Eastern promise: how China and India are balancing out Westernisation

The status quo of Western innovation and Eastern delivery is rapidly crumbling, with the balance likely to shift towards the East in the next few decades. Ian Clover looks at the infrastructural implications this transformation will have on Asia’s future powerbrokers.

Paper and mathematics are pretty much the perfect partners. While schoolchildren might bemoan the existence of the latter and defamate the functionality of the former with absent-minded doodlings and hilariously juvenile name-calling, both inventions have been instrumental in shaping the world around us. Sure, today's technophile might be more reliant on his smartphone, Wi-Fi connection and beloved iPad in order to function in this modern, fast-paced society of ours, but the foundations of such human civilisation owe much to the discovery that pulped, dried and flattened wood was easy to write on; and that the study of quantity, structure, space and change that defines mathematics could help humans grasp how the world works.

Both of these epoch-defining discoveries were made in Asia - the Chinese invented paper (as well as printing and explosives), while the Indians were the first to truly lay the foundations for mathematical theory. And as any engineer worth their salt knows, infrastructural integrity relies on mathematical know-how, while creativity stems from the mind, down to the hand and - finally - out on to a blank canvas; invariably one of paper.

Asia has a rich history of invention, innovation, integrity and enlightenment. The region has delivered to the world a rich tapestry of products, philosophies, services and theories. But if one is to adopt the accepted global lexicon of the current world order, they do China and India a gross disservice while doing so.

For China and India are countries of the East; Asian nations that are not near, nor middle, but far. They are in the Far East - far from enlightenment, far from civilisation, far from the centre of the world, or rather the 'West'. Globalisation dictates that much of the world is now becoming 'westernised', but to label Asia as part of this westernisation is not only insulting; it's entirely inaccurate. Because if the entire globe can be westernised, where does the line then lie between west and east? A line that was drawn by European and American scientists; safely stowed centuries ago in settled cities engorged on the natural resources pilfered from the 'East'; expanding upon ideas and innovations that owed their foundations to Asia, and endlessly patronising this great portion of the world that was methodically labelled as lesser and unworthy.

This has been happening since the end of the 17th century, around about the time that Europe got its act together and North America began sucking on the resource-rich teat of vast, empty wilderness and possibility that characterised the primordial landscape that lay before it.

That's history for you. It has already happened. The world order has been shaped, and serendipity has been the key driver behind the West's disproportionate slice of the earth's power. But while the terminology that underpins the current world order has been cemented and is unlikely to change any time soon, the pillars of progress are - increasingly - transient. We are entering an age where eyes do not look immediately west for innovation, for inspiration or for energetic discovery and decision-making.

Economically, China has long been something of a powerhouse, but its continued development has been stymied by political oppression and an enforced lack of social cohesion. India, too, has always boasted plenty of natural resources and potential manpower, but has been bedevilled by pluralism, weak governance and a lack of unity. After all, the 'country' was only created once the British realised they could no longer exert their influence over the area for much longer once Mahatma Gandhi had opened the people's eyes to the unlawful and unethical oppression being exerted by India's 'betters'.

Over the past couple of decades, there has been a more tangible balancing of power between East and West, and the future threatens to tip that balance into the favour of the East once more. Research by the European Commission predicts that China and India will account for 20 percent of all global R&D by 2025, so as the world of innovation becomes more egalitarian, how will China and India cope with the level of interest, investment and innovation that will soon be lighting up Shanghai rather than Silicon Valley, and Mumbai rather than Munich?

Immediate infrastructural shortcomings

China's tumultuous history is far too voluminous to cover here. Suffice to say, decades and centuries have come and gone under various ruling dynasties, and it has been normal practice for any new emperor to wipe out as many remnants and reminders of previous dynasties as possible. Hence, the Chinese are auto-fitted with an innate aversion to old structures.

