Six Reason Why India Will Beat China
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Ever wondered who will win the economic competition between China and India? Here are the six short answers to your question - the reason why India will become the next Asian Tiger while the Chinese dragon be humiliated.
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Population
India is experiencing a explosive population growth which is predicted to overtake China as the World’s largest population within the next decade. Thus India has the human resources needed to propel its growth. Currently India has the world’s youngest population - almost 1 out of every 10 people in India is below the age of 25. Thus the country has a ton of fresh minds entering the various industry, business, and education sectors. China however is facing a population crisis. The One-Child policy has left many parents to abandon their female children or not desire a female child. Thus more males are born to Chinese families to help with the family income. So China is facing an unequal sex ratio (males: females) in which there are less females for every male in the population. By 2015, China’s population will peak at 1 billion and then decrease steadily while Chinese government struggles with providing care to its aging millions.
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Economy
China’s current economic growth is due to resource accumulation from trades while India’s growth is increasingly based on a more efficient economic sector. In the long run, a more efficient economy will always overtake and surpass a large cumbersome inefficient economy. This is seen today as China buys debts from foreign powers while trying to market their goods and resources to a global market - while India is focusing on specializing their economy and providing better quality services such as the IT sector. Thus unlike China, outsourcing to India has grown rapidly and by 2010, it is expected to be 56 billion dollars a year. Currently every major company has begun to invest heavily in India and has started to rely on Indian engineers for their next-generation products. Google lead scientist, Krishna Bharat is working on the new core search engine technology in Indian tech capital of Bangalore while companies like GM, Boeing, Motorola, Cisco, HP and many others have begun to make their R&D facilities and Asian headquarters in India. Bangalore, in many ways, has become to Silicon Valley in 1999, with much development and growth headed its way. However, China still manages to hold the 9.5% growth lead thanks to its mass production capabilities - which has begun to see problems due to their bad quality as been by the lead in Kingfisher toys or the poisons in Chinese imported fish.
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Industry
China is a leading producer of marketable good and a major mass producer of such goods. Thus to maintain their lead, China is working on industrial plants geared towards their production sector. Meanwhile, India is a rising power in the software, design, services and precision industry. There is no other IT sector in the world that can compare to or even hold its own against India. So what is the key difference maker between India and China? Well China is what we call a light industry producer while India is the heavy Industry producer. While China makes the toys and the T-shirts that we see as common goods on the market, India is making industrial grade steel used in making skyscrapers, tanks and ships while its automotive industry is experiencing unprecedented growth. Thus in the short run, China will experience a growth that’s mainly due to its ability to sell common goods, it is going to have trouble with heavy industry. A good example of this would be the Chinese attempt to kick start their automotive industry - which continues to be a failure and fails to reach a global audience. Meanwhile Indian companies such as TATA is making headlines by making more cheaper and efficient cars and making deals with western companies like GM and many others. More recent was the takeover of Jaguar and Land Rover by Indian TATA motors - an indicator of India’s heavy growth industry seeking to expand its influence worldwide.
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Education System
Every year both India and China produce over 500 thousand engineers who graduate with high degrees - compared to the 60 thousand who graduate in the US. Out of the 500 thousand, a better part of them are Indian graduates. India has the 2nd largest English speaking population out of the English nations and 2nd largest nation with the most English speakers per GDP. India’s education system has proven to be far more advanced than its Chinese counterpart. Indian Institutes of Technology (IIT) is a world prestigious institution that even rivals western universities at the quality of education it provides - churning out the engineers and IT professionals of tomorrow. Currently, India is the 2nd largest producer of Engineers, scientist and doctors. Other educational intuitions like the Indian Institute of Science (IIsc) and the Business school have all set standards as the world benchmark. Meanwhile in China, low English speaking populations with high illiteracy rates have been a turnoff for many companies and opportunity seekers. India’s education have steadily been increasing while corruption, and lack of uncontrolled and wasteful spending has not been beneficial to the education sector.
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Environmental Consequences
As with any developing country, India and China both are heavy producers of pollution which continues to contribute to the global warning. Massive and forcible seizures of land, the destruction of usable housing structures, reduction of arable land, and environmental degradation in China has all contributed to a environmental policies for the near future. In an effort to promote the image of growth and modernization, China has done little to research their environmental impact on the planet and thus is harboring an oncoming crisis within the next few decades. India has however been slow to respond like China to the growth, thus making sure safety procedures are more accurately followed. Even today, Chinese companies do not install filters onto their smoke stacks or care for where they dump their industrial garbage while in India, environmental groups (using their freedom of speech & rights) have begun to advocate for better environmental care.
