In early February last year, Wang Lijun, the police chief of the Chinese megacity Chongqing, drove 200 miles through the night to seek refuge in the U.S. Consulate in Chengdu, the capital of neighboring Sichuan Province. Wang’s escape was part of a shadowy intrigue that became a sensational public scandal involving murder, money, power, adultery, fist fights, car chases, and disguises. It triggered tension between two Chinese provinces, nearly pulling the United States into the middle of a Chinese domestic political crisis, and, ultimately, led to the downfall of Bo Xilai, the former Chongqing party chief, now a fallen star who just last month was sentenced to life in prison.

For 18 months the world was riveted by this story in all its sensational and gory details, but few took notice of one of its more anomalous features. The municipality of Chongqing—which has the standing of a province—is China’s largest city, home to 30 million people. That is roughly the population of Canada, packed into an inland territory roughly the size of South Carolina. If it were a country, Chongqing would be the 41st largest in the world. That means there would be over 150 countries that are smaller; yet almost all of those countries have U.S. embassies in their capitals, and many have additional U.S. consulates in other cities. Chongqing hosts dozens of American businesses and exports about $7 billion a year. Yet it has no U.S. diplomatic representation. That was why Wang Lijun had to drive over three hours from China’s largest city to find an American diplomat.

Above: China's megacity Chongqing, population 30 million, sits at the confluence of the Jialing and Yangtze Rivers. Wikimedia Commons / Oliver Ren

Below: Narendra Modi, Gujarat's chief minister, addresses supporters in Dokar village during an election campaign rally in 2012. Reuters / Amit Dave

Flash to the other side of the Himalayas—around 2,000 miles from Chongqing—to the Indian state of Gujarat, where Narendra Modi is chief minister (equivalent to governor). His star still rising after ten years in power, Modi has helped Gujarat become India’s leader in manufacturing and exports. Domestic and foreign corporations have flocked to Gujarat because of the business-friendly environment Modi cultivated. In early September, he was designated by the BJP (Bharatiya Janata Party), the main opposition party to the Congress Party-led current government, to be its candidate for prime minister in next year’s parliamentary elections.

Modi has his detractors, however, and has had his American visa revoked, thanks to a provision in U.S. law that bars any foreign government official who “directly carried out, at any time, particularly severe violations of religious freedom.” This is a result of the fact that Modi has been blamed by many—though never charged—for promoting Hindu-on-Muslim violence that erupted in Gujarat in 2002. The riots killed over a thousand, three out of four being Muslim. If the State Department were to revoke the ban, and Modi sought to visit the United States, the nearest American consulate would be 300 miles away, in Mumbai, the capital of the neighboring state of Maharashtra.

...local leaders are increasingly running much of India and China, home to a third of all humanity, from the bottom up. ... which means that these countries need to be understood from the inside out.
Yet Modi presides over 60 million Gujaratis. If Gujarat were a separate country, it would be the 23rd largest in the world, slightly smaller than France, where the U.S. has seven consulates in addition to its embassy in Paris. And Gujarat’s exports—$61 billion in 2011—would put it in the top 50 countries in the world.

Bo Xilai and Narendra Modi are but two of the many prominent figures in the 60-some provinces, states, territories, and other major administrative units that make up China and India. For a sense of how many people are involved, take the United States and add Mexico, Brazil, plus the rest of North America and South America, then add the 500 million people living in the European Union. That adds up to roughly the 1.3 billion people who live in China alone. India is only slightly smaller, with 1.24 billion.

While Bo and Modi have governed districts the size of major nations, they are cut off from western centers of power. Bo and Modi gained international reputations, which makes them the exception, since most outsiders tend to follow only those politicians based in Beijing and New Delhi. Reporting from capitals and scattered consulates is important, but it gives us partial and often distorted glimpses of what is going on in the rest of China and India.

In early 2012, my wife Kristen and our daughters Annika and Kyri joined me in a five-month odyssey. We visited 20 states or provinces in the two Asian giants. We travelled by plane, train, automobile, boat, three-wheeled motorized rickshaw, and bicycle, as well as elephant and camel on occasion. We interviewed national and local political leaders (including Modi). We also met with corporate executives, journalists, academics, diplomats, religious leaders, teachers, farmers, slum dwellers, and—not just inevitably but usefully—waiters and taxi drivers.

