COMPARINGTHE ECONOMICGROWTH
OF CHINA AND INDIA
" Inthe early stages following the foundation of
the People's Republic of China (PRC), the national
economy of China and India were at similar levels
" In1950, India's gross national product (GNP) was
49.5% higher than that of China
" Asfor the per capita GNP, India's was 2.3 times
higher than that of China, while the Chinese per
capita gross domestic product (GDP) was only
43.5% of India's
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" Since the establishment of the PRC, especially
in the late 1970s, with the opening up and
reform policy, the Chinese economy has made
rapid progress and notable achievements
regarded as the "Chinese Miracle"
" India has also attained sometimes fast and
sometimes slow economic development
through a series of economic reform policies
since 1991
China-India's Economic Growth:
Achievements in Recent Years
Chinese economic reform and development
have taken a traditional road of
industrialization, in which manufacturing
industry has been established as the core
force to drive the development of other
industries and to eventually accelerate the
development of national economy and
promote the adjustment, optimization, and
upgrading of industrial structure Activate
Chinese economic development has
experienced a process of enhancing domestic
manufacturing industry and accordingly the
general industrialization of the country by
considerably expanding investment demand
(by domestic investment and foreign direct
investment (FDI) entry) and export demand
(with huge trade surplus)
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" Mckinsey& Companyclaims that the
development of the manufacturing industry has
made Chinese mainland a "world factory" within
a short period of 20 years, and China has found a
sustainable developing pattern for manufacturing
industry
China
well
has gained great success in opening up as
First, the introduction of foreign capital has
gained notable achievements.
" By 2010, the Chinese FDl mounted up to
US$105.7 billion, ranking the second in the world
while the fourth in 2005
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" China has alreadybecome one of the world's
most attractive FDI countries.
Until now, with over 30 million foreign
companies carrying out business activities in
China, China has become the second FDI
inflowcountry, ranking onlysecond to the USA
in the past 5 years
" Almost allFortune 500 companies have
invested in Chinese mainland
Second, Chinese foreign trade has maintained
rapid development.
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At present, China's volume of total imports
and exports rank the second largest in the
world
" Third, China's foreign investment has made
considerable progress.
" By2009, China's FDI outflows had maintained
steady and rapid growth for 8 consecutive
years, with an average annual growth rate of
over 50%, ranked fifth after America, France,
Japan, and Germany in the world
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" Fourth, the national per capita income is also
increasing rapidly.
" Fifth, the total scale taken in world economy has
been increasing.
" Chinese GDP ranking in the world increased from
fifth in 2005,to fourth in 2006, third in 2007, and
surpassed Japan to be the world's second largest
economy for the first time in 2010
" The proportion of China's GDP in the world has
increased year by year, from 5% in 2005 to 9.5%
in 2010
" If the totalGDP in 2010 is taken as the base, the
Americaneconomy developsat an average
annualgrowth rate of 2%,while China's GDP
grows at an annual rate of 8%
" It is estimated that China's GDP will reach nearly
US$20trillion by 2025.
Inother words, in 2025, China's GDP will rank
alongside or outpace America's
India's economy performed poorly during 1950s
1970s, so India has got into the Hindu equilibrium
with a low-speed economic development (3%
3.5%)
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In 1950, India's per capita income was about
40% higher than China's, while in 1978 the
two countries almost had equal per capita
income.
In the1980s, India's economy began to speed
up andthe economic growth accelerated in
the 1990s
" In 1999, China's per capita income increased
to twice of India's.
" India's economicgrowth reached 6% during
1980-2002 and 7.5% during 2002--2010, while
China's average annual GDP grew by 10% in
1978-2010.
Table 1 ComparisonofEconomic Growth Rate between India, China and America (2006-2013)
2006 2007 2008 2009 2010 2011 2012 2013 4verage Growth
Rate (2006-2013)
Total 52 S.3 2.8 -0.6 S.0 3.5 3.5 3.5 3.5
Amenca 2.7 2.0 0.0 -26 2,8 1.8 18 2.2 14
China 12.7 142 9.6 9.2 10.3 92 8.2 8.8 102
India 9.7 9.9 64 5.7 8.7 74 7.0 73 78
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Overall, the economicdevelopments of China
and Indiashow distinct differences
First, China is twice that of India both in total
GDP and per capita GDP
Second, the Chinese foreign trade scale is 6
times that of India
Third, Chinese FDI is 10 times that of India
" Fourth,the Chinese economy took 11.16%
and 17.66% in the world share in 2000 and
2010, respectively, while India took 5.46% and
6.2%, in the respective years
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" Thus, it willstill take time for India to overtake
China either in terms of total economic scale
or percapita income levels
" Manyscholars consider the economic reform
implemented by the Rao government as the
main cause for Indian economy's growth in
recent years
"Policy reforms during the 1980s were
sufficient to trigger the acceleration of
economic growth
" India's averageannual economic growth rate
reached nearly 6% between 1980 and 2005
India's reform focuses on three aspects:to
encourage imports of capital goods and
products, moderate relaxation of industrial
control, and moderate tax reform
" Anotherfactor that promotes the rapid
economicdevelopment in India is the T
industry
" Without aany broad-based manufacturing
industrial revolution, the economic growth of
India depends largely on the services industry
" Withthe rise of the software industry after
1986, India witnessed a rapid increase in
exports
" The proportion that the services industry has
taken in Indian GDP in the last 10 years
accounts for over 50%, which is 12%-13%
higher than that of China
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" At present, Indiansoftware exports to over
100countries and regions in the world; 200 of
the world's top 500 enterprises have
outsourced to Indian software developing
services.
" The exports of Indian software service rank
the second in the world and account for 10%
tototal exports of India
Main factorsguiding the rapid development of
software industry are the following
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" The first is policy guidance
" The Indian government's developing strategy
is carried out from several key industries, to
use limited resources and centralized support
policy to related industries
" Since the Rajiv Gandhiera, India began to
focus on the development of the IT industry
and has established the information industry
as economic growth poles
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" In the early 1980s,the government clearly
proposed "to drive India to the 21st century
by electronic revolution"
The Vajpayee government has further
established the goal of making India "a global
IT superpower" and "pioneer in the era of
information revolution,"
The second is the habitat and hatching role
played by science and technology parks for
the software industry
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" The first three established Indian science and
technologyparks, of which Bangalore is the
center
One reason is that research team and strength of
the Indian Institute of Technology provide the
development of the software industry in
Bangalore with sound technology and talents
support
" Anotherreason lies in the early introduction of
multinational companies, such as the satellite
ground station, which has solved the problem of
high-speed data transmission
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" Third, multi-level software talents are fostered
by multi-channel training, form multi-level
human resource structure, and provide
human support for the rapid development of
the software industry
Growing Tendency and Problems in Long
Term Economic Growth of China and India
" China and India's economic development is
increasingly concerned about the long-term
sustainable growth prospects
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