Whatever be the reason for Indian poverty, there is no doubt that, given the nature of the Chinese economic system, it is government policy which is responsible for Chinese outperformance. The government has been quick to see the changes which have occurred in the Pacific-rim economies, and has learnt useful lessons from them. That is why it has proceeded slowly with financial liberalisation, while ensuring that foreign funds are readily available for direct investment. The value of the yuan is administratively determined, and banks continue to be creatures of the state. Yet, at the same time, the government has been quick to try and restructure the economy, in particular the ramshackle state owned enterprises, of which there are well over 1,50,000. Firms are being merged and privatised. National champions are being built up. For example, in 1997, sales of Chinese PC makes Legend, founded by the Chinese Academy of Sciences overtook those of IBM in China. Most importantly, there are plans toreduce the size of the bureaucracy. The plans for reforming the state-owned units are fraught with the danger of civil unrest, and there are reports of millions of unemployed roaming the Chinese countryside. Reforming the state industries and the banks is not going to be easy. But it is clear that China's authoritarian power structures have helped to push through policies and programmes much faster than in democratic India. We have the people, the entrepreneurial talent and the resources to compete with China. All that is needed is a strong political leadership which ensures that the backing of the Indian state is available to the Indian corporate sector.