The questions we asked fell into three categories: How do Chinese provinces and Indian states work? How do their leaders seek to balance local and national priorities and value systems? How do their citizens as well as their leaders view various global issues?

In Beijing and New Delhi, as in Shanghai and Mumbai, Chennai and Chengdu, Ahmadabad and Hangzhou, we often heard the same response: “Why do you care?”

The answer, in brief, is because local leaders are increasingly running much of India and China, which are home to a third of all humanity, from the bottom up. That is affecting how both countries act in the world, which means that these countries need to be understood from the inside out.

Much the same is true of the United States. In talking to the people I met in China and India, I told them what I have learned about the workings of the American government over the last two decades. Federalism, the system of government under which power is divided between a central government and subsidiary, largely self-governing units is in ever-evolving flux in the United States. That is, there is a constant push-pull between the states and the metropolitan areas on the one hand and the federal government on the other. And that process has a huge impact on our foreign policy.

Upon arriving in China, 9-year-old Kyri said of all the gleaming highways and office buildings, “Daddy, this looks more like America.” But by the end of our trip, 11-year-old Annika proclaimed: “India was dirty. China is polluted.”
As a junior staffer at the State Department and White House, I helped prepare Secretary of State Warren Christopher and President Bill Clinton for dozens of meetings with foreign leaders. Top officials in the executive branch have to heed the voices of members of Congress on foreign policy issues, especially—though by no means exclusively—on economic and trade issues. Within the White House, we often felt that we spent as much time negotiating domestically as we did internationally. Still, President Clinton was able to assemble coalitions of senators, from both sides of the aisle, to balance the national budget and to negotiate key trade pacts such as the North American Free Trade Agreement and the launch of the World Trade Organization. Of course he also experienced his share of frustration over domestic obstacles to diplomacy, for example when he found himself unable to break legislative gridlock on nuclear weapons talks and on trade deals. Another stalemate, which exists to this day, occurred when Democratic senators from West Virginia, Louisiana, Nebraska, and Missouri crossed party lines to join with Republicans to help kill a national approach to protect the climate.

These were all instances of federalism at work, with senators and representatives sometimes voting along party lines, sometimes not, which was sometimes to the advantage of the administration, and sometimes not. While unbridgeable impasses did occur, the system basically functioned and was able to get things done. Whereas now there is a great reluctance to cross party lines, and the result has been a massive case of federal gridlock—not just occasional stalemates.

Faced with this gridlock in Washington, mayors and governors have gone a long way toward filling the vacuum of effective decision-making and effective action by exercising political and economic power at their level. My Brookings colleagues Bruce Katz and Jennifer Bradley have just summed up a decade worth of research on what they call the Metropolitan Revolution, a national movement taking place all across the United States. Cities and states have upped their game to create jobs, reform education and health care, and compete in the global economy. They have been able to make progress on some issues that are highly polarizing in national politics and that are maddeningly stalled at the federal level. Republican governors named Schwarzenegger, Pataki, and Romney actually signed state-level climate change laws passed by Democratic legislatures. These governors had priorities that were shaped at least as much by where they came from, and by the concerns of their constituents, as by their party affiliations.

Establishing and maintaining workable political systems across a continent and across multiple and diverse belief systems is a challenge. For the American founders, it was as much a hope as a statement of fact. Forging unum out of pluribus requires crafting compromises and forming coalitions.

It also takes time. The United States has had nearly two-and-a-half centuries of trial and error to make progress in achieving what the preamble of our Constitution set as a national goal: “to form a more perfect union.” We Americans failed at our first attempt, with the Articles of Confederation, and failed again, catastrophically, with the Civil War. We are still working on the project today.

So how do India and China—with populations about four times as large as America—develop their own versions of central-local balance? Since 1947 when India achieved independence, and 1949 when China’s Communist Party drove the Nationalists to Taiwan, both countries have wrestled with how to strike the right balance between the central government and the states (in India) and provinces (in China).

