The secret sauce of the China-India rivalry is education

By Andy Mukherjee

The world’s two most-populous nations began to open up to the world around the same time, in the early 1990s. But while both grew rapidly and pulled hundreds of millions of people out of poverty, China’s per capita income is now more than double India’s, when their currencies are adjusted for their true purchasing power. What’s behind the divergence?

Beijing and New Delhi pursued quite separate paths to globalization. One set its sights on becoming the world’s factory, starting with toys and electronics, and moving on to electric cars and semiconductors. The other emphasized services like computer software. Their population structures were dissimilar, too. A one-child policy gave rise to a pronounced youth bulge and brought China to the brink of rich-country status before it started turning old. India’s demographic destiny is playing out now, though minus the jobs to absorb surplus farm labor.

And then there are differences in political institutions. China’s is a single-party state, while India is a messy, multiparty, electoral democracy.

This is the conventional narrative. But what if there was a more fundamental force operating beneath the surface, a sharp departure in the long history of how the two nations embraced modern education? That’s the thesis of The Making of China and India in 21st Century, a new paper by Nitin Kumar Bharti and Li Yang. The scholars at the Paris School of Economics’ World Inequality Lab have pored over official reports and yearbooks going back to 1900 to make a database of who studied what in the two countries, for how long, and what was taught to them. The different courses charted by China and India for the last 100 years may have led to striking outcomes for human capital and productivity.

Here’s what Bharti and Yang found. Thanks to a 50-year head-start in exposure to Western learning, India had a student population that was eight times bigger than China’s at the turn of the 20th century. China began to catch up only after the abolition of the imperial examination system in 1905 bid farewell to Confucianism. By the 1930s, it had achieved parity with India’s overall enrolment.

In the 1950s, the newly formed People’s Republic kept up a steady pace of expansion, not even allowing the Cultural Revolution (1966-1976) to come in the way of secondary schooling. Where the chaotic decade extracted a heavy price was in undergraduate education. In the early 1980s, India’s college enrollment ratio was five times higher than China’s. By 2020, however, the story had changed: China was sending a far bigger share of its university-age cohort to tertiary institutions than India.

The different trajectories have their roots in history. China’s late-19th-century Qing dynasty rulers wanted manpower with vocational skills to handle military-related production. By contrast, India’s British colonial masters had little interest in creating a manufacturing base. So they seeded the education system with a bias for producing clerks and junior administrators. Only the more affluent sections of the society had access to government jobs, and to the education required to land them. After independence in 1947, India doubled down on tertiary institutions, investing in elite colleges at the expense of basic reading and math skills.

The decision to emphasize tertiary education was a top-down choice for India, where half the individuals born in the 1960s were likely to remain illiterate, compared with 10 per cent in China, according to the Bharti-Yang study. Most school-age Indian kids dropped out quickly (if they even started), either because nobody came to their villages to teach, or because more hands were needed to augment the family labor pool. A bottom-up strategy involves giving a large number of young pupils five years of learning, then enabling an increasingly bigger subset of them to attend high schools for a total of 12 years of instruction — before opening pathways to 16 years of education. This is what China chose.

An even more stark finding of the study is about college majors. Historically, India has had a preponderance of social-science graduates at the bachelor’s degree level. In China, however, the overrepresentation of humanities, law and business began to ebb as early as the 1930s as more undergraduates got trained as teachers, scientists, engineers, doctors and farming experts.

Credit: Bloomberg

This might have had a bearing on growth. As a 1991 paper by Kevin Murphy, Andrei Shleifer, and Robert Vishny has shown, a country that wants to expand faster needs more engineers than lawyers. (Law and economics have seen a revival in China after economic reforms created new demand for human capital in these areas.)

The common view, particularly in the US, is that India is the “land of engineers.” It’s true that many tech-industry founders and chief executives, including the CEOs of Microsoft Corp. and Alphabet Inc., were born and educated in India. But the huge expansion of its high-speed train network — or the sophistication of its EVs — shows that Bharti and Yang may have zeroed in on an often-overlooked source of China’s competitiveness. “China’s higher share of engineering and vocational graduates, combined with a higher share of primary and secondary graduates, lends itself more readily to a focus on manufacturing,” the authors say.

Deng Xiaoping’s 1992 tour of southern China signaled Beijing’s willingness to engage with capital from the West, while retaining the primacy of the Communist Party. Just a few months earlier, Manmohan Singh, then the new Indian finance minister, too, had made a decisive break from decades of Soviet-inspired socialism and isolationism. India, he said, was going to be a major economic actor. “No power on earth can stop an idea whose time has come,” Singh said, invoking Victor Hugo.

The residues of history, however, are often hard to brush off. The top-down, elitist bias that the British put into India’s education has carried over. One final finding in the Bharti-Yang paper proves the point: In 1976, China had 160 million people who had missed out on regular schooling in adult education programs, compared with just 1 million in India. The progeny of those 159 million extra minds to whom China gave literacy and numeracy may have played more than a small role in beating India at growth.