Want to be like China

[StingRoy]

A lesson from China that may help India reduce slum populations: invest heavily in construction and construction equipment. This will drive the growth of not only real estate, but machinery, advanced materials, chemicals, IT, services... everything.
People say China's property market is overheated. I say, that's due to speculation. We've built the capacity to absorb a further 20% additional urbanization and avoid slum formation with this.

Yes, I agree that heavy investment is required, but why concentrate it on a few urban areas? Industries can be setup in remote areas as well. Till date there are several small and medium scale industries spread out all over India doing there share, but it has never been able to provide employment to more than a few hundred people at the most per setup. India is already investing very heavily in the public infrastructure which has been able to generate a number of employment, there is a slow and steady progress in this segment.

I have always believed that the growth always comes from the people and their willingness to develop their own area, the govt can pump in billions of dollars into a certain area, but if the people are not willing to capitalize on it, it is never going to be sustainable. The Chinese model is good in generating employment, but it is also resulting in a heavy regional imbalance in the country. Only recently has the CPC realized and started to concentrate in the western areas.

The problem with slums is many fold and it is a very complicated problem. Local growth may help but in the end, urbanization is irreversible for countries like ours, and the capacity has to be built.

India should note that construction costs are strongly tied with both labor and materials costs, as machinery and design costs are relatively fixed. If India waits too long, both costs may rise, due to India's economic growth and due to shortage of raw materials. This is why China was very rushed to finish the high speed rail within the next 2-3 years. This way, the railroads are built before either labor or raw materials becomes limiting.

There are good and bad sides of this model that China is following. I have been hearing that investing now before everything becomes expensive as a reason from many Chinese friends, but this is an untested growth model and may not suit to India. Just because construction costs will become expensive does not mean that I will start building my house where I want to retire.

Construction and raw material costs are bound to increase and it is a good sign that the economy is progressing in the right direction, but building ahead of the demand is a big risk. There is always an associated cost of maintenance and upkeep for all the infrastructure that you build, so if the infrastructure is underutilized for a few years, it is draining more money on top of the extra expenditure that was done in the infrastructure itself. I would rather spend money in areas where we are deficient first and make sure infrastructure keeps up with the demands of the economy.

 

[Tigershark]

As to your "Indian model" of economic development, only change is constant. Policies and priorities need to change with the changing economy and its requirements. With a growing middle class, this is the need of the hour. But having said that, the so called "Indian model" has traditionally focused on development at a much more distributed level, each state is naturally gifted with their own distinct advantages and hence will be suitable fit for a wide variety of goods. And in the past we have never lost focus on the agrarian sector and it the govt should be continuing with this policy. Avoiding widespread migration is the key here and only then can we provide inclusive growth to the populace.

That's not what many Indians claim. They bash China for having an export-led economy and insist that the Indian model of democracy, free-market capitalism, and services led growth will prove superior and more sustainable than China's economic policy.

Instead, India is following in China's stead to develop is manufacturing and export sector. Now I have no reasons to believe any Indian who claims that Indian's economic model is superior than China's.

 

[tallboy123]

That's not what many Indians claim. They bash China for having an export-led economy and insist that the Indian model of democracy, free-market capitalism, and services led growth will prove superior and more sustainable than China's economic policy.

Instead, India is following in China's stead to develop is manufacturing and export sector. Now I have no reasons to believe any Indian who claims that Indian's economic model is superior than China's.

^^we will have both,Services industry and manufacturing..not only manufacturing...
So our economic model is unique..and ur economic model is also unique..

 

[ephone]

You indicate China does not have a services industry or strong services industry???

^^we will have both,Services industry and manufacturing..not only manufacturing...
So our economic model is unique..and ur economic model is also unique..

 

[rcrmj]

^^we will have both,Services industry and manufacturing..not only manufacturing...
So our economic model is unique..and ur economic model is also unique..

you 'will' have, always 'WILL'

to clearify some of ur points, chinese service industry output in 2010 $2.65trllion, indian's is only $760million, and now u do the comparison.
so it is going to be a very very LONG WILL``

 

[Veritas]

I thought India wanted to skip large-scale manufacturing, and go straight to services?

India is not Israel, there are lot unemployed who are semi-skilled and service sector cannot accomodate them, and a healthy manufacturing base is required to give a path for employment and prosperity for this group.

 

[Veritas]

you 'will' have, always 'WILL'

to clearify some of ur points, chinese service industry output in 2010 $2.65trllion, indian's is only $760million, and now u do the comparison.
so it is going to be a very very LONG WILL``

pretty sure, India's service industry is not sub-billion dollars, if only people stop pulling number down from their.....

 

[Aramsogo]

pretty sure, India's service industry is not sub-billion dollars, if only people stop pulling number down from their.....

I'm pretty sure he meant billions.
Everything else being equal (education, work ethic, infrastructure, raw materials), India is still disadvantaged compared to China for manufacturing in simple geography. China is just closer to other east Asian suppliers and closer to the vital US market. China is just so competitive now in logistics and efficiency in manufacturing having had a 20 year head start.

 

[StingRoy]

That's not what many Indians claim. They bash China for having an export-led economy and insist that the Indian model of democracy, free-market capitalism, and services led growth will prove superior and more sustainable than China's economic policy.
Instead, India is following in China's stead to develop is manufacturing and export sector. Now I have no reasons to believe any Indian who claims that Indian's economic model is superior than China's

Not the question of bashing one another... rather about the right time to do the right things. I never questioned the manufacturing based economy that China has... it has several advantages which are working in China's favor.

Indian model of free-market capitalism is better for India since it is more based on the needs of our people. You should always note that service industry pays lot more than manufacturing industry. But following that way, the Indian service industry has been able to raise the living standards of millions rapidly. Now these new upper middle are demanding more products for local consumption which is where the need for setting up manufacturing industry arises.

India is following China to develop its manufacturing sector and so is China following India to develop its services and IT sector. At the end of the day, I feel both the economies will be able to ride up the value chain in both sectors leading to an inclusive growth for their population.

 

[StingRoy]

I'm pretty sure he meant billions.
Everything else being equal (education, work ethic, infrastructure, raw materials), India is still disadvantaged compared to China for manufacturing in simple geography. China is just closer to other east Asian suppliers and closer to the vital US market. China is just so competitive now in logistics and efficiency in manufacturing having had a 20 year head start.

Yes China indeed has its advantages regards proximity to the US market, but more than that it is right now catering to the local market more than the export market.... As the consumerism grows in China they will be absorbing most of the goods within the country.

One advantage in having a service based industry is that the geographical location does not matter much. India is in an excellent time zone sitting in between East Asia and Europe/US... so there are definite advantages for us in service and IT sector.