Wang Yang, Guangdong's Communist Party chief, speaks during a news conference in the southern Chinese city of Guangzhou, July 2009.
REUTERS/Tyrone Siu Wang Yang, the provincial party secretary for five years, embraced nongovernmental organizations and independent labor organizations—giving them something close to official recognition. And in 2011 he sided with peasants in a violent uprising in the village of Wukan, prosecuting local party leaders for corruption.

Wang Yang even suggested a Jeffersonian-sounding public philosophy: “We must shake off the wrong idea that the people owe their welfare and happiness to some dispensation from the party and government.” With cell phone, Internet, and social media usage rapidly expanding in Guangdong, Wang Yang also seemed to endorse the legitimacy of the voice and rights of the people. “People’s democratic awareness is increasing significantly in this changing society. . . . When their appeals for rights aren’t getting enough attention, that’s when mass incidents happen.”

Wang Yang, like all political leaders, was appointed—and subject to rotation. (Because Chinese central leaders have a historically based fear of rebellion and secessionism in the provinces, they move those to whom they delegate power from province to province, and back and forth between the provinces and Beijing—much as the U.S. rotates its military base commanders.) When Wang Yang came to the end of his stint in December 2012, he was promoted to be one of four vice premiers of China.

Even without Wang Yang, Guangdong continues to be a laboratory for Deng Xiaoping’s coastal experiment in greater political openness, private enterprise, and governance.

But the further one travels from China’s coast, the greater the dependence on public works and public spending. That spending, of course, is managed by the government—which, in this case, means the provincial governments. This has helped empower these local leaders. And in this part of China, people seem to look to their leaders for shows of strength, firm control, and even paternalism.

Bo Xilai, fallen Chongqing Municipality Communist Party Secretary, looks on during a meeting at the annual session of the National People's Congress, at the Great Hall of the People in Beijing, March 2010.
REUTERS/Jason Lee Exhibit A—up until his sudden political demise—was Bo Xilai. Under him, Chongqing’s economy grew a whopping 16.4 percent in 2011. That growth—the highest of any Chinese province—was fueled by Bo’s support of state-owned companies. He also poured $16 billion into affordable housing in an attempt to draw workers from the nearby countryside—and back home from factories on the coast.

The boom came at a cost, however—a real estate bubble waiting to burst and environmental degradation on an epic scale. The air in Chongqing burns the lungs as well as the eyes. During nearly a month in inland China, I did not even attempt to go for a run outdoors. And while the Yangtze headwaters are clear in the mountains west of Chengdu, by the time the river reaches Chongqing, 200 miles east, it already runs black. Our daughters summed it up well. Upon arriving in China (where we traveled after India), 9-year-old Kyri said of all the gleaming highways and office buildings, “Daddy, this looks more like America.” But by the end of our trip, 11-year-old Annika proclaimed: “India was dirty. China is polluted.”

Buildings are seen through the haze in downtown Chongqing, January 2013. Heavy air pollution stems from coal burning and vehicle emissions.
REUTERS/ Carlos Barria

Residential buildings under construction in Kangbashi New Area, part of the city of Ordos in Inner Mongolia. Fewer than 30,000 people live in a city intended to hold a million residents.
REUTERS/David Gray

As for Bo Xilai’s approach to governance, there was no hint of Jeffersonianism. He and his police chief who subsequently brought him down, Wang Lijun, carried out a vigorous and popular crackdown on crime and government corruption. But many arrests and prosecutions seemed blatantly motivated by Bo’s determination to settle scores and consolidate his own power. In short, Chongqing under Bo rolled back advances to date in the rule of law in China.

...take the United States and add Mexico, Brazil, plus the rest of North America and South America, then add the 500 million people living in the European Union. That adds up to roughly the 1.3 billion people who live in China.
In addition to the corruption of which he was ultimately convicted, Bo was also a throwback to the days of the Little Red Book and the Cultural Revolution. He promoted patriotic, Mao-era songs and launched a campaign under the slogan “Stamp Black, Sing Red”—with the “black” referring to crime and the “red” referring to a restoration of communist ideology.

