Published on

Published in: Education
1 Comment
  • please e-mail it to
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide


  1. 1. ECONOMICS PROJECT Indian Economy V/S Chinese Economy A Comparative Study Submitted To: Dr. Shakira Khan Submitted By: Ankit Dabral MBA (13MSM16)
  2. 2. Indian Economy V/S Chinese Economy Page | 1 COMPARISON BETWEEN INDIAN AND CHINESE ECONOMY India & China, two of the Asian giants have locked horns against one another to become a world superpower. Historically, inevitable comparison of economies between the two giants has shown that China usually emerges on top. Both countries are consistently analyzing their economic strengths and reinforcing their political and financial systems to sustain and establish themselves as a superpower in the global economy. India was under the colonial rule of the British for around 200 years. This drained the countries resources to a great extent, which lead to huge economic loss. On the other hand, there was no such instance of colonization in China. As such from the beginning the country enjoyed a planned economic model which made it stronger.
  3. 3. Indian Economy V/S Chinese Economy Page | 2 Economy Of India The economy of India is the 10th largest in the world by Nominal GDP. The 3rd largest by Purchasing Power Parity (PPP). The country is one of the G-20 major economies and a member of BRICS. On the per capita income basis India is ranked 141st by nominal GDP and 130th by GDP (PPP) in 2012. India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s(New Economic Policy) and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for nearly two-thirds of India's output, with less than one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year- on-year in real terms. However, India's economic growth began slowing in 2011 because of a tight monetary policy, intended to address persistent inflation, and a decline in investment, caused by investor pessimism about domestic economic reforms and about the global situation. High international crude prices have exacerbated the government's fuel subsidy expenditures, contributing to a higher fiscal deficit and a worsening current account deficit. In late 2012, the Indian Government announced reforms and deficit reduction measures to reverse India's slowdown. The outlook India's medium-term growth is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy.
  4. 4. Indian Economy V/S Chinese Economy Page | 3 India has many long-term challenges that it has not yet fully addressed, including poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration. India Economy Prior 1991: The independence-era Indian economy (from 1947 to 1991) was based on a mixed economy combining features of capitalism and socialism, resulting in an inward- looking, interventionist policies and import-substituting economy that failed to take advantage of the post-war expansion of trade. This model contributed to widespread inefficiencies and corruption, and the failings of this system were due largely to its poor implementation. In 1991, India adopted liberal and free-market principles and liberalised its economy to international trade under the guidance of Former Finance Minister Manmohan Singh under the Prime Ministry of P.V. Narasimha Rao, prime minister from 1991 to 1996, who had eliminated Licence Raj, a pre- and post-British era mechanism of strict government controls on setting up new industry. Following these major economic reforms, and a strong focus on developing national infrastructure such as the Golden Quadrilateral project by former Prime Minister Atal Bihari Vajpayee, the country's economic growth progressed at a rapid pace, with relatively large increases in per-capita incomes.
  5. 5. Indian Economy V/S Chinese Economy Page | 4 Economy Of China The Economy of China is the 2nd largest in the world by Nominal GDP. The 2nd largest by Purchasing Power Parity (PPP). The country is one of the G-20 major economies and a member of BRICS. On the per capita income basis China is ranked 87th by nominal GDP and 92nd by GDP (PPP) in 2012. The Economy of China is the world's fastest-growing major economy, with growth rates averaging 10% over the past 30 years. China is also the largest exporter and second largest importer of goods in the world. China is the largest manufacturing economy in the world, outpacing its world rival in this category, the service-driven economy of the United States of America. ASEAN–China Free Trade Area came into effect on 1 January 2010. China-Switzerland FTA is China's first FTA with a major European economy. The provinces in the coastal regions of China tend to be more industrialized, while regions in the hinterland are less developed. As China's economic importance has grown, so has attention to the structure and health of the economy. The internationalization of the Chinese economy continues to affect the standardized economic forecast officially launched in China by the Purchasing Managers Index in 2005. At the start of 2010s, China remained as the sole Asian nation to have an economy above the $10-trillion mark (along with the United States and the European Union). Most of China's economic growth is created from Special Economic Zones of the People's Republic of China that spread successful economic experiences to other areas. The development progress of China's infrastructure is documented in a 2009 report by KPMG. Since the late 1970s China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the world's largest exporter.
