OCTOBER 16, 2000 VOL. 156 NO. 15

Where Chaos is King
What gives India the high-tech edge over China? Its unruliness
By PHILIP BOWRING

ALSO
The Great Web Bonanza: India has unexpectedly and unintentionally found a future through the Internet, one fueled by the largest pool of engineering talent in the developing world
Wave of the Future: Villages get hooked up
Interview: "Our Net revolution is here to stay"

ALSO IN TIME COVER: The Great Web Bonanza India has unexpectedly and unintentionally found a future through the Internet, one fueled by the largest pool of engineering talent in the developing world • Wave of the Future: Villages get hooked up • Interview: "Our Net revolution is here to stay" • Viewpoint: Why India, not China, is a high-tech whiz TAIWAN: Rookie Mistakes The resignation of Premier Tang Fei highlights the fragility of Chen Shui-bian's young and still fumbling administration THAILAND: Back to the Brink Changing sexual habits and a decline in funds for AIDS prevention is leading to a dangerous rebound in HIV rates • Burma: The generals battle the disease by lying about it MALAYSIA: All the News That's Fit to Surf Stymied by the nation's traditional, conservative press, more and more readers are going online for information CINEMA: In the Mood for Wong Kar-wai Fifteen months in the making, the Hong Kong director's latest film leaves viewers both delighted and mystified • On Location: A long night on the wild side BOOKS: A Walk on the Wild Side An entertaining biography examines the man who has chronicled Bangkok and its sex scene for 35 years TRAVEL WATCH: Check into the past at one of Asia's Grand Hotels

How in the world did India surpass China in leading-edge technology? The Chinese would seem to have every advantage. Consider each nation's performance at the Olympics: China finished No. 3 in the overall medal table, while India, with its 1 billion people, could muster only a single bronze. Or compare Shanghai, glorying in its highways, high-rise buildings and new airport, with Bombay, overburdened with its beggars, woeful infrastructure and crumbling edifices. Compare, too, India's high-tech mecca, Bangalore, a cool and pleasant city but with an old-fashioned and almost colonial air, with Shenzhen, the shiny, bustling and unruly new city and would-be technology center across the border from Hong Kong.

How, then, to answer the riddle? One explanation may be the Indian Elite's familiarity with English, the language of the Web and technology. Another might be the large Indian migrant communities in the West, especially North America, who excel in education and entrepreneurship and have learned how to profit from linking new knowledge to the old country. But these are only partial explanations. Taiwan and South Korea, which are far ahead of the rest of Asia (outside of Japan) in Internet use, lack widespread familiarity with English. As for China, it has been sending tens of thousands of students each year to the West since 1978, while being able to draw on Taiwan and Hong Kong expertise in its IT industries. For the past two decades it has encouraged private business and joint ventures with foreigners. These have generated a great deal of industrial activity. But invention? World-class companies? Even passably efficient local concerns? The record is not good.

Let's return to the Olympics. China appears to have inherited the East German mantle, using force-fed, massively financed sports academies concentrating on medal-rich events to make winning a focus of national pride and proof of the system's success. Xenophobia plus communism makes a powerful sporting force. India, on the other hand, with its chaotic but pluralistic political system and weak central government, has neither the money, the will nor the competence to achieve official sports success. If India can (rarely these days) win at cricket, that's fine. But academies of weight lifting, badminton, gymnastics, diving? Forget it. India's hands-off approach to sport is akin to that of many rich and technologically advanced countries. How many medals for Taiwan? Or Denmark? As for a free and united Germany, it finished far down the list of winners at Sydney.

Consider, again, the cities. Shanghai's excellent roads and high-rise offices are largely a product of central government subsidies and grossly inefficient investment by loss-making state enterprises. Its streets are beggarless because the authorities keep strict control on residency rights, excluding the great unwashed from the interior provinces who are accustomed to incomes a fraction of those of the residents of Shanghai. In India, the rural poor are free to move around their own country, even when that inconveniences the established residents of Bombay.

So just as peasants from Bihar can get a foothold up the ladder, so Indians with talent can start almost any kind of small business without much fuss. Yes, as in any other nation, there are corrupt bureaucrats and vested interests. There are also the obstacles of caste, absent in China. But India's brand of socialism runs only skin deep and applies mainly to big national enterprises. In China, while the ideology and ethics of socialism are in steep decline, the political structure that binds the Communist Party to the economy (and party leaders to enterprise heads) is still intact. So, too, is a fear of another IT essential: the free flow of ideas.

The result is that China is capable of delivering results which, like the Olympics, require official organization and direction—such as the roads, dams and power stations that in India are ever delayed by legal and political squabbles and bureaucratic inertia. In India the business-politics link is much looser, and the power of the state minimal. Entrepreneurs have more scope to do their own thing, whether wiring villages with pirated cable TV systems, setting up a software outfit in Bangalore or running a phone-answering business in Delhi to serve card holders in, say, Denver.

China may yet capitalize on its fascination with the Web and spawn a world-class software industry. It has many potential New Economy assets. Incomes, especially in the cities, are far higher than in India, which means more citizens can afford PCs. China enjoys a greater phone density, especially in mobiles, and is united by a single language—albeit one that isn't ideal for the Web—which India, with its mix of English, Hindi, Tamil and others, lacks. But for now India's weaknesses—"a million mutinies now," to use V.S. Naipaul's words—are its strengths. China's centralized organizational muscle is its weakness.

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