Examining the Regional Imbalance in China: Comparison with India

Abstract

In the ninth chapter of this volume, the author carries out a cross-country analysis of India and China, the two giants of Asia. Having several common issues and threats between India and China, such comparative analyses can meaningfully provide inputs to India’s policy process. It is being argued that in the post-reform periods, both the nations have been facing very high regional disparity in their development. The socio-economic costs of a sustained divergence in income between their leading and backward regions have become a major policy challenge in development. The chapter therefore is significant, and explicitly highlights how regional imbalance in China has remained conspicuous, notwithstanding a conscious shift in development strategy towards balanced growth for several years. In spite of extensive state efforts to increase investment in the backward regions, economic activity remains sluggish in these regions, constraining growth of new income generating and earning opportunities. The author shows a clear comparative advantage in production in coastal areas. Specific development strategies are not easy, given that the Chinese economy has become far more market-oriented and globally integrated than what it was during the early years of economic transition. Under the current circumstances, state efforts and emphasis are not eliciting the desired response from the market forces. Furthermore, regional development strategies like the Go West, and the Western Development Strategy are producing partial outcomes that are accentuating intra-regional disparities and aggravating overall imbalance by expanding rural-urban differentials. This according to the author is an important lesson for India and other emerging economies that are also grappling with the challenge of regional imbalance.