the people of China wanted to get out of thousands of years of poverty, there was no stopping them. They were ready to do everything that would free them from shackles of poverty. The Chinese worked very hard. More importantly, they did not want to look up to the government or wait for government. The moment the reform was introduced, they saw the opportunities, realised their potentials and worked very hard. Of course, the government must get the credit for providing people with pragmatic policies and other supports. I felt that these aspects of Chinese economic growth were not adequately appreciated in India.