A comparison of economic development in China and India October 26, on Twitter on Facebook on LinkedIn While the average income in China and India remains low, their impressive economic growth and enormous populations have made them two world powers of extraordinary importance, whose economies are surpassed only by that of the United States.
Therefore, even if a large slice of their population remains in poverty, the economies of China and India are completely integrated into the world markets and financial exchanges, making the development of these two key countries important to maintaining a peaceful international scene during the 21st Century.
Following the financial crisis of and the difficulty faced by the main world powers in maintaining a sustainable economic growth, China and India are among the few economies to record a positive rate of growth. Many hope that a closer collaboration among these two colossus may lead the rest of the world to break the negative trend of the worldwide economy.
Nevertheless, when China and India are more closely and meticulously compared, the profound difference in development between the dragon and the elephant is immediately noticeable, with the former having a decisive advantage over the latter.
The situation in China Since the beginning of the Chinese economic reform launched by Deng Xiaoping inChina has passed from a closed, centralized economic system to a market economy. The reforms began with the dismantling of the communal systems in the countryside, moving on to the liberating of prices, to fiscal decentralization, to greater autonomy of state companies, to the development of the private sector, to the development of a financial market and to a modern banking system, up to the opening of business abroad and the Direct Foreign Investments IDE.
In China became the largest exporter of essential goods and surpassed Japan in terms gross internal production PIL. The restructuring of the Chinese economy has increased the PIL tenfold since Measured in terms of buying power equivalent PPAin China became the largest economy in the world, passing the United States for the first time in history.
Nevertheless the per capita income of Chinese residents remains below the world average. Moreover the Chinese government has numerous difficult challenges to face, among which are: Reducing the enormous savings rate for families and promoting domestic consumption; Increasing work opportunities in sectors with high paying salaries and promoting the hiring of newly-graduated students; Reducing the level of corruption and other economic crimes; Reducing environmental pollution; Reversing the aging process of the population.
In response to these problems in the Chinese government, during the Thirteenth Five-Year Plan, emphasized the need for new and effective economic reforms to increase innovation and domestic consumption so that the Chinese economy is less dependent on fixed investments, exports, and heavy industry.
The situation in India India is slowly becoming a market economy. In the Nineties, the government promoted economic freedom measures, such as the deregulation of the industrial sector, privatization of principal state agencies SOEsand a reductions on controls on commerce and direct foreign investment.
Almost half of the workforce is engaged in the agricultural sector, but the real backbone of Indian economic growth is in the service sector. Nevertheless, starting inthe Indian economy has recovered and grows thanks to government investments, measures introduced to reduce the deficit, and also thanks to greater participation on the part of foreign firms.
Nov 23, · China’s central bank has more cause to worry than the Fed or the ECB. The past decade has been marked by a series of false economic dawns. This time really does feel different. China economic growth has been acknowledged by many as remarkable. In a very short span of time, it has grown to become one of world's largest economies. It is predicted that by , Chinese economy is likely to overcome that of United States of America. Credit for this remarkable economic growth of China goes to its communist government, . China has had a remarkable period of rapid growth shifting from a centrally planned to a market based economy. Today, China is an upper middle-income country that has complex development needs, where the Bank continues to play an important development role.
India, like China, has to face a series of challenges in order to maintain and sustain current economic growth, such as: Lowering the poverty rate; Eliminate violence and discrimination against women and children; Implement a more efficient distribution system throughout the territory; Promote intellectual property rights; Improve transport systems and infrastructure for agriculture; Create greater job opportunities in sectors other than agriculture; Control migration between the countryside and cities; Reform and improve the scholastic system.
Level of development in China and India After having briefly discussed the principal historical factors that have brought China and India such exceptional economic growth, and having set out the challenges that the two countries must face in the future, the second part is dedicated to a deeper analysis on the different level of development of China and India so as to understand the reasons why the differences between the two countries are so large and unable to be remedied in a short period of time.
We will analyze the PIL growth rate, the infrastructure, the level of foreign investments attracted IDEthe total volume of imports and exports, as well as the national savings rate. In the Fifties, the national economies of China and India were at the same level.
Nevertheless, following the opening of foreign investments and the reforms promoted during the Seventies, the Chinese economy recorded enormous progress and has surpassed the Indian economy in every category. In foreign investments IDE in China amounted to 1.
In addition Chinese foreign investments have maintained constant growth: Even Chinese foreign commerce has maintained a high growth rate, recording a positive balance of billion USD; on the other hand, India recorded a negative commercial balance of billion USD. In terms of PIL, if China has recorded an exceptional growth in the last ten years, only recently has it begun to slow, recording a general growth of 6.
Conversely India, with a PIL growth of 7. In terms of national income per capita, China with In conclusion, as Martin Jacques said, even if the Indian economy were to grow faster than the Chinese, India would need an enormous period of time before reaching a level of development and complexity on scale with the Chinese economy.
The reforms concentrated on three main aspects: Moreover, Indian economical development was led by active industry in the technological sector; having a poor infrastructure and without a trustworthy manufacturing sector, India has based its economic growth on its service industries.
The main reason why the service industry has had a better performance than the Chinese is found in state investments; in the Eighties, the government of Rajiv Gandhi openly declared that India would be led into the future through a technological revolution.
Lately both China and India are facing the same difficulties in terms of economic growth, namely the impossibility to depend entirely on the industrial and service sectors.
Both countries need to reduce their dependence on foreign commerce and promote a more far-reaching economy, extended into the highest number of sectors possible so as to avoid being trapped in the chain of international production. The Indian industrial sector is very weak and even if it had access to a numerous, young work force, it would still be at a deficit of minimum education and training.Development: China, economically extremely backward before , has become one of the world's major economic powers with the greatest potential, and the overall living standard has reached that of a fairly well-off society.
China has had a remarkable period of rapid growth shifting from a centrally planned to a market based economy. Today, China is an upper middle-income country that has complex development needs, where the Bank continues to play an important development role.
China’s twelfth five-year economic plan marks a shift in emphasis from high growth to the quality, balance and sustainability of that growth. .
The development of the manufacturing industry has transformed China into the “factory of the world” and has created an industrial substrate sustainable in the long term.
In foreign investments (IDE) in China amounted to trillion USD, while in India that number is . China’s Economic Rise: History, Trends, Challenges, Implications for the United States Congressional Research Service Summary Prior to the initiation of economic reforms and trade liberalization nearly 40 years ago, China.
The DC China Center is supported by the DC Mayor's Office, Office of the Deputy Mayor for Planning and Economic Development (DMPED), Department of Small and Local Business Development (DSLBD) (ExportDC), and in collaboration with private-sector members of the DC business community.