  6. 6. Indian Economy V/S Chinese Economy Page | 5 The Chinese government faces numerous economic challenges, including: (a) Reducing its high domestic savings rate and correspondingly low domestic demand; (b) Sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; (c) Reducing corruption and other economic crimes; and (d) Containing environmental damage. Economic development has progressed further in coastal provinces than in the interior, and by 2011 more than 250 million migrant workers and their dependents had relocated to urban areas to find work. In 2010-11, China faced high inflation resulting largely from its credit-fueled stimulus program. Some tightening measures appear to have controlled inflation, but GDP growth consequently slowed to under 8% for 2012. An economic slowdown in Europe contributed to China's, and is expected to further drag Chinese growth in 2013.
  7. 7. Indian Economy V/S Chinese Economy Page | 6 THE FACTORS COMPARING ECONOMY OF CHINA AND INDIA ARE: I. GDP II. Trade Patterns III. Poverty Reduction IV. Human Development V. Employment Growth VI. Rate of investment I. GDP (Gross Domestic Product) : CHINA: The gross domestic product in china expanded 2.20% in the third quarter of 2013 over the previous quarter. GDP Growth Rate in China is reported by the National Bureau of Statistics of China. From 2011 until 2013, China GDP Growth Rate averaged 2.0% reaching an all-time high of 2.5% in June of 2011 and record low of 1.5% in March of 2012.In China the Growth Rate in GDP measures the change in the seasonally adjusted value of the goods and services produced by the Chinese economy during the quarter. China’s economy is the 2nd largest in the world after that of United States. INDIA: The Gross Domestic Product in India expanded 4.40% in the second quarter of 2013 over the same quarter of the previous year. GDP Annual Growth Rate in India is reported by the Ministry of Statistics and Program Implementation. From1951 until 2013, India GDP Growth Rate averaged 5.8% reaching an all-time high of 10.2%december of 1988 and a record low of -5.2% in December of 1979. In India the Growth Rate in GDP measures the change in the value of goods and services produced in India without counting government’s involvement. It excludes the indirect expenses and includes the original value of the product.
  8. 8. Indian Economy V/S Chinese Economy Page | 7 COMPARISON OF G.D.P GDP China India GDP (Purchasing Power Parity) $12.38 trillion (2012 est.) $11.48 trillion (2011 est.) $10.51 trillion (2010 est.) note: data are in 2012 US dollars $4.735 trillion (2012 est.) $4.492 trillion (2011 est.) $4.205 trillion (2010 est.) note: data are in 2012 US dollars GDP (Real Growth Rate) 7.8% (2012 est.) 9.2% (2011 est.) 10.4% (2010 est.) 5.4% (2012 est.) 6.8% (2011 est.) 10.1% (2010 est.) GDP ( Per Capita ) $9,100 (2012 est.) $8,500 (2011 est.) $7,800 (2010 est.) note: data are in 2012 US dollars $3,900 (2012 est.) $3,700 (2011 est.) $3,500 (2010 est.) note: data are in 2012 US dollars GDP (Composition By Sector) Agriculture: 9.7% industry: 46.6% services: 43.7% (2012 est.) agriculture: 17% industry: 18% services: 65% (2011 est.) Population (Below Poverty Line) 13.4% note: in 2011, China set a new poverty line at RMB 2300 (approximately US $363; this new standard is significantly higher than the line set in 2009, and as a result, 128 million Chinese are now considered below the poverty line (2011) 29.8% (2010 est.) Household (Income Or Consumption By %ageShare) lowest 10%: 3.5% highest 10%: 15% note: data are for urban households only (2008) lowest 10%: 3.6% highest 10%: 31.1% (2005)