The Cultural Revolution was marked by the destruction of hundreds of old temples and palaces, while today's cities are ever-changing patchworks of new buildings, condemned structures and fresh blueprints for future follies. China is building more than two billion square metres of new property every year, getting through some 40 percent of the world's cement and steel in the process. These new buildings will have an average lifespan of just 30 years before being torn down again - not necessarily because they have been poorly built, but rather because China's collective mindset seeks to unhook itself from the past at every opportunity.

As a result of this mindset, China's construction industry is growing at 18 percent a year, and in 2008 received a $586 billion stimulus boost from the government. However, opportunistic developers are in fact seizing this opportunity to construct low-quality buildings, where profit and proliferation trump safety and longevity. In the 2008 Sichuan earthquake, 5,335 students were killed across the province due to the collective collapse of many recently built schools. In Shanghai in 2009, a construction worker was killed when a nearly complete residential tower simply toppled over. This new-trumping-old mindset is not necessarily a bad thing so long as developers build their projects to last; otherwise, China can instigate all the technical revolutions and R&D it likes, but if its hardcore infrastructure is unreliable, the country will remain hamstrung on a global scale.

"China wants this shift to happen, desperately," an official European Commission source told Asia Infrastructure. "It is a shift that will happen, initially because China is increasing the quality of its engineers. There is also a shift in the amount of investment in research China funds - it has increased from 1.44 percent of GDP in 2005 to 2.5 percent in 2010. And this figure is only going to increase. Right now, the Chinese do not need Europe's money - they need its technology."

Figures from the European Commission show that Foreign Direct Investment (FDI) in China has fallen sharply, by 13 percent, since 2006. During the same period, total investment has increased by 30 percent. Money is being poured into the country's infrastructure, but it's not foreign money.

In India, infrastructural shortcomings have held back the country's economic progress for decades, but the thirst for better roads, better rail, better air and seaports and a more reliable power supply is driving nationwide private and public investment in India's infrastructure.

Between 2007 and 2012, India's government will have spent $500 billion on the country's infrastructure, with TIME Magazine reporting an estimated £1 trillion of private money to follow in the five years after that. India's rate of growth has hovered around the eight percent mark for the past few years, and the widespread belief is that such investment in infrastructure will finally push it into the double-digits.

The private sector will fund the bulk of this growth, catalysing a period of energy and full-scale investment that will, according to industry experts, evoke memories of America's 19th century gold rush: an era in history that was characterised by optimism and opportunity, but also breakneck risk-taking, unchecked greed and perpetual conflict.

Such a scenario in India could create an undesirable infrastructural environment for the country. With private investors and developers chasing the big bucks in India's hardcore infrastructure - toll roads, power plants, rail networks and gleaming high-rise buildings - there is a danger that the country's much-needed 'softer' infrastructure (better schools, more hospitals, open spaces, sustainable energy, social and commercial ventures) will be overlooked or poorly implemented, creating a potentially volatile imbalance in India's societal makeup.

"Currently, India is lacking in hardcore infrastructure," says Dinesh Saparamadu, Chairman of SLASSCOM, a Sri Lanka-based IT and BPO enterprise. "The country's telecom infrastructure is very advanced; there are areas of high broadband penetration and high-tech industries have received good investment, but the current situation is imbalanced. Transport networks are poor and other hardcore infrastructures are insufficient."

The massive black holes that exist in India's major infrastructure are frightening. More than 600 million Indians have no access to any source of utilities, living, effectively, off the power grid. Since 2008, when direct investment in India began to increase, there has been a 15 percent shortfall between demand and supply of electricity at peak hours. The country needs an additional 160,000 megawatts of power to cope - an investment that will cost an estimated $405 billion by 2017.

On the roads, India's National Highways Authority intends to build 30,000 miles of road in the next four years. Last year it built just 3223 miles. Mass transit and sewer lines in the country's big cities remain dangerously underfunded. But R&D funding is at higher levels than it has ever been, so how will such an imbalance in investment and focus come to shape the infrastructures of China and India in the future?