Yet these policies were not what brought Bo down. Quite the contrary, Xi Jinping praised Bo’s accomplishments about a year before his comeuppance. Xi’s Document Number Nine is, to some extent, an affirmation of Bo’s view that the Communist Party leadership should not be questioned in providing growth and stability. And, by most accounts, Bo still has a large, loyal following in Chongqing and beyond.

Bo’s sin—indeed, his crime—in the eyes of his Communist Party colleagues and superiors in Beijing was not that he promoted egalitarian policies and ideology or that he insisted on absolute power. Rather it was self-aggrandizement. He had used a provincial power base to promote a cult of personality. Moreover, he lost control of what was going on behind the scenes. The result was a spectacle that was deeply embarrassing to China as a whole and therefore to its top leadership.

Bo’s former comrades in Beijing managed his trial to make it seem that his misdeeds were an aberration. They do not want to undermine the authority of strong provincial leaders elsewhere.

That is particularly the case moving west from Chongqing, where provincial party secretaries are widely seen as the bulwark of Han Chinese dominance over the populations of the frontier territories—the Tibetans in the Himalayas, the Mongols in the north, and the Muslim Uyghurs in Xinjiang on the arid steppes of Central Asia.

An ethnic Uyghur man ushers his camel past Chinese paramilitary policemen on a main street in the city of Urumqi in China's Xinjiang Autonomous Region, July 2009.
REUTERS/David Gray In Beijing’s view, the vast interior and border areas of China are the equivalent of the badlands of the American West in the 19th century—evoking much the same response that our federal government had: send settlers, and troops, in from the east to subdue the natives. This past summer Uyghurs rioted in several cities—the fourth such mass protest in five years. Central government forces responded aggressively with a “resolute strike” against these “violent terrorist forces.”

Throughout China, from the coastal zone to the rapidly urbanizing heartland to the restive western interior, Beijing has found it necessary to rely on local officials. But no matter how far they are allowed to go in the direction of political openness and reform, the system always protects itself against centrifugal forces. At the beginning and end of every day, President Xi and the Standing Committee want to reassure themselves they maintain ultimate control over all of the Middle Kingdom. That means making sure local officials do not go too local. That is part of the reason why the term “federalism” is taboo. So is the very notion of pluralism—i.e., making a civic, political, and economic virtue out of diversity of views and priorities. The officially sanctioned word is “harmony,” which suggests that whatever differences there are must be reconciled in the service of the single party and the unified state.

But adhering to a single doctrine imposed from above is becoming ever more difficult in the face of competing interests and priorities among the regions. For example, grass-roots organizations and governing bodies in the coastal areas are pushing for higher national environmental standards, only to find that the powers that be in the development-hungry heartland and the mineral-rich western provinces resist enforcing such standards. There are many diverse voices clamoring to be heard.

China’s leaders are struggling not just with their increasingly vocal provincial leaders, but with voices from beyond their borders. Pressure for more openness is coming from abroad—from foreign central bankers, finance ministers, and private investors, all of whom would like to do more business with China but are concerned with the lack of transparency in financial dealings, inconsistencies and irregularities in the enforcement of contracts, and a legal system that puts certain individuals above the rule of law.

With foreign investment key to its financial future, China wants to find a way to accommodate the outside world, but insists on doing so in a way that feels authentically Chinese and does not diminish the power of the party. Hence Xi Jinping’s reiteration of the authority of the president and the Standing Committee, and his willingness to take aim at conspicuously corrupt officials. In short, he wants to preserve the system while eliminating those who abuse it or expose its shortcomings.

As this complex process plays out over the years to come, those of us who are dealing with that system from the outside will be doing both ourselves and China a favor if we understand the growing importance of the provinces—not just the dynamics of their relations with Beijing, but their internal dynamics as well.

The two biggest examples of backward states are Bihar and Uttar Pradesh, which together have 300 million people, as many as the entire United States. Others include Madhya Pradesh, Rajasthan, and Odisha. These states are what make India home to more subsistence-poor people than any country on earth.