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Growth Investment
China’s economy began its growth spree almost 13 years (1979) before India even emerged on the global economic market. Even when China did emerge, it began to rely on foreign investments too much. Today, China is dependent on foreign investments. The Chinese stock market has already crashed and is still reeling to recover. Almost 70% of the country’s banks have declared bankruptcy and is now riding on foreign investments. Like communist Russia, China is mobilizing its resources trying to issue a mirage of growth by buying US debts, modernizing its army seizing civilian lands for huge building projects - but at what price? In the long run, none of this will stimulate the decaying and crumbling Chinese financial/capital market. There are no private run enterprises in China - for the fear of individualization and loss of government control of the country. So while China is relying on foreign investments and trade, India has been developing a wave of homegrown, innovative private companies, especially in high tech & information sector. For example, even when facing severe international sanctions and trade limitations, Indian civilian and military nuclear program has been effectively successfully, springing forth a homegrown nuclear technology capable of processing Thorium - unlike all the other nuclear technology that uses uranium.
Just like that, Indian companies have grown on their own, and are now emerging on the world markets. TATA Group, Reliance Corp, Mittal Steel and many others have begun to takeover European and American companies - expanding their global reach. India’s stock markets have grown exceedingly large; the Bombay stock market has broken numerous domestic and international records. Indian companies are earning more due to the 20% returns on the investment opportunities in India - thus the reason for Japan’s recent 5 billion dollar investment in the “industrial corridor” of India. Overall, India is growing at a rate that ensures quality while experiencing record breaking growth - something China has failed to do.
22 Comments
You need to get your facts right. But the core message is true.
Well between India and China, India will clearly win in the long run. India has plenty of resources, money and allies to succeed.
Both countries still have many issues to deal with and i believe that after the Olympic games China will focus heavily on resolving some of these issues…already many whispers are being heard about new policies that will be put in place to improve China…and i think you will see BIG changes in China very soon…remember that both of these countries are doing well…in part due to cheaper labour…when this changes so do prices…India is not nearly as developed as China currently is…so to predict this idea of India being a super power over China is premature…and i think people underestimate Chinese determination.
China is heading a a good direction and India can learn a lot from them
India has become a world economic power, with growth over the past three years averaging 8% - a rate approaching that of its booming neighbour, China. Based on purchasing power parity, it is now the world’s fourth largest economy.
World’s largest economies based on PPP
Since India began to open up to the outside world in the late 1980s, it has become increasingly attractive to foreign investors. Its low costs and huge, English-speaking, workforce have made it popular with multinationals for work including manufacturing and call centres.
The success of hi-tech industries in particular has seen large numbers of overseas Indians return, in what has been described as a “brain gain”. They are part of growing middle class, which is seen as a potentially vast domestic market.
How do you summarise a country which is home to one in six members of the human race, which contains a third of the world’s poorest people and yet has an increasingly consumer-oriented middle-class twice the size of the population of Germany?
And which - according to predictions by the CIA and investment bankers Goldman Sachs - could, along with China, come to dominate the global economy in the next few decades?
India has always been hard to get a handle on. In the 28 years that I’ve been visiting, thinking and writing about this vast and varied subcontinent, I’ve clung on to an unnerving, and yet somehow also reassuring, truism: for any generalisation that can be made about India, the opposite is equally true.
So is it or is it not true that, 60 years after partition and independence, India is finally about to take its place on the world stage as a major player?
India has always been on the world stage. The colonization of India by the white Europeans (barbaric savages) reduced its former glory to a 3rd world nation.
Americans (Lester and Victoria, this is for you) would do well to remember that; Recall what the colonization of America by Europeans did to the Native Americans, a group of people that were hundreds of years ahead of the the Europeans on social issues and the status of woman in their societies.
Anyway, back to India; this is what Albert Einstein said about India:
“We owe a lot to the Indians, who taught us how to count, without which no worthwhile scientific discovery could have been made!”
Albert Einstein
What he is referring to is that both; the number system (0 - 9) that we use today and the decimal system originated in India. So for you Americans; the numbers you print of your dollar bills (that hold even less value today) is because of India !!!
India does indeed face some tough problems if it wants to sustain the 9% growth rate Planning Commissioner Ahulwalia says can happen. Lack of infrastructure tops the list of concerns it has to overcome.
Another driving factor in India’s five-year growth plan is the country’s rising middle class. The middle class currently numbers some 50 million people, but by 2025, that number will expand dramatically to 583 million people — some 41% of the population.
