The Indian Economy Blog

October 15, 2005

A Picture Is Worth….

A visual treat for you, dear reader. The India – China comparison in pictures, courtesy Deutsche Bank

Hat tip: The World Bank Blog, which in turn got it from New Economist

Sidebar: I sometimes wonder if this China-India comparison is a tad overdone. However, given that we’re talking about 2.3 billion people, or more than a third of the globe’s population, these two countries economic successes (or lack, thereof) matter a lot.

Another perspective: A friend, who’s been to the Middle Kingdom several times and is well on her way to becoming a China “hand” says that the Chinese — businessmen, government officials and journalists — don’t really spend too much time on India. For them, it’s more the US and Japan. .

Update: An earliert post by Amit Varma — a statistical comparison of the India v. China story as per Shankar Acharya

5 Comments »

  1. China-India comparison is overdone?After few years we will see USA Today publishing comparitive study of Walmart’China operation and Walmart’s India operation.

    Comment by ak — October 17, 2005 @ 12:53 am

  2. Such comparisons are useful only upto a point. In particular, I think it is less instructive to compare macroeconomic outcomes (like what’s happening to exchange rates, or public deficits), and more instructive to compare how the two countries perform in the areas that drive those outcomes (leaving aside for now the important difference that China started liberalizing way ahead of India) – such as infrastructure, human capital, corporate governance, and ease of doing business. It is clear from the document that in some of these latter areas, (e.g. infrastructure, adult literacy), India has a lot of catching up to do, while in others, the two countries are almost neck and neck. Another point – I think that the tendency to look at outcomes obscures important differences between the two economies in the terms of the macroeconomic risks going forward. India’s main concern has always been very high fiscal deficits. The fact that this continues to be the main macro risk, is troubling, because once a country liberalizes its capital account, its ability to do expansionary monetary policy is severely constrained – adding high fiscal deficits on top of that constrains monetary policy options even further. China, on the other hand, faces a different set of macro risks – primarily, a sharp RMB appreciation (which would be only exacerbated if interest rates in China rose from their low current levels), leading to a significant dimunition of exports, which has been one of the two main drivers of China’s recent growth performance. The other driver has been extraordinary investment growth, but already, this is beginning to look a bit like irrational exuberance. If the RMB appreciates sharply, and investment slumps, China is in for a hard landing, unless Chinese consumption rises to counter the fall in investment.

    Comment by Deep — October 17, 2005 @ 1:55 pm

  3. Having been to China myself, and having talked to some people in businesses, I agree that the Chinese don’t focus very much on India. A couple of times I was asked whether I was from Pakistan. My guess would be that the Chinese media must have focussed quite a bit on Pakistan, given Sino-Pakistan friendly relations. However, when they find out that your are from India, they are more curious about our cultural aspects that financial/economic prowes. However, all those I spoke to in China mentioned India’s software Industry and their desire/attempts to replicate it. And again, having visited some of their software parks in Beijing, I can say that they were quite impressive.

    And they did not have traffic jams going in and out of the park!

    Comment by AA — October 17, 2005 @ 5:36 pm

  4. I looked at the Deutsche Bank statistics and compared India 2006 with China 1993 to see the comparative situation when both were a similar number of years into their ‘takeoff’.
    I was somewhat surprised to find India doing rather better in most fields.Credit Suisse thinks India’g GDP growth rate will overtake China’s in 2007.
    Lets see how India 2020 compares with China 2007.
    Janak De

    Comment by Janak De — December 23, 2006 @ 5:57 am

  5. i guess the only reason for that is china actually trying to slow thier economy down

    Comment by james — March 6, 2008 @ 11:56 pm

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