The most celebrated leader of a backward state is Nitish Kumar, chief minister of Bihar, who has used his power to see to it that Bihar defies many of the expectations we have about such states. Kumar oversees the lives of more than 103 million people, who occupy three quarters of the land area of Arkansas, while numbering 35 times the population of Arkansas. Nine out of 10 Biharis live off the land.

Bihar state Chief Minister Nitish Kumar shakes hands with a crowd during an election rally in Maner, India, October 2010.
AP Photo/Prashant Ravi I spent an hour-and-a-half with Nitish in his understated, unguarded office. Known universally by his first name, Nitish wears a simple white long-shirt kurta, and comes across as a secular monk-wonk in the religion of rural development. He has helped turn around what was once a nearly failed state.

Nitish’s first priority was to crack down on lawlessness. He got help from the Congress Party-led central government even though his own party (Janata Dal United) is in the opposition coalition. In marked contrast to the power-mongering, score-settling crackdown Bo Xilai led in Chongqing, Nitish’s was open, by-the-book, and expeditious. As a result, India’s most crime-ridden, corrupt, and poverty-stricken state is now one of the better governed and more effective in fighting corruption.

Nitish paved roads and invested in schools. His efforts helped cut female illiteracy nearly in half. That accomplishment helped him forge a coherent and reliable constituency of women from multiple castes.

Woman carrying load on head, Pushkar, Rajasthan, India.
Getty / Danita Delimont Enormous challenges remain. Only one in five Bihari enterprises is connected to the electric grid. While many use diesel generators or small solar units, the vast majority still get power the old fashioned way—burning dried cow dung. And in a place so densely populated with subsistence farmers, acquiring land for new factories is extremely difficult and expensive. Lack of skilled workers, inadequate banking services, and poor infrastructure all make investors wary.

Still, Nitish’s brand of politics, of caring for the poor, has doubled average Bihari’s income to about $500 a year. That has made him extremely popular within Bihar, leading to an easy reelection in 2010. Many in India hope that he might head a national opposition coalition in 2014 parliamentary elections. Under Nitish, several smaller, regional parties might together advance a new politics of economic development.

At the other end of the development spectrum from Bihar are what might be called the forward states, such as Gujarat, Maharashtra and Tamil Nadu. Those three have nearly three times the per capita income of Bihar, and a longer history of urbanization, commerce and foreign trade. In each of the three about half the people now live in cities—well above the country’s average of only 31 percent, and there has been significant investment in the infrastructure of modern manufacturing. The forward states tend to have the highest rates of literacy, household electricity, access to health care, and up-to-date roads, bridges, sewers, and ports.

Above: In Maharashrta, a laborer carries a bowl of onions inside Shivshankar Trading Co.'s onion storehouse at a wholesale market in Lasalgaon, India, August 2013.Getty / Dhiraj Singh / Bloomberg

Below: Indian technicians work in the Sikorsky S-92 helicopter cabin manufacturing facility at Tata Advanced Systems Limited (TASL) in Hyderabad, April 2012.Getty Images/ Noah Seelam / AFP

Leaders in the forward states feel more confident about a more open global trading system. Being in a location that hugs India’s coast—Gujarat and Maharashtra in the west, Tamil Nadu in the southeast—encourages such openness.

Maharashtra and Gujarat face west to Iran and the Middle East, and northwest to Europe. Gujarat takes oil from the Middle East, refines it, and sends it across India, and all around Asia. The Gujarati diaspora works in the Gulf States, in London high finance, and in American service businesses from high-tech to hotels. Maharashtra makes everything from cars to chemicals. The state’s capital, Mumbai, has its own share of factories and ports, and is also the center of Indian finance and film.

Over 1,000 miles to the south, Tamil Nadu exports east to Singapore, Thailand, Indonesia, and the rest of Southeast Asia—thanks in part to connections forged by the Tamil diaspora in those countries. And there is a serious enough investment in information technology and biotech businesses, particularly in southern Tamil Nadu and neighboring Karnataka, to warrant efforts to obtain the highest level of intellectual property protection available.

