India and China. Two giants of the developing world. Two very different models of social, political and economic development. An endless source of comparisons.

Few people are better placed to give a fresh version of the strengths and weaknesses of the two behemoths than 63-year-old Arun Shourie. Until the Bharatiya Janata Party (BJP) lost power in India in May, Shourie was one of the country's most powerful and well-respected ministers. His portfolio included a trio of hot-button areas: Trade, telecommunications and privatization.

That the former World Bank economist and one of India's leading journalists made enemies in all of these areas should have come as no surprise. He's long had a tough reputation. The Indian Express was shut down while Shourie was running it during the 1970s as a result of his opposition to Prime Minister Indira Gandhi's authoritarian rule. As minister he controversially dismantled a cumbersome telecommunications licensing system, a move that has made India's cell phone market one of the world's fastest growing today. His sell-offs of state-owned companies have helped shake up India's sprawling state sector. And his donation of 120 million rupees (HK$21.55 million) from a government spending allowance to endow a world-class biotech laboratory at the Indian Institute of Technology in Kanpur is testament to his visionary nature.

Over coffee during a recent trip to Beijing, Shourie reflected on the simultaneous awakening of the world's two most populous countries. Shourie is, like the rest of the world, fascinated by China but clearly concerned with what its economic rise means for India. Like other reformers in India, he wants to use the rise of China as a goad to reforming India. Otherwise, he warns, India's national security will be at stake.

``We should shift parliament to Shanghai for some time so that our parliamentarians can see how China's economic might will be transformed into military might which will impinge on India. We [in India] are standing in our own way by keeping the country back. China's [economic] strength will translate into power - for instance the tying of Southeast Asian countries with a free trade agreement. After that you don't have to use military power.''

But military power is very much on the mind of planners in New Delhi.

``In official circles [concern over China's increasing military presence] is very high. For example, there is China's presence in Myanmar. They have established a naval presence and radar stations on Great Coco Island, just 30 nautical miles off Indian islands.''

This isn't just an Indian nationalist talking. The Federation of American Scientists (FAS), which monitors security developments, says that the intelligence collection site near the key shipping lane is the most extensive in Myanmar and notes that the Chinese army is building a base on Small Coco Island.

``These two islands, which have been leased to China since 1994, are located at a crucial point in traffic routes between the Bay of Bengal and the Strait of Malacca. The Coco Islands are thus an ideal location for monitoring Indian naval and missile launch facilities in the Andaman and Nicobar Islands to the south, and movements of the Indian Navy and other navies throughout the eastern Indian Ocean,'' notes the FAS Web site.

China's military activities in South Asia don't end with the Coco Islands, warns Shourie. ``There are develop-ments in the Irrawaddy basin - the whole basin is to be developed by China. They have access to five boats that they have modernized in Myan-mar.''

And, notes Shourie, China has access to Gawadar port in Pakistan, thanks to extensive work it has done to develop those port facilities.

It also continues to militarize Tibet. ``That directly influences India. Even the extension of this railway network [into Tibet], the building of extensive road networks, the transformation of Tibetan towns into majority Chinese towns and the change of the demographic composition in the region [all potentially have military significance]. From India's point of view, China is on all sides.

``China is very much concerned with a strong center and controlling the periphery because invasions have all come from the periphery. What the periphery is depends on technology available. Now, with missiles, the periphery they would want to dominate is extensive and much deeper.

``China looks on India as a possible pawn of the United States. Just as India once made itself available to the Soviet Union [China worries that India] would be part of a `contain China' arrangement. We have to reckon with the possibility that, justified or not, they have a fear of India.''

The consequences of such thinking, Shourie says, ``doesn't mean we are enemies. We have to do both things - prepare for peace as well as be cautious.''

For Shourie, the answer to the potential security threat posed by China isn't only - or even mostly - military. It is fixing the rot within India.

Shourie describes himself as a full-time writer, and his book on governance, published six months ago, is already in its sixth printing. Now he is working on a book on national security titled Will the Iron Fence Save a Tree Hollowed by Termites? The defense forces are the iron fence. Political administration and governing institutions, he argues, have become rotten from within. What can the iron fence do?

``This is the main challenge for India,'' he says. ``The key is a better class of persons in public life. The real threat to India comes from the breakdown of governance. If we look at [the northern states of] Bihar and Uttar Pradesh,'' national security is being undermined by the breakdown of governance and the ``sclerosis of administration.''

Shourie spent much of his time in government whittling away at the superstructure of bureaucracy and power by accelerating and reforming the sell-offs of state-owned companies. So it's no surprise that he looks skeptically at the role of government in China, as well as in India.

China's overbearing state is more like that of the Soviet Union, he says, while India's more decentralized freewheeling society allows for the sort of creativity that has buttressed the American economy.

``It is, in a sense, a great contest. There are two paradigms going on about change. [In China] the role of the state as the great generator, the great propeller of growth, is still very prominent.

``In India, people like me feel the less government there is the better because the problem is the condition of the state apparatus. Our strength is society. The more the government is confined to minimal functions - law and order, justice, infrastructure defense, foreign policy - the better.''

The Chinese state, for all its overbearing nature, has changed in enormous ways, Shourie notes. ``The remarkable thing about China is the way the state has been transformed in the past 15 or 20 years.

``I don't know of another state that has been transformed in this way.''

If the dominant rivalry was between the Soviet Union and the US in the post-World War II period, in the first half of the 21st century it will be between the statist Chinese approach and the more open Indian approach.

Shourie is pretty clear which model he thinks will triumph.

``The great lesson of the 20th century is that countries in which the state was dominant collapsed. The contest was between Soviet thrust and America's freewheeling research and development.''

China has gone ``from a state that is controlling things to a state that has engineered this impressive economic development. That must have required a great change in the attitude of the personnel in the state. In China, the state has been transformed but remains the dominant presence.

``India's strength is much like American strength. The great question of the first half of the 21st century is whether Chinese society [can emerge as] creative and freewheeling a society as India, Japan or Southeast Asia.''

Score one for India on the creativity side, Shourie says, but when it comes to execution India still has a lot to learn.

``We should learn from China how to execute things. We are not able to put ideas into practice as swiftly as China can.

``One of the ingredients [of] that is national focus. Joining the World Trade Organization became a timetable for reform. [Now] they have put up calendars for the Olympics in 2008.''

But in India, he says, disputes are the norm. ``Even today there are voices that say `Why not get out of the WTO?'. That dissipates national focus and resolve.

``On the other side, China would have things to learn from India's loose and accommodating nature. That is partly because of parliamentary democracy and openness. Even if there are 100 farmers in extreme distress, some reporter will get hold of them and bring them to national attention and the government attends to them.

``Small marginal groups are heard much more swiftly than in China.''

Like many infrequent visitors to China, Shourie is surprised by the power of ordinary customers and the apparent openness with which many sensitive subjects - corruption and workplace accidents being two - are discussed in the media.

The Chinese ``are much freer than I would have thought,'' he says.

``The dominance of the consumer and the choice they have in the markets is certainly a surprise to the visitor. That, plus the growth of mobile telephony and the Internet, means that information is spreading and voices are being heard. The apprehension that people visiting the Soviet Union used to report is not there.''

India's parliament may not be moving to Shanghai any time soon. But if Shourie's past record is any indication, India will be hearing a lot more about what the rise of China means to their country in the months and years to come.