India’ s middle class includes young college graduates to mid-level government officials, traders and business people. They enjoy a lifestyle that most of the world would recognize as middle class. They typically own a television, a refrigerator, a mobile phone and perhaps even a scooter or a car.
The upper end of the middle-class segment includes senior government officials, managers of large businesses, professionals and rich farmers. Successful and upwardly mobile, they are brand-conscious, buying the latest foreign-made cars and electronic gadgets. They are likely to indulge in an annual vacation, usually somewhere in India.
Both segments of the middle class are demanding more from the government, including better education and healthcare.
And the country is responding.
A much-cited 2003 study by Goldman Sachs projects that over the next 50 years, India will be the fastest-growing of the world’s major economies (largely because its work force will not age as fast as the others). The report calculates that in 10 years India’s economy will be larger than Italy’s and in 15 years will have overtaken Britain’s. By 2040 it will boast the world’s third largest economy. By 2050 it will be five times the size of Japan’s and its per capita income will have risen to 35 times its current level. Predictions like these are a treacherous business, though it’s worth noting that India’s current growth rate is actually higher than the study assumed.
The wave of Hindu nationalism that raged through the country in the 1990s is on the wane, for now, and a thoroughly secular government is in power. Headed by Manmohan Singh, the former Finance minister who opened up India’s economy in the summer of 1991, it is also committed to economic reform. In an act of great wisdom and restraint, Sonia Gandhi, who led the ruling coalition to victory in the polls, chose to appoint Singh as prime minister rather than take the job herself. As a result, quite unexpectedly, India’s chaotic and often-corrupt democratic system has yielded as its head of government a man of immense intelligence, unimpeachable integrity and deep experience. Singh, an Oxford Ph.D., has already run the country’s central bank, planning ministry and Finance Ministry. His breadth, depth and decency are unmatched by any Indian prime minister since Nehru.
China just spend 45 Billion Dollars on the Olympic preparation for the games. That is crazy amount when considering that Greece only spend 16 billion in 2004. So somebody has to pay for that 45 billion and the people are going to suffer with the taxes for the next couple of years.
This is why having a democracy makes a nation stronger. It will lead to alot of debate and even discussion for whether or not spending 45 billion on Olympics is worth it.
India changes every time i visit. it has come a long way, but it has a long way to go as well.
Im positive though, that even within the next 20 years, India will be a recognized, respected and ‘official’ world superpower that no one can deny.
The coming future is for Asia, and once again we see prosperity shine on the East, once again will history be kind to this part of the world.
May both India and China prosper like they did in the past.
yes, India has got a population of 1.2 billion and it is going to surpass china. US with 350 million people and economic might still have problems like lack of health insurance,homeless and i’ve seen beggars in seatle and other parts of the US. It does not mean the US is a poor country. India with its huge population and other social problems able to kick start this power house economy. 700 to 800 million people lead a decent life, and it is double the population of the US. Another 200 million live a lower middle class life. Rest live below 2$ per day, that is around 200 million people.
Make no mistake, growth helps lower middle class and poor people to climb up the ladder. India’s growth rate was 700 billion in 2006, and the experts predicted that it would take 10 more years for india to reach 1 trillion dollar economy, but in couple of years time, india has already reached 1.33 trillion dollars GDP (NOMINAL).
In 10 yrs time, india will overtake china. I agree with the above 6 points.
India will beat China – all in its own good time
Democracy will ensure that the tortoise overcomes the hare in the race for competitive advantage, argues William Nobrega
Sunday, 27 July 2008
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Authoritarian regimes often yield strong short-term economic results, as seen in Germany in the 1930s, the Soviet Union in the 1950s, Brazil in the 1960s and China in the 1990s. Unencumbered by such things as property rights, legal recourse and public debate, the authoritarian regime can harness significant economic and political resources to achieve impressive industrial and economic feats.
Conversely, democratic regimes tend to be sloppy affairs with loud public discourse, a vocal press, stubborn land owners and a myriad of civil liberties. Far from being able to harness economic resources, the government often must act more as a regulator. The result is that there are very few grandiose government-sponsored projects. Instead, there are countless private-sector initiatives driven by the invisible hand of the market.
But while the authoritarian regime is envied by some, the fact is that, longer term, this type of socio-economic model has typically led to economic and social distortions.
That is the dilemma faced by China today. Since the 1980s, the government has focused on developing an export-driven economy supported by an artificially undervalued currency. Foreign direct investment was encouraged while domestic consumption was limited. Massive infrastructure projects were initiated, fuelled by a growing trade surplus, with cities sprouting up in the hinterlands like mythical phoenix. For years, the Chinese economy benefited from these policies with double-digit growth in gross domestic product, vast foreign currency reserves, and ever-increasing capital inflows.
