Re: India might overtake China
http://www.bjreview.com.cn/En-2005/05-14-e/14-S-1.htm
ASIAN TIGERS, HEAR THEM ROAR
It’s an area of the world that is on the radar of every other nation, worldwide. China and India have emerged with electrifying economic growth that is not only influencing the economies and politics of Asia, but also of the rest of the international community. After two centuries of Western domination, China and India are poised to claim their places as future world kingpins.
By BARLEEN MONARCH & DING ZHITAO
In the same way that commentators refer to the 1900s as the “American Century,” the 21st century may be seen as a time when Asia, led by China and India, comes into its own. These comments from a report released earlier this year by the U.S. National Intelligence Council (NIC), entitled “Mapping the Global Future,” echo what many see as the third wave of world globalization, which began with Portuguese and Spanish sea explorers in the late 15th century and was followed by dominance of West over East after the founding of the United States and the era of industrialization in the late 1700s. Although China was then the economic giant of the world, mass production ensured the United States and Europe had a firm grip of the global economy by the time the last century came to a close. But in economics, as in life, history tends to repeat itself. Today the wheel has turned full circle and China is undoubtedly the first option for most of the world’s manufacturers. The reason is simple-an endless, low-cost labor force. India on the other hand, while not seen as a manufacturing haven in the same mould as China, has stepped forward to become the software development and service hub of the world.
Half a century after the two Asian giants became independent, as a combined unit they form a formidable package. Over 2.4 billion people, a rapidly expanding middle class, rising buying power, confident political leadership and competitive world-class companies, all clearly suggest that they will eventually be a force to be reckoned with in the world economy.
It’s perhaps the sheer population size of China and India-projected by U.S. Census Bureau to be 1.4 billion and almost 1.3 billion respectively by 2020-that will allow these countries to become notable economic powers without having the standard of living associated with Western developed nations. China is already the third largest producer of manufactured goods, projected to surpass Japan in a few years, not only in share of manufacturing but also of the world’s exports. Competition for the price at which Chinese goods are priced is already having a strong effect on controlling commodity prices worldwide. India currently lags behind China on most economic measures, but many economists believe it also will sustain high levels of economic growth.
GROWTH EXAMPLE: Shanghai, China’s largest business hub, is always compared with India’s Mumbai when people measure the prosperity of the two Asian neighbors
The economic rise of these two Asian giants is set to become the most dramatic story of the 21st century. Both China and India are tigers playing in the same sandbox and both want to seize the next two decades as their own. China’s economy is growing at a rate of more than 9 percent annually, India’s at 8 percent, and the Southeast Asian tigers have recovered from the knockout blow of the 1997 financial crisis and are once again back in the ring. China’s economy is expected to double the size of Germany’s by 2010 and to overtake Japan’s, currently the world’s second largest, by 2020. If India sustains a 6 percent growth rate for 50 years, as some financial analysts think possible, it will equal or overtake China in that time.
Whichever way you look at it, China has made massive achievements since it embarked on the road of reform and opening up in 1978. The lives of Chinese, once worse than their southern neighbors, today are better off comparatively in per-capita GDP, life span, adult literacy and newborn mortality.
TIME TO CELEBRATE: If India sustained a 6 percent growth rate for 50 years, as some financial analysts deem possible, it would equal or overtake China in economic strength in that time
India waited until 1985 to open the door on its economy but has its own edge over the big neighbor. Its grassroots entrepreneurship is believed more organic than China’s foreign direct investment driven, export-led model and the software, pharmaceutical and biotechnology, advertising, and razzle of the Bollywood film industry leave China gasping.
The NIC report points out that despite the fact India lags behind China in many areas, most notably overall GDP, it does have several things working in its favor. India has a working-age population that is expected to increase into the 2020s, in sharp contrast to China where the nature of the family planning policy points to a population that will age quickly and reduce in numbers in the process. In addition, India has working capital markets and world-class companies in important hi-tech sectors, which China has yet to achieve.
WALK AHEAD: Indian economy has maintained a steady growth since it
initiated economic restructuring in the early 1990s
By focusing on service, India makes maximum use of its greatest assets of a well-educated workforce, proficient IT sector and its high level of English-language proficiency. The service area presents a big opportunity for China in the next decade as it is presently way underdeveloped-usually makes up over 60 percent of economic activity in developed countries.
While China has a “hardware” economy, India could be compared to having a “software” financial system. Comparisons are fascinating; however, complementarities between the two countries merit more attention, as their economic strengths are not conflicting. China has developed into a “factory of the world” and India into a “world laboratory” of note.
Amartya Sen, a Nobel Economic Prize laureate, pointed out it was wrong to view China and India as competitors. He believes that every country has its own features, and they can learn from each other.
The India-born professor of economics and philosophy at Harvard University said a question China and India should first think of is what they can learn from each other, not which will surpass the other. He stressed that one major contribution of the Chinese economy to the world lay in that many other countries, especially India, might learn from the Chinese experience.