  9. 9. Indian Economy V/S Chinese Economy Page | 8 Inflation Rate (Consumer Prices) 3.1% (2012 est.) 5.5% (2011 est.) 9.2% (2012 est.) 8.9% (2011 est.) Labor Force 795.4 million Note: by the end of 2011, population at working age (15-64 years) was 1.0024 billion (2012 est.) 498.4 million (2012 est.) Labor Force (By Occupation) Agriculture: 36.7% industry: 28.7% services: 34.6% (2008 est.) Agriculture: 53% industry: 19% services: 28% (2011 est.) Unemployment Rate 6.4% (2012 est.) 6.5% (2011 est.) note: registered urban unemployment, which excludes private enterprises and migrants was 4.1% in 2010 9.9% (2012 est.) 9.8% (2011 est.) Distribution Of Family Income (Gini index) 48 (2009) 41.5 (2007) 36.8 (2004) 37.8 (1997) Budget Revenues: $1.838 trillion expenditures: $2.031 trillion (2012 est.) revenues: $171.5 billion expenditures: $281 billion (2012 est.) Industries world leader in gross value of industrial output; mining and ore processing, iron, steel, aluminum, and other metals, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizers; consumer products, including footwear, toys, and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; telecommunications equipment, commercial space launch vehicles, satellites textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticals
  10. 10. Indian Economy V/S Chinese Economy Page | 9 Industrial Production Growth Rate 13.9% (2011 est.) 4.8% (2011 est.) Agriculture Products world leader in gross value of agricultural output; rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish rice, wheat, oilseed, cotton, jute, tea, sugarcane, lentils, onions, potatoes; dairy products, sheep, goats, poultry; fish Exports $2.021 trillion (2012 est.) $1.899 trillion (2011 est.) $309.1 billion (2012 est.) $305 billion (2011 est.) Exports Commodities electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel Exports Partners US 17.1%, Hong Kong 14.1%, Japan 7.8%, South Korea 4.4%, Germany 4% (2011) UAE 12.7%, US 10.8%, China 6.2%, Singapore 5.3%, Hong Kong 4.1% (2011) Imports $1.78 trillion (2012 est.) $1.74 trillion (2011 est.) $500.3 billion (2012 est.) $490 billion (2011 est.) Imports Commodities electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals Imports Partners Japan 11.2%, South Korea 9.3%, US 6.8%, Germany 5.3%, Australia 4.6% (2011) China 11.9%, UAE 7.7%, Switzerland 6.8%, Saudi Arabia 6.1%, US 4.9% (2011) Debt External $710.7 billion (31 December 2012 est.) $656.3 billion (31 December 2011 est.) $299.2 billion (31 December 2012 est.) $287.5 billion (31 December 2011 est.) Exchange Rates Renminbi Yuan (RMB) per US dollar - 6.311 (2012 est.) Indian rupees (INR) per US dollar - 53.17 (2012 est.) 46.671 (2011 est.)
  11. 11. Indian Economy V/S Chinese Economy Page | 10 6.4615 (2011 est.) 6.7703 (2010 est.) 6.8314 (2009) 6.9385 (2008) 45.726 (2010 est.) 48.405 (2009) 43.319 (2008) Fiscal Year calendar year 1 April - 31 March Investment (Gross Fixed) 45.9% of GDP (2012 est.) 30% of GDP (2012 est.) Public Debt 38.5% of GDP (2011) 43.5% of GDP (2010) note: official data; data cover both central government debt and local government debt, which China's National Audit Office estimated at RMB 10.72 trillion (approximately US$1.66 trillion)in 2011; data exclude policy bank bonds, Ministry of Railway debt, China Asset Management Company debt, and non-performing loans 51.9% of GDP (2012 est.) 50.5% of GDP (2011 est.) note: data cover central government debt, and exclude debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data exclude debt issued by subnational entities, as well as intra-governmental debt; intra- governmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment; debt instruments for the social funds are not sold at public auctions Reserves Of Foreign Exchange And Gold $3.549 trillion (31 December 2012 est.) $3.213 trillion (31 December 2011 est.) $287.2 billion (31 December 2012 est.) $297.9 billion (31 December 2011 est.) Current Account Balance $170.8 billion (2012 est.) $201.7 billion (2011 est.) -$80.15 billion (2012 est.) -$46.91 billion (2011 est.) GDP (Official Exchange Rate) $8.25 trillion note: because China's exchange rate is determine by fiat, rather than by market forces, the official exchange rate measure of GDP is not an accurate measure of China's output; GDP at the official exchange rate $1.947 trillion (2012 est.)
