Comparative Study Of India And China As Economies

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5/12/16 Economics Reference this

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India and China are the world’s next major powers. Both India and China have registered strong economic growth since 1980 and opening up to international trade and capital. The Indian and Chinese economies have benefited from FDIs that have provided new goods and services and therefore a spurt in industrial growth. The Chinese and the Indian economies rank number 1 and 2 respectively as the fastest growing economies in the world.

India and China both Economies are developing with higher rate of growth . It is also estimated that India will get 3rd largest economy in the world after the place of America and China.

There are so many factors which supports India’s Economy and China’s Economy to bacome the superpowers. but there are some factors which resist to the growth of these Economies .


The economy of India has great and competitive advantages in the today’s business world . There are some points of Indian Economy which are as follows :-

GDP is $752 billion; world’s 10th largest economy in terms of GDP.

Economic liberalization began in 1991; continues at a slow pace.India is slowly integrating with global markets.

Since the 1990s, the middle class has grown and poverty levels have fallen

GDP growth has fallen only slightly to 6.4% (2000-2005) from 6.7% (1994-1999). Tariffs are still among the world’s highest (average 22%).

Challenges ahead: reduce poverty, accelerate pace of reform, reduce fiscal deficit, upgrade infrastructure.

India’s successes: IT, pharma & biotech, telcom, science and technology skills, manufacturing gaining competitiveness.

wo – way U.S.-India trade tops $25 billion a year, was $10 billion in 1997.

India’s GDP grew at an impressive 7.8% during 2005-2006.

India is one of only three countries that makes supercomputers (the US and Japan are the other two).

India is one of the sixth country who launches sattelites

The Bombay stock exchange lists more than 6000 companies , only the NYSE has more .

Eight Indian companies are listed on the NYSE; three on the NASDAQ.

By volume of pills produced, the Indian pharmaceutical industry is the world’s second largest after China.

India has the second largest community of software developers, after the U.S.

India has the second largest network of paved highways, after the U.S.

India is the world’s largest producer of milk, and among the topfive producers of sugar, cotton, tea, coffee, spices, rubber, silk, and fish.

100 of the Fortune 500 companies have R&D facilities in India.

Two million people of Indian origin live in the U.S.

Indian-born Americans are among the most affluent and best educated of the recent immigrant groups in the U.S.

Thirty percent of the R&D researchers in American pharmaceuticalcompanies are Indian Americans.

Nearly 49% of the high-tech startups in silicon Valey and Washington, D.C. are owned by Indians or Indian-Americans.l

There are over 700 companies in Silicon Valley owned by Indian-Americans.

India sends more students to U.S. colleges than any country in the world. In 2004-2005, over 80,000 Indian students entered the U.S. China sent only 65,000 students during the same time.

In a case decided by the U.S. Supreme Court, an Indian-American woman scientist, Dr. Ananda Chakrabaty, won the argument that persons may be granted patents for useful manufacture of living organisms.

A 36% surge in imports at US$106bn resulted in India’s trade deficit touching a record high of US$26.5bn in FY05 compared to US$14.3bn in FY04.

The predicted trade deficit for FY06 is US$30.9bn.

Citigroup estimates that the value of Indian currency is expected to decline by 15% over the next 4 years.

India’s savings rate has risen to 28.1%, while investments have risen by 26.3%.

Non-agricultural sector growth may trend to 9% in the coming years.

In FY04, India committed more revenue to subsidies (nearly US$1bn) than it did to non-capital defense expenditures.

Almost 55% of India’s tax revenue in FY04 was collected from excise duties and customs collections.

India’sFY06 budget targets a fiscal deficit of 4.3% of GDP.

In India, services account for nearly 50% of GDP.

So , There is much scope for India to Gorw in future and to become the superpower in the coming years.

Factors resist Indian economy :

there is no support of any other country when it goes to the increasing way.

Some govt policies resist the growth of economy

the budget of India also stops its growth

corruption is very much in India .

Tax evasion is at a great extent

people sometimes does not give pay attention to the serious dealing with other nations .

Population is vary high .

No proper set to run the particular task.

Now I will discuss some powers / facts of china to become the superpower in future too .

Every thing in China is big and has big numbers. Even when numbers are small on a percentage basis they can be huge in real terms.

One thing that investors find so attractive is that many domestic markets-for cars, computers and designer products-are still in their infancy and thus capable of vigorous growth in the future.

China has three main impacts on the global economy:

1) as a purchaser of large amount of raw materials and agricultural products, boosting the economies in producing countries

2) as a supplier of cheap labor for companies around the globe

3) as a supplier of cheap goods which brings prices down for consumers around the world. Prices around the world have being driven down by Chinese factories.

The model for growth in China has been to subsidize manufacturing and exports at almost any cost with low-interest loans, export subsidies and other incentives to keep factories humming and give them an advantage over foreign competitors.

China has managed to combine Communist ideolog , the government calls a “socialist market” through using Chinese traditions to justify its authoritarian hold of the government and control of free market forces.

China’s formula for success for the past two decades has been cheap labor, holding down the value of the yuan, picking and supporting top-performing companies, and favoring exports for growth.

The model for growth in China has been to subsidize manufacturing and exports at almost any cost with low-interest loans, export subsidies and other incentives to keep factories humming and give them an advantage over foreign competitors.

The People’s Bank of China in China’s central bank. It has two primary missions: to maintain domestic price stability and to ensure stable foreign exchange.

High growth also has allowed workers to receive double digit pay increases each year and attracts foreign investment, which in turn brings modern technology and management skills.

factors resist to growth of Chinese economy

A Basic Estimate of Chinese Long-Term Economic Growth

5. Non-saturation of government investments

4. An upward tendency of direct foreign investments in China will

maintain steadily

The effect of the comprehensive unbalance-elements exceed single


The effect of non-economic factors exceeds that of economic factors

China is not a good setting for a Frank Capra tale, but people do have influence over their autocratic masters .

There are some points which differs the both economies of countries.


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 resource 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


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,as 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


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

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.

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.

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.

After studied the both economies , it is seen that china has the more chance to become the superpower than India . But it is not the actual thing to be happen .

If we see with the very carefully we may find INDIA is the superpower .

The present business world , the president of United States , Barack Obama came in India to get jobs for their citizens and also make many other business deals.

China’s products are cheaper but the quality of the products are very bad . So it gets the bad image in the business arena.

China has great population as compare than India .

India produces more software products than China.

The techniques are more efficient and best than china in production .

There is more chances to increases the value of rupee .as in the share markets Indian companies shares gets increased value.


It is concluded that India has efficiency for superpowers.

India has the resources to compete in the future to exists in business world.

India a country of engineers , machics,doctors businessman etc . So it has the plus points as compared to all the economies of the world.

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