But now the economic and social distortions have begun to appear with rising inflation rates, numerous asset bubbles, looming overcapacity and rampant institutionalised corruption. China’s rulers find themselves in a quandary. If the government allows its currency to appreciate rapidly to reduce inflation, it will drive down exports and fuel unemployment. If it fails to quell inflation, social unrest will quickly unfold.
But while the hare runs into obstacles of its own design, the tortoise is looking well placed in the long endurance race for competitive advantage. In India there is an entrenched and vibrant democracy that will ultimately drive it to outperform China socially and economically. Messy, frustrating and more often than not agonisingly slow, India’s democracy would seem chaotic at the surface. But if you look deeper, you will see why the tortoise will prevail. Let’s take a look at two of the big advantages that India’s democracy provides.
PROPERTY RIGHTS
As India becomes urbanised, many families will choose to sell or borrow against their land so that they can start businesses, buy apartments or provide education opportunities for their children. India is at the start of a gradual migration driven by the development of high-end manufacturing and other “sunrise” industries that will require a vast pool of skilled and semi-skilled labour. This migration will create an increasingly urban India that is expected to attract more than 200 million rural inhabitants to “secondary cities” by 2025.
This transition will facilitate the sale of land holdings by an estimated 30 million farmers and 170 million other individuals indirectly tied to the agricultural sector. These sales are expected to generate more than $1 trillion in capital by 2025. This capital will have a multiplier effect on the Indian economy that could exceed $3 trillion.
The development of mortgage-backed security and asset-backed security markets, driven by financial institutions like Citigroup, will create the liquidity required to free up this capital.
China, by contrast, has no rural property rights. The 750 million rural residents who lease land are at the mercy of local and regional government as to what compensation they will receive, if any, when they are forced from the land as a result of development, infrastructure improvements etc. Additionally, they have no right to borrow against their lease, and as such they have no assets. In fact, the Chinese government’s official figures state that more than 200,000 hectares of rural land are taken from rural residents every year with little or no compensation. Between 1992 and 2005, according to some estimates, 20 million farmers were evicted from agriculture due to land acquisition, and between 1996 and 2005 more than 21 per cent of arable land in China was put to non-agriculture use.
The result has not been unexpected, with over 87,000 “mass incidents” (or riots) reported in 2005 – a 50 per cent increase from 2003. Many provincial governments in China have begun to use plain-clothes policemen to beat, intimidate or otherwise subdue any peasant that dares to oppose these land grabs. And, also as would be expected, the beneficiaries from these policies have been developers and corrupt government officials.
RULE OF LAW
This is a cornerstone of any modern society. India has a legal system that has been in place for well over 100 years. It is internationally respected and includes laws that protect intellectual as well as physical property.
The rule of law creates predictability and stability, allowing entrepreneurial behaviour to flourish. This is clearly evident in India, with more than 6,000 companies listed on the stock exchanges, compared to approximately 2,000 in China. More telling is that of these 6,000 listed groups in India, only 100 or so are state-owned. This stands in stark contrast to China, where more than 1,200 belong to the state.
Can there be any doubt where the next Microsoft or Intel will be created? Certainly not China.
More than 100 Indian companies that completed initial public offerings as mid-cap firms now have a market capitalisation of over $1bn (£500m). Companies such as Jet Airways, Bharti Tele-Ventures, Infosys, Reliance Communications, Tata Motors (which just acquired Jaguar), Wipro and Hindalco are becoming multinational competitors with globally recognised brands.
China also has numerous companies with a market capitalisation of more than $1bn, but most of these are state-owned behemoths recognised for their sheer size and not their nimbleness.
When the rule of law is seen by investors and foreign companies as something that is beyond question, it serves to facilitate additional investments in research and development. For instance, 150 of the top global companies now have research and development bases in India. Additionally, the US Food and Drug Administration has certified more companies in India than in any other country outside the US, a testament to the innovation fostered by free markets and the rule of law.
China, meanwhile, has a legal system that does little to protect intellectual and physical property rights; it has been ranked with Nigeria in this respect. Indeed, China’s illegal copying of movies, music and software cost companies $2.2bn in sales in 2006, according to an estimate by lobby groups representing Microsoft, Walt Disney and Vivendi. This figure may in fact be understated as it does not include pirated products that have been shipped to overseas markets by government-controlled Chinese companies.
