Will China be replaced by India?
The rise of China and India will be the most significant event in this century. With different national conditions, advantages and disadvantages, the two countries will take varying ways and adopt differing models. There will be races and competitions, as well as reciprocity and cooperation between them.
Last November, an international symposium, "Two Giants --- Comparison between China and India" was held in Delhi. Noted scholars including Dr. Nicholas R. Lardy attended the meeting.
Zhang Yuyan, a researcher with the Institute of World Economy under the Chinese Academy of Social Sciences (CASS), who visited India for the first time, simply couldn't believe Delhi's urban infrastructure level--- no expressway in its real sense, only a second-grade highway linking the airport and Delhi, vehicles of all kinds were running in a disorderly way with herds of livestock wandering about.
Dr. Lardy, who had been in India 20 years before, said, " India hasn't experienced much change during the period."
The following is the calculation made by Hu Angang and Men Honghua in their article " Comparisons of the comprehensive national strengths between China, the United States, Japan, Russia, and India" published in "Strategies and Management" Issue No.2, 2002.
The ratio of economic resources (GDP) to the world's total: China 11.16 percent in 2000, and India 5.46 percent;
The ratio of long-term economic growth expectation in the world's total: China 17.66 percent by 2010 and India 6.27 percent, equivalent to China's in 1990;
Average years of education: China 7.11 years in 1999, India 5.06 years;
The ratio of exported goods and services in the world's total: China 5 percent and India less than 0.8 percent.
Besides the figures listed above, the comparison also indicated that indexes in most fields China is far ahead of India. India has to undergo the process of chasing after developed countries as well as China. No wonder Dr. Lardy said openly in India, " India should learn from China's experience of opening to the outside world."
India's economy has suddenly become a hot topic of conversation at home and abroad since the beginning of the year. Probably this is connected with an article. In February at a national symposium in Washington, Huang Yasheng, associate professor with the Massachusetts Institute of Technology (MIT), reiterated his forecast given in his article carried in "Diplomatic Policies" magazine on India's admirable potential for economic growth. In Huang's opinion, what positions China and India are currently in are not important, what really matters is their future positions.
"India: Terminator of China's Sole Dance" was an article carried on the front page of "Economics News" on Feb. 27. It made a comparison between China and India in many aspects as shown below.
Indian banks may be not so good as to serve as examples for the world's financial industry, but the mistakes they have made are much less serious than those by their Chinese counterparts. A research report by McKinsey & Company indicated that by 2001 only about 10 percent of India's bank assets were non-performing loans, making up 4.4 percent of net assets and 8.8 percent of gross loans. However, at least more than 25 percent of China's bank assets, as Chinese banks willingly admitted alone, were non-performing loans.
India's stock market rejoiced their domestic and international investors in 2003. The performance of China's capital market paled before India's. India's stock indices rose 64.19 percent in total last year and the returns ratios on their six funds in Hong Kong were between 73.76 percent and 106.38 percent. By contrast, at least 800 billion yuan vanished from the Chinese stock market over the past two years.
Foreign experts analyzed that in the past 10 years, the Chinese economy grew at an annual rate of 7 percent, and India 6 percent. But the rate of China's savings deposits was as high as 40 percent and its foreign capital was injected into economic development. Indian banks absorbed 24 percent deposits and the country had less foreign capital. That means China earns US$7 from an investment of US$40 while India reaps US$6 from an investment of US$24.
The Chinese economy has had a take-off, but China's private enterprises have not developed accordingly, the country has not brought up companies capable of launching international competitions with their European and American counterparts. Whereas India boasts a large batch of world-level private firms based on software and information systems. A survey conducted in 2000 by CLSA on 25 newly-emerging market economies worldwide showed that India was placed sixth and China 19th in terms of standardized management. Of the world's top 200 small-sized companies listed by Forbes in 2002, 13 were India's; four were China's, all of them in Hong Kong.
Fifty and 25 years ago there was the common topic of discussion about India surpassing China, and so this is not a new topic, Western scholars believed that India would overtake China, because, they asserted, India is a market economy, while China is not. However, 25 years have already elapsed, China has been developing not along this track and has gained world-attracting achievements.
Douglas Zen held that it would not be easy for India to outrun China but India's advantages must not be taken lightly.
As we have all seen India is improving relations with its neighboring countries and intentionally strengthens its trade ties with China. The Sino-Indian trade volume, though currently worth only US$5 billion, is expected to increase geometrically, if India can effectively remove the hurdles in the way of its advance, such as social, racial and religions problems, and polarization between the rich and the poor.
Hu Angang maintains that the rise of China and India will be the most important event in this century, because their national conditions, strengths and weaknesses are different, the two countries will follow varied roads and adopt differing models. In the long run, their future common point is: These two most populous countries will face the question of rising afresh. But for China, it should turn itself not only into the "world factory", but also the "world office". The two countries will face the problem of chasing after and competing with each other, and engaging in reciprocity and cooperation.
(People's Daily Online)