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30 years of growth on steroids: How China surged ahead of India in race for economic domination
Economy
Shiv Nalapat
Updated Jun 25, 2020 | 13:39 IST
China's transformation from a largely agrarian economy to a manufacturing hub between 1990 and 2010, has been central to its rise to become a global force with great economic clout.
KEY HIGHLIGHTS
By developing a strong manufacturing foundation, Ping managed to achieve an impressive compound annual growth rate of 10 per cent. India, meanwhile, continued to struggle under the policies of the Morarji Desai-led government, and the stagnation continued during the prime ministership of Indira Gandhi. It was only following the historic recession of the 1990s, that India began opening up its economy under the recommendations of then Finance Minister Manmohan Singh.
It is worth noting though, that although China's GDP exceeded India's in 1978, per capita incomes still lagged behind those of India's. As of 1990, China's per capita income stood at $368, while India's was higher at $368. But China's second phase of liberalisation during the next decade would see it take advantage of rising labour costs across the world, fashioning itself into an irresistible manufacturing destination. Over the next three decades, Chinese per capita incomes enjoyed steady growth, and as per the Chinese National Bureau of Statistics, stood at $10,276 in 2019. World Bank data from 2018 reveals that India's per capita income was pegged at just $2,104.
Key to China's growth was the surge in exports that followed from the country's inclusion into the World Trade Organistion in 2001. Between 2001 and 2008, the value of China's export market skyrocketed from $266.1 billion to $1.43 trillion – a five-fold increase. The next decade saw the export engine slow significantly but still rise to $2.26 trillion – nearly double of its 2007 figure.
Meanwhile, India completely missed the bus, with 2018 estimates of Indian exports pegged at just $0.54 trillion. Central to China consolidating itself as the 'world's factory' was an infrastructure revolution that has taken place in the last two decades, which saw the construction of new cities, airports, high-speed rail networks and ports. China's investment rates are also among the highest in the world.
With regard to exports, India has only been able to keep pace within the domain of services exports. The value of India's services exports in 2018 stood at $205 billion compared to China's $233.6 billion. This has primarily been driven by software exports, spearheaded by the nation's rich entrepreneurial talent and spirit.
In contrast, manufacturing in India has stalled with many companies still tethered to the import-substitution model that has disabled them from competing in the global arena. India continues to over-rely on Chinese imports even for the most generic goods. Its trade deficit with China has swelled in the last two decades and, reportedly, stood at $48.7 billion in the previous fiscal year. Notably, the deficit is almost identical to the 2014 figure when the Narendra Modi-led government came to power, suggesting that the Centre's much vaunted 'Make in India' campaign has, till date, fallen short of its objectives.
https://www.timesnownews.com/busine...india-to-become-an-economic-powerhouse/611774
Economy
Shiv Nalapat
Updated Jun 25, 2020 | 13:39 IST
China's transformation from a largely agrarian economy to a manufacturing hub between 1990 and 2010, has been central to its rise to become a global force with great economic clout.
KEY HIGHLIGHTS
- From 1978 onwards, China began adopting a policy geared towards liberalisation under the stewardship of then Chairman Deng Xiao Ping
- Between 1990 and 2020, Chinese per capita incomes have enjoyed steady growth, and as per the Chinese National Bureau of Statistics, stood at $10,276 in 2019
- Between 2001 and 2008, the value of China's export market skyrocketed from $266.1 billion to $1.43 trillion – a five-fold increase
By developing a strong manufacturing foundation, Ping managed to achieve an impressive compound annual growth rate of 10 per cent. India, meanwhile, continued to struggle under the policies of the Morarji Desai-led government, and the stagnation continued during the prime ministership of Indira Gandhi. It was only following the historic recession of the 1990s, that India began opening up its economy under the recommendations of then Finance Minister Manmohan Singh.
It is worth noting though, that although China's GDP exceeded India's in 1978, per capita incomes still lagged behind those of India's. As of 1990, China's per capita income stood at $368, while India's was higher at $368. But China's second phase of liberalisation during the next decade would see it take advantage of rising labour costs across the world, fashioning itself into an irresistible manufacturing destination. Over the next three decades, Chinese per capita incomes enjoyed steady growth, and as per the Chinese National Bureau of Statistics, stood at $10,276 in 2019. World Bank data from 2018 reveals that India's per capita income was pegged at just $2,104.
Key to China's growth was the surge in exports that followed from the country's inclusion into the World Trade Organistion in 2001. Between 2001 and 2008, the value of China's export market skyrocketed from $266.1 billion to $1.43 trillion – a five-fold increase. The next decade saw the export engine slow significantly but still rise to $2.26 trillion – nearly double of its 2007 figure.
Meanwhile, India completely missed the bus, with 2018 estimates of Indian exports pegged at just $0.54 trillion. Central to China consolidating itself as the 'world's factory' was an infrastructure revolution that has taken place in the last two decades, which saw the construction of new cities, airports, high-speed rail networks and ports. China's investment rates are also among the highest in the world.
With regard to exports, India has only been able to keep pace within the domain of services exports. The value of India's services exports in 2018 stood at $205 billion compared to China's $233.6 billion. This has primarily been driven by software exports, spearheaded by the nation's rich entrepreneurial talent and spirit.
In contrast, manufacturing in India has stalled with many companies still tethered to the import-substitution model that has disabled them from competing in the global arena. India continues to over-rely on Chinese imports even for the most generic goods. Its trade deficit with China has swelled in the last two decades and, reportedly, stood at $48.7 billion in the previous fiscal year. Notably, the deficit is almost identical to the 2014 figure when the Narendra Modi-led government came to power, suggesting that the Centre's much vaunted 'Make in India' campaign has, till date, fallen short of its objectives.
https://www.timesnownews.com/busine...india-to-become-an-economic-powerhouse/611774