The rule of law, when applied evenly and justly in a democratic society, also helps to ensure that wealth accumulation does not favour individuals in political office or people connected to those in political office.
Democracy is a messy thing, especially when you have an electorate that exceeds 600 million motivated voters. However, it helps to ensure that individual liberties are respected and that the government is responsive and beholden to the will of the people – rich or poor. A democracy also ensures accountability through impartial courts that help enforce and protect such things as property rights, environmental rights, human rights and good governance.
India’s democracy is far from perfect but it is also quite young, and as incomes rise and the populace becomes more informed, we can expect that India’s state institutions will become more responsive and transparent.
And what about the hare? Consider this: a recent survey found that of the 20,000 richest men in China, more than 95 per cent were directly related to Communist Party officials. Where would you place your bet?
Bismillah-e-rehman-e-raheem,
We Pakistan people doing Jihad against Indian kafir by grace of Allah. and china men giving us low-cost plastic AK-47 and we spreading terror so noone liking indian and noone going to see poverty in indias. Pakistan rox! Inshallah
How funny you indian are. I am curious how you can get the six funny reasons to support your point of view.
Trust me, if you don’t try to find the real reasons that you are behind chinese, you will never overtake them.
Please, dear indian, don’t close your eyes and isloat your heart once more.
lol…wait and watch…..WE R INDIANS AND NOTHING IS IMPOSSIBLE FOR US.
so funny indian guys ,,,,u ll see china is china( great power) ,,,,,, & no one can defeat him ,,,,,,
Interesting post, another group therapy session for Indian’s insecurity about their place on the world stage? Lets look at the six reasons:
1) Population: First, yes India’s population is rising faster than China, but you ever stop to think why China is limiting its population? I mean are Chinese just enjoy not having kids coming from a culture that favors large family traditionally? Given the infantile mortality rate, I think if China wanted to there is no way India could surpass it in population. You could argue the Chinese are just stupid, but do you really believe that or perhaps they know something you don’t?
Secondly, large young population is an advantage if its useful workforce. However, given the illiterate of India, all you gonna have is a bunch of people who can’t read. How can they be productive in any fields except for those using hard labor given the trend is towards automation in the future? Further more, the growing population means increasing population burden on the social welfare and given the poor-rich disparity in India, its not a good thing.
2)BS, get your facts right. China produces a lot more steel than india and is a net imorter of steel. India produces a lot less and is a net exporter. Also China consumes 3 times the energy compare to India so tell me who is more heavy industry based. Don’t make up stuff to make your point.
3)superficial understanding at best, let me know how it goes in a few more years.
4)How can you shameless claim this with the level of illiteracy rate in India? BTW, China have a lot more research institutitons ranked in top 500 of world research universites than India. And what is the claim about low illiteracy rate in China? Its at 93% compare to India’s 60.
5)Environment, India is not even at the stage of industrialization and look at the condition of its river. I shutter to think what happen if it is developing like China.
6)Again superficial at best, jsut tell me one thing in US that is made by an indian company? Ever heard of Lenovo? Harrier?
1) yes, its true that india is far behind of china in the current scenario but considering the interval of time that india has had after independence is very less compared to china(60 years)while its rate of development and growth is faster than that of china which has had much more time for development after independence
2) yes, india has a greater rate of illiteracy but those who are educated are considered more skilled and intelligent than chinese
3) but still india has to overcome many problems like the corrution and inequality of wealth to emerge as a greater power.
i respect chinese as well indians but being an indian im on india’s side but i hope that in future these 2 countries will be the best allies (as uk-us)
To Nabeel
You know, I really hate people who boasts without even bother checking their facts and data. Just do a google search for verification for god sake.
1. Dude, should look at the date of nation finding vs that of china. India was founded in 1947, China in 1949. India’s growth rate have been consistently behind that of China for most of the time. currently, China is averaging 10% growht rate while India is at 8%.
2. I wonder what allows you to make sucha claim that India’s elite is better than China’s? Cause if that is the case, why is DRDO which represent cream of the crop for Indian research sucks so much compare to its Chinese counter part?
3. right, claim you have conquered corruption and inequality after you have done it first please. As far as I can tell, the country is still plagued with those problems.
To Nabeel,
How can you claim that educated Indian is more skilled and intelligent? If you talk about English skill, probably yes. But about skill. Is this right that India export mostly raw material to China and import manufactured goods? Is this right that farming productivity of India only a half or a third of China? Where are your skill?
About intelligence: is this right that IQ of average Chinese is 105, the highest in the world, whereas of average Indian is 82, among the lowest.