From workshop to HQ?

The globalisation of innovation is already happening. Asian expenditure on R&D has exceeded EU levels, and will overtake US spending within five years. China currently invests $100 billion a year on R&D, while multinationals like Motorola, Microsoft and Intel have recently opened laboratory centres in India.

The traditional trend of Asian 'brain drain' has not yet reversed (the European Commission estimates that 645,000 Chinese and 300,000 India students will still study abroad in 2025), but a tangible 'brain circulation' is beginning to emerge. The large research centres in India, China, the Republic of Korea and Singapore have begun looking west, both for traditional 'Western' expertise, but also in order to compel their fellow Asian expats to return home.

"China is opening up to the world more and more now," said the European Commission source. "There has been an astonishing level of development in Chinese laboratories in recent years, and when a foreign scientist or researcher visits these labs they are usually very impressed. China has recognised this and is now looking to belong more and more to the world in a collaborative sense, by both attracting foreign expertise and also bringing back Chinese people who have been educated abroad."

In India, a country with 22 million graduates, Saparamadu sees the situation as something more akin to 'brain gain'. "It is in the early stages at the moment, but there is certainly quite an interest in India and Sri Lanka in terms of the opportunities these countries can offer. It will not happen immediately, but there is a definite shift in the balance of innovation, of talented graduates moving to these countries for their work."

We have been here before, of course. The Middle East, spoilt rotten by oil wealth and led down the path of ostentation by enigmatic, idealistic, but ultimately shortsighted leaders, revelled in its position as wresters of the West during the turn of the millennium. It was meant to be Dubai - and not China or Europe - that was going to challenge the US's innovation dominance, its infrastructural might and its inventive pull. Huge skyscrapers were built, the world's media was schmoozed and foreigners were tempted with the promise of high, tax-free wages in the land of eternal sunshine.

What has happened since then has been an invaluable lesson for China and India. Transforming an ancient land into an adult's playground of prosperity might attract short-term headlines, but it's not the basis upon which to lay down long-term foundations.

"The Middle East is a terrible role model for China and India to follow," says Saparamadu. "Their bubble has burst, and Asia needs to operate outside of a bubble environment. We are lucky in that respect; we are set up for continual growth and investment, towards something more sustained and long-term. I think Singapore is the best example for India and China to follow. In fact, I think Singapore has managed innovation and wealth much better than most Western nations."

The European Commission sees similar cause for positivity in China's long-term development. "The Chinese system is very good right now. China has developed in many innovative areas. The problem they now face is connecting their research investment to big industry. In the West, research is very close to industry. This needs to happen in China and India - research centres, laboratories, universities and so on have to bridge that gap between innovation and production, because in R&D terms, China is still a lot more 'D' than it is 'R', but that will change over an extremely short time scale, maybe even within the next ten years."

With more technological parks, research centres, laboratories and high-tech universities, China and India's infrastructure will look wildly different in the next five, ten and 20 years. The challenge for these countries is to follow that up with sufficient hardcore infrastructure that will allow for the easy delivery of the products such research will create, supported by a viable soft infrastructure network, making China and India safe, progressive, comfortable, diverse and fun places for everyone to live and work in.

In Asia, currently 45 percent of the continent's four billion population live on less than $2 a day. The average Asian income is 40 percent below the world average, and electricity, water, power and Internet supply is erratic at best throughout much of the continent. Asia is in the unheralded position of having access to the most cutting-edge technology in the world, while simultaneously lacking much of the basic infrastructure that underpins humanity and society. How it manages this back-to-front imbalance will be key if it is to become truly 'Westernised'. And who knows, by the time it manages it, that very phrase could be defunct, and it will be Europeans and Americans striving for the 'Asianisation' of their economies, their cities and their lifestyles in the not-too distant future.

FACTS

Until 1800, approximately 3/5 of the world's commerce and production took place in and around China and India

In 1830, Asia accounted for more than half of the world's GDP