Without doubt, India’s economic development had been influenced to some degree by the world’s understanding of the Chinese economy. But without China’s experience, India’s economic reform and opening up would face much more difficulties, affirmed Sen.
CONFIDENT STEPS: Chinese travelers are on their way abroad. With strong purchasing power, Chinese tourists are welcomed worldwide to boost local retail sales
In a political sense, the countries are fast shedding their mantles of backroom players.
China has set its course on the path of peaceful development, actively playing an important role in regional and international affairs as it seeks to contribute to world peace and stability. Beijing’s relations with other powers worldwide have seen steady growth and the good-neighborliness policy has become a hallmark of Beijing’s forward thinking strategy. The country is also playing a dual role of both a participant and sponsor in multilateral diplomacy. It has been active in the APEC summit, the Asia-Europe meeting, the ASEAN plus China meeting, China-EU summit and the China-Africa forum, among others. Apart from this, Beijing has hosted three rounds of multilateral talks to resolve the nuclear deadlock on the Korean Peninsula, so far the only acknowledged effective channel for the resolution of this global crisis.
Since its emergence from colonialization, India has dreamt of improving its status on the world stage. It has always been seeking to maintain and strengthen its influence in South Asia and is lobbying for a permanent seat on the UN Security Council. India’s refusal of foreign aid after the deadly tsunami disaster last December also reflects the country’s determination to be taken seriously as a responsible power. Its prompt action in providing relief to Sri Lanka, the Maldives and Indonesia in the aftermath of the devastating tidal wave disaster made a strong positive impression in the region. New Delhi’s “tsunami diplomacy” is also believed to be part of its “Look East” strategy, which comes about partly as a response to the end of the Cold War in the early 1990s and is designed to strengthen relations with Southeast Asia and participate in the new trend of globalization. India has maintained favorable ties with the West and is actively participating in diplomatic efforts to improve relations with Pakistan, and strive for a better international environment.
INDIAN BELLE: Dressed-up ladies wait for their turn to dance at a rally to celebrate the International Women’s Day in New Delhi
Political ties between China and India have been greatly improved in recent years, especially after former Indian Defense Minister George Fernandes visited China during the SARS epidemic in early 2003, as well as the ensuing China trip of former Indian Prime Minister Atal Behari Vajpayee. This April, Chinese Premier Wen Jiabao will pay a formal visit to New Delhi, to enhance political consensus with Indian leaders. The two countries have the potential to change the demographic of world politics being firmly committed to multilateralism in the quest for global harmony.
Several other areas indicate that both countries are not immune to the debilitating factors that plague most developing economies, in particular the large chunks of the mainly rural population who have received little benefit from the much publicized booming economies, and the potentially disastrous HIV/AIDS epidemic that could seriously affect economic prospects if not brought under control. According to UNAIDS statistics, India accounts for over 60 percent of the 7.4 million people living with HIV/AIDS in the Asia-Pacific region.
Mention must also be made of the inevitable requirement that challenges fast-growing economies-the soaring demand for energy. India, as the world’s number six energy consumer, is in a stickier situation than its neighbors as imports account for two thirds of its oil consumption, while China imports a third of its crude oil consumption. Also in China’s favor is its verified oil reserves of 18 billion barrels, compared to India’s 5 billion barrels.
Indian Prime Minister Manmohan Singh warned his people, “China is ahead of us in planning for its energy security-India can no longer be complacent.” These words conveyed the sense of urgency that India holds over meeting its energy needs.
On the other hand, says the NIC report, India is not yet attractive for foreign investment and faces strong political challenges as it continues down the path of economic reform. India’s other big millstone is the burden of having a much larger proportion of its population in desperate poverty. Besides, China and India are both faced with the challenge of growing social inequality.
Ultimately, according to the report, it would be a stretch for India to push its economic growth rate to anywhere near those reached by China since the 1990s. However as China’s ability to sustain its present growth rate is probably more at risk than is India’s, a slowdown of China’s growth could leave the way clear for India to emerge as the world’s fastest-growing economy as we head toward 2020.
Observers predict a large portion of the world’s economical growth may soon come from the industrialization of China and India. “These two countries are really going to drive the rest of the world,” said Chetan Ahya, Senior Vice President and India economist for Morgan Stanley.
The diversion of investment toward China and India also could spur Southeast Asia to implement plans for a single economic community and investment area by 2020.
To better exert their political and economic leverage, it definitely needs more political vision from leaders of both countries. As they raise their glasses to toast the 55th anniversary of the two countries’ diplomatic ties, they must be reminded of their old friendship, fostered by Mao Zedong and Jawaharlal Nehru, as well as their responsibilities to rekindle this relationship formed so long ago by pioneers of mutual trust and understanding.
IT sectors, motion pictures
