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India & China: No surprises here - Views on News from Equitymaster
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  • Feb 20, 2001

    India & China: No surprises here

    Okay, it is a much talked about subject. Therefore, we will make a conscious attempt to limit the ‘bhashan’. Plain facts. The results will probably not surprise many. China is truly a juggernaut in every sense of the word. Even on social parameters, it emerges a clear winner.

    (FY00)   India China
    Population Million 998 1,250
    Labour force Million 431 743
    GDP US$ bn 460 991
    Per capita GDP US$ 461 792
    Source: Statistical Outline of India
    China is today the most populous country in the world. Half a century down the line, the not so coveted post will be held by India. China's labour force as a percentage of the overall population is much higher. Basically this means that in proportionate terms, there are more working people in China than in India. This is primarily the reason why China's per capita GDP is 60% higher than India's.

    (FY00)   India China
    Motor vehicles Per 1,000 7 8
    TV sets Per 1,000 69 272
    Telephone main lines Per 1,000 22 70
    Personal Computers Per 1,000 2.7 8.9
    Source: Statistical Outline of India

    The high per capita GDP reflects in the higher standard of living in China. More Chinese own vehicles, television sets, telephones and computers than Indians do. Indeed the number of people (per 1,000) owning mobile phones in China is 54 as against a dismal 3 in India.

    (FY00)   India China
    Exports US$ bn 34 184
    Imports US$ bn 43 140
    Current Account US$ bn -4.9 29.3
    Forex Reserves US$ bn 36 157
    FDI Inflows US$ bn 2.2 40.4
    Market Capitalisation US$ bn 184 330
    External Debt US$ bn 98 155
    Source: Statistical Outline of India

    These statistics clearly bring out why the world is wary of China post the WTO agreement. The country commands a 3.5% share of world exports (India’s share is 0.6%). Its external situation, if one may say so, is rock solid. Not surprisingly, the Southeast Asian crisis failed to make a dent in the value of its currency. Readers will remember that the Indian Rupee depreciated considerably due to the crisis. The confidence in China is underscored by the large inflows of the more stable foreign direct investment (FDI). India meanwhile continues to witness a trickling in of FDI inflows.

    (FY00)   India China
    Adult literacy % 54 83
    Population below poverty line % 35 5
    Source: Statistical Outline of India
    Finally, these two statistics say it all. India has a population that is growing faster than China’s. Its population is more illiterate and a larger portion of it is poverty stricken as compared to China. How India, with a population that is not equipped to participate in economic growth, will face up to China is yet unclear. Not surprisingly, our politicians still prefer to ignore this issue.



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