There are at least three different respects in which Chinese reforms differ from what is happening in India. First, while China has undertaken a massive export drive, the Chinese economy has not opened itself to "liberal" imports in the same way as the Indian economy has. China continues to be an import-restrictive economy. Their tariff rates are much higher than in India and there are direct import controls as well. In this respect China is following much more closely the example of East Asian countries which kept their own markets protected through tariff and non-tariff barriers even while making encroachments on the international market. India by contrast is opening her own market to foreign goods in the mistaken belief that by doing so she would be able to capture foreign markets. As a matter of fact in a period of world recession "import liberalisation" simply enables foreign producers to capture our domestic market without our being able to capture foreign markets to any comparable extent (in manufacturing at any rate) which gives rise to a worsening of the balance of payments as well as to domestic deindustrialisation.
 
Secondly, the Chinese economy, notwithstanding all its reforms, remains one with substantial State ownership. The State-owned units moreover are still amenable to central control, if not in their day-to-day operation, then at any rate in a strategic sense. For instance if the foreign exchange situation gets out of hand, State enterprises can be immediately directed, as they were some years ago, to cut back on import orders for investment projects. The country does not have to accentuate its debt- burden; nor does it have to undertake any drastic domestic deflation. In short, even when there is apparent freedom for enterprises the economy retains the flexibility whereby centralised command can be quickly made effective in a pre-crisis situation in order to forestall a crisis. The reason for this flexibility lies in the fact that China, by and large, retains both her economic sovereignty (much of the foreign investment pouring into China incidentally is from overseas Chinese and not from metropolitan countries) as well as pervasive State ownership over the means of production. Those who draw parallels between Chinese and Indian reforms tend to miss out on this crucial fact of strategic flexibility which the Chinese retain and which we are in the process of giving up.
 
Thirdly, the impressive Chinese growth performance of recent years has been fuelled to a large extent by an expansion in agricultural output. It is a case much more of agriculture-led growth than of export-led growth. It is quite another matter that this agricultural expansion has come about through reforms in selectively anti-collectivist directions, but this expansion is at the core of Chinese growth. In India however the new economic strategy, as we saw earlier, is not concerned at all with raising the rate of agricultural growth (which in our specific context requires land redistribution and a move towards a more egalitarian social order in the countryside). For large countries like India and China, to believe that rapid economic advance can be made without stepping up agricultural growth through purposive State action is a chimera.