Business Environment Project

INDIAN VS CHINESE ECONOMY

Submitted To:- Dr. Sonu Gupta

Submitted By:-Jaydev Sevak

CONTENTS…..IntroductionRecent Development HistoryProblems of Chinese EconomyProblems of Indian EconomyStrengths of Indian EconomyIndia or China – Next Superpower

Growth of China and India and its Influence on the World EconomyPolicy and ImplicationsConclusion

INTRODUCTION• Both are world’s most

ancient civilizations • Chinese built 4000-mile

Great Wall some 2000 years ago •Invented bureaucracy

Conti…..Indian contributions to :-

• Algebra, • Textile, • Chemistry, • Medicine, • Metallurgy, and •Astronomy in the Ancient and Medieval periods

Conti…..•India and China, lost their edge somewhere during the 16th and 17th centuries •Contacts between these two civilizations ceased during the colonial period because the new rulers of the world did not encourage such contacts. •When the contacts revived, they turned into conflict and hostility over rival territorial claims in the Himalayan region, the Chinese annexation of Tibet, and the Exile of Dalai Lama into (Dharamsala) India

Recent Development HistoryIndia became independent peaceful transition of sovereignty from Britain in 1947 China had a proletarian revolution in 1949 Both democratic India and Communist China embarked upon ambitious science, technology, and economic development programs through centralized planning. That relationship began to crack in 1962 because of the USSR’s reluctance to transfer nuclear technology to the Peoples Republic

Conti….. China continued its isolation and suffered serious

stagnation for 20 or so more years

The Indian economy began to open its door a bit more widely by the middle of the 1980s

It missed 20 years of the IT revolution that was sweeping the world and driving the global economy IBM and Coca-Cola were kicked out of India in

the middle of 1970s.

Conti…. Chinese economy has been growing at about 9-10% per year (1980)

GDP per capita of China is the world’s 4th largest economy, overtaking Japan within next 5-10 years

India has left behind its “Hindu growth rate” of 3%

to hit an annual growth rate of 8+%.

India’s per capita GDP - 12th largest, 4th largest in the world in terms of purchasing power parity

Problems of Chinese Economic Growth…?

1. Pollution.

2. Shortage of Power

3. Growing Income Inequality.

4. Property Boom

5. Inefficient Banking Sector.

Conti……

6. Unemployment

7. Undervaluation of Yuan.

8. Overheating Economy.

9. Huge Balance of Payments Surplus.

Problems Facing Indian Economy…?

1. Inflation. (7-8%)

2. Poor educational standards.

3. Poor Infrastructure.

4. Balance of Payments deterioration.

Conti…..

5.High levels of debt

6.Inequality has risen rather than decreased.

7.Large Budget Deficit.

8.Rigid labor Laws.

Strengths of Indian Economy

•Demographics of India are favorable.•There is much scope for increases in efficiency.•India is well placed to benefit from globalization and outsourcing. •Positive Growth Forecasts

India OR China and Next Superpower …????

According to the US strategic review , Washington wants India to play “a more influential role in global affairs.” On the other hand, the QDR (Quadrennial Defence Review) underscores the US concerns about China’s military ambitions and decision-making processes.

Conti…..

• If the US finds itself more at ease with India,rather than China, it makes perfect sense.

• Both are successful, open, and largedemocracies with sound, viable democraticinstitutions as well as independent media andjudiciary

Growth of China and India and its Influence on the World Economy!!

Indicators of the Extent of Integration in World Markets for Goods and Services Shares of China and India in Global GDP and its Growth Sources and Sustainability of Growth

• Factor Accumulation • Growth in Total Factor Productivity• External Capital Inflows

Policy Implications

•Chinese GDP growth since 1980 - 9% •India's GDP growth since 1980 - 6%•With populations of 1.3 and 1.1 billion in 2003, they present huge & fast growing domestic market for a range of goods and services, • and export opportunities for producers in the

rest of the world.

Conti….

• Their increasing competition for the world’s raw materials and their increasing shares in the global markets for a range of goods and services, is a threat to their prosperity and growth.

• Acceleration of global growth would increase the demand for transport and shipping.

Conclusion…!!!

Whether or not India overtakes China in the next two decades, it is clear that both countries will be economic powerhouses in the medium term. Undoubtedly, their growth will have significant impacts on the World economy.

THANK YOU…..

Any Queries…????

INDIA AND CHINA

A Economic Comparison

Economy: Overview• China has a higher GDP• China has a higher GDP per capita• China has a lower inflation rate• China has lower unemployment rate• China has higher current account

balance• China has higher GINI coefficient

than India, which is not good.

GDP TREND SINCE 1980s

GDP PER CAPITA TREND SINCE 1992

Inflation

STATISTICS

CHINA INDIAGDP >7.5% <5%

GDP PER CAPITA $6747 $1504

UNEMPLOYMENT RATE

4.1% 6%

CURRENT ACCOUNT BALANCE

$202 Billions

$-46.9 Billions

GINI COEFFICIENT 47.4 36.8

Demographics: Overview

• China has a larger population but India has a younger population.

• China is more urbanised where as India has greater rural population.

• China has larger labour force.

4th

7th

China India

9.4% 5.7%11.3% 6.9%

46.7% 40.4%

15.4 % 18.2%17.2% 28.9%

31%68%

Health & Education: Overview

• China has higher life expectancy rate and lower infant mortality rate.

• China has higher literacy rate

y

omy

Though the economic growth is less than 5%New government fills hope for growth and development.