China vs India: why history still matters

From literacy to land reform, the Maoist legacy behind China’s economic lead

‘We are all responsible for sweeping away illiteracy, teaching characters is a glorious duty’ (April, 1958) (Chineseposters.net) 

Discussion of China’s economic success over India focuses on the liberalising policies which began in the 1980s but often ignores legacies from the era of Mao Zedong (1949-1976), perhaps because these challenge western assumptions about growth. Comparing these economies has been popular since 1949, when the creation of the People’s Republic of China (PRC) heralded an experiment in different developmental approaches by the world’s largest nation-states. The gap between them today is commonly explained in terms of Deng Xiaoping’s reforms launched in the 1980s: liberalisation of agriculture, the Special Economic Zones and the subsequent boom in foreign direct investment. But comparing China and India also illustrates the importance of Mao-era legacies in demographics, education, gender and land reform. How far India might replicate China’s economic success has profound implications for debates about the changing international order. But reflecting on this question leads me to two other arguments. Substantively, China’s economic success owes much to the Mao era, despite its horrors. And methodologically, China-India comparison is often a productive way to analyse China and India individually.

Political factors have long motivated China-India comparisons. Particularly in the early Cold War, many Americans desperately hoped democratic India would outperform communist China. And numerous Indians also earnestly expected that postcolonial India would forge a more humane model of Asian development. Today, many compare China and India again, hoping that India may in time balance Chinese power. It is less well-known that Chinese analysts also studied India’s economy in Mao’s time, to test aspects of CCP ideology. However, politics aside, the real methodological value of comparing China and India is that excluding size as a factor allows other explanations to emerge.

In November 2024, an economist at UBS in Hong Kong published an article in the semi-official Chinese magazine, China Reform (中国改革), titled ‘Can India be the next China?’ (印度能否成为下一个中国). The author compared India now with China in 2000 to consider how far India might replicate China’s success as a manufacturing superpower. Good omens included FDI trends, India's more limited state sector and its internal market. Other positives were more qualified, like infrastructure investment, low tariff levels, labour laws and demographics. But by unwittingly drawing my attention to the Mao era the author showed how a China-India lens throws up special insights.

First of all, the PRC’s demographics are closely linked to the Mao period, for good and ill. The article explained that in 2000 China’s population was 1.26 billion with a median age of 29 while India today is at 1.4 billion and 28.2 years. This abundance of cheap labour suggests India has great potential as a manufacturing economy. China’s once rapid population growth was caused by Mao’s policies, when high birth rates were a revolutionary virtue. Post-Mao, the Party adopted the One-Child-Policy as a brutal corrective. China now strains under a rapidly ageing population. By contrast, India’s population has grown less fast and no equivalent handbrake has been applied, so it remains a young society.

A more clearly positive legacy of Mao’s China is gender equality. The China Reform article highlighted this by qualifying India’s demographic advantage. China’s total population in work in 2000 was 720m while today’s India is only 550m. This difference is due to the lower female labour participation rate in India, 32.8% today, while in 2000 in China it was 67.9%. Indian prospects for rapidly expanding manufacturing is therefore heavily constrained by the absence of women in the workforce. So, although feminist historians have critiqued Mao’s China, it certainly outperformed India on gender.

Another positive legacy is literacy. In 2022 adult literacy in India was 76%, while in China in 2000 it was 91%. And the working age population’s average period in education in India is 7.8 years while in China this is 8.4 years. There is a gender dimension to this also. World Bank data shows that female literacy in India today is 70% (85% for men), while in China today it is 95% (98% for men). Naturally, a country with a highly literate workforce better serves a modern manufacturing economy. Under Mao primary education expanded, huge literacy campaigns were undertaken and Chinese characters were simplified making them easier to learn.

The gender literacy gap has been highlighted by Nobel laureate Amartya Sen, who has suggested that the divergence of the Chinese and Indian economies in the reform era rested on human development factors such as primary education, gender equality and healthcare. Such social underpinnings of economic success were noted by Indian observers of Mao’s China. Mesmerised by the mass mobilisation of Chinese labour for development projects they concluded that this popular enthusiasm was due to the liberating social reforms of the era.

This takes us to a final legacy of the Mao era that has shaped China and India’s divergence: land reform. The UBS author explained that Indian infrastructure development is often inhibited by difficulties securing land for new projects. By contrast, a key factor behind China’s rapid growth was the ability of local government to provide this land. Again this recalls Mao. Land reform in the 1950s entirely reshaped Chinese land tenure and established the principle that the State owned all land. Still today, individuals and organisations only have ‘Usage Right’ (使用权) while the state retains ‘Ownership Right’ (所有权) of all land.  Hence appropriation is fairly straightforward. By contrast, Indian leaders envied Beijing’s ability to redistribute land under Mao and, today, property protection slows Indian development.

With current chatter all about an international order in flux, China’s rise, America’s decline, decoupling, de-risking and all the rest of it, India emerges as a central player. But Indian influence on these processes will rely on it reproducing growth at China’s former pace and magnitude. The importance of liberalising policies are well-rehearsed. But taking a China-India comparative lens generates compelling and less conventional insights; in this case, the continuing salience of the Mao era. China’s early growth as a manufacturing power was driven by the massive supply of labour that had resulted from Mao’s pro-natalist stance. But the major demographic challenge now faced is a result of the Party’s traumatising reversal with the One-Child-Policy. However, other differences point to more positive legacies. Better gender equality means China has benefitted from more working women. A higher literacy level has made Chinese workers more productive. And, most confounding of all, the limits on individual property rights left from the Mao era facilitated China’s rapid development of the infrastructure underpinning its manufacturing power.