Caught between the forward and backward states are India’s swing states. The two most important are Andhra Pradesh, in the southeast, and West Bengal, in the northeast. Rather than proceeding in a straight line toward economic development, both these states often vacillate between forward and backward motion. Although they are home to major global cities and other urban corridors, they have about two rural dwellers for every city resident—quite close to the national average. The result is that in both Andhra Pradesh and West Bengal, state governments are split between addressing the needs of the rural poor and investing in the building blocks of a modern, urban economy. Globally-focused cities such as Hyderabad and Kolkata have prospered in recent years, but with twice as many people still living in the countryside, politicians have not necessarily benefited when their constituents went to the polls. Rural voters have turned out in large numbers to vote when they’ve felt ignored.

West Bengal epitomizes the challenge of being a swing state. Once a shining star in India, its capital, Kolkata (formerly Calcutta), was the seat of the British Raj before 1911. For most of the 20th century, it was India’s manufacturing capital—and also India’s most cosmopolitan city, producing great works of literature, cinema, and scholarship.

Yet for over three decades West Bengal was also synonymous with public mismanagement. Led by the world’s longest-serving elected Communist Party—the communists remained in office from 1977 until 2011—the state government eroded the state’s industrial base, stalled and undermined investment, and drove manufacturers to other, rising states.

But in the early 2000s, having witnessed a decade of growth elsewhere in India (not to mention in China), the communists began to court investment. They promoted their top-tier universities to attract software developers such as Wipro, Infosys, and Cognizant, and tried to use eminent domain to acquire land for major manufacturing plants.

The communists were turned out of office, however, by West Bengal’s rural poor—presumably for too much capitalism too quickly. The opposition Trinamool party won a sweeping landslide under their charismatic leader, Mamata Banerjee.

Above: A slum dweller walks past shanties being reconstructed after they were demolished by the government in Kolkata, April 2012.Reuters / Rupak De Chowdhuri


Below: Mamata Banerjee, chief minister of West Bengal, addresses her supporters at a rally in Kolkata, July 2011. Reuters / Rupak De Chowdhuri

Banerjee is by all accounts personally ethical and committed to her job. She appears focused on cleaning up one of India’s most poorly run and corrupt states, and brings a passionate attention to rural poverty. She has fought against Maoist rebellions, protected West Bengal’s 25 percent Muslim minority, and urged the economic and tourist development of the spectacular and prosperous tea-growing hill region of Darjeeling.

However, outside investors fear her—and therefore tend to steer clear of West Bengal. More than that, they fear her impact on Indian national politics. Using her party’s 19 seats in the national parliament to play the role of power broker, she has prevented the Congress Party from forming a parliamentary majority in New Delhi. More dramatically, she blocked India from concluding a water agreement with Bangladesh; and in late 2011 she opposed a new national foreign investment law that would allow foreign retail giants, such as Walmart, to own a majority stake in supermarkets and department stores, a move that nearly brought down the current national governing coalition.

The central government is by no means powerless in this game. When Mamata Banerjee withdrew her support for the governing coalition over investment reform, Prime Minister Manmohan Singh played an ace card to save his coalition. He recruited Akhilesh Yadav to support the investment reform. Yadav is the new chief minister of Uttar Pradesh, a previously non-aligned backward state which had just voted Mayawati's BSP party out of office in state-wide elections — also delivering a stunning blow to Prime Minister Singh's Congress Party, which finished a distant fourth. With this move, Singh sent a signal that the central government could play one regional party off against another to get things done, and for his part Yadav sent a signal that state-based leaders are willing to band together across party lines to support pro-growth policies.

While it won’t be easy, the nation-wide empowerment of leaders at the state level may ultimately be for the good of all of India. In making national policy aimed at attracting foreign investment, strengthening interstate commerce, and improving infrastructure, New Delhi will benefit from the input of experienced local leaders. These are the people who have a direct feel both for what makes India work, and for how to rally support for the needed reforms among their constituents. In the long run, India’s ultra-pluralistic, highly federalized democracy can work only as well as its individual parts work.