  12. 12. Indian Economy V/S Chinese Economy Page | 11 substantially understates the actual level of China's output vis-a-vis the rest of the world; in China's situation, GDP at purchasing power parity provides the best measure for comparing output across countries (2012 est.) Stock Of Direct Foreign Investment At Home $909.8 billion (31 December 2012 est.) $711.8 billion (31 December 2011 est.) $256.6 billion (31 December 2012 est.) $232.7 billion (31 December 2011 est.) Stock Of Direct Foreign Investment Abroad $465 billion (31 December 2012 est.) $364 billion (31 December 2011 est.) $121.3 billion (31 December 2012 est.) $106.3 billion (31 December 2011 est.) Market Value Of Publicly Traded Shares $3.389 trillion (31 December 2011 est.) $4.763 trillion (31 December 2010) $5.008 trillion (31 December 2009 est.) $1.015 trillion (31 December 2011) $1.616 trillion (31 December 2010) $1.179 trillion (31 December 2009) Central Bank Discount Rate 2.25% (31 December 2011 est.) 3.25% (31 December 2010 est.) 5.5% (31 December 2010 est.) 6% (31 December 2009 est.) note: the Indian central bank's policy rate - the repurchase rate - was 8% during December 2012 Commercial Bank Prime Lending Rate 6% (31 December 2012 est.) 6.56% (31 December 2011 est.) 10.8% (31 December 2012 est.) 10.19% (31 December 2011 est.) Stock Of Money $2.434 trillion (31 December 2008) $2.09 trillion (31 December 2007) $278.8 billion (31 December 2009) $239.8 billion (31 December 2008) Stock Of Quasi money $4.523 trillion (31 December 2008) $3.437 trillion (31 December 2007) $853.4 billion (31 December 2009) $687.7 billion (31 December 2008) Stock Of Domestic Credit $12.59 trillion (31 December 2012 est.) $10.92 trillion (31 December 2011 $1.402 trillion (31 December 2012 est.) $1.249 trillion (31 December 2011
  13. 13. Indian Economy V/S Chinese Economy Page | 12 est.) est.) Stock Of Narrow Money $4.91 trillion (31 December 2012 est.) $4.6 trillion (31 December 2011 est.) $342.3 billion (31 December 2012 est.) $305.7 billion (31 December 2011 est.) Stock Of Broad Money $15.58 trillion (31 December 2012 est.) $13.52 trillion (31 December 2011 est.) $1.451 trillion (31 December 2012 est.) $1.293 trillion (31 December 2011 est.) Taxes And Other Revenues 22.3% of GDP (2012 est.) 8.8% of GDP (2012 est.) Budget Surplus (+) Or Deficit (-) -2.3% of GDP (2012 est.) -5.6% of GDP (2012 est.)
  14. 14. Indian Economy V/S Chinese Economy Page | 13 II. TRADE PATTERNS: India and China are two most populist countries in the world. India and China together contain about 37.5% of world’s population. So India and China are huge markets as these two countries play a massive role in world economy as they have a significant impact on world economy, but they differ largely in their trading patterns. China’s economy has grown by increasing investment in the manufacturing industry and increasing foreign trade, whereas service sector is responsible for the growth of Indian economy. The economy of China is third largest in the world and still growing very rapidly. India is also developing with a fast rate. CONTRASTING TRADE PATTERNS: China’s trade expansion started in 1978, when the country initiated reforms and Opening-up policies. For the past decade, its position as a strong player in international trade has been remarkable. India’s trade expansion has not been as significant as China’s. By 2004, China’s share of the world’s manufacturing exports was 8.3%; that of India was 0.9% their shares of global manufacturing imports were 6.3% and 0.8% respectively (Winters and Yusuf 2007) China’s manufacturing sector accounts for more than 41% of gross domestic product (GDP). In 2005 manufactured goods constituted 93% of exports or almost a quarter of the Gross value of industrial output. China is a significant importer and exporter in Manufacturing, with market shares of 6.2% and 7.7%, respectively, in 2004. India’s trade in manufacturing has not been remarkable to date, and the sector accounts for a far Smaller share of GDP – less than 16% (Winters and Yusuf, 2007).
  15. 15. Indian Economy V/S Chinese Economy Page | 14 From the start, the two countries’ trade patterns have been largely dissimilar. In the case of China, using its vast resources of cheap labour and domestic savings to initiate Infrastructure building and invite large amounts of FDI to spur the development of the Manufacturing industry in the coastal areas has been seen as one of the initial and leading drivers for the country’s economic success. India’s strength, on the other hand, is based on its knowledge-based sectors such as IT and pharmaceuticals, its more developed financial markets and more robust private sector. Besides being the world’s third-largest trader with a 6% share in world trade – compared with India’s 1% – China is gradually becoming a manufacturing hub in Asia. It is now Deeply involved in regional production and distribution networks in East and Southeast Asia (including ten ASEAN countries, plus Japan, China and South Korea). The share of China’s exports and imports to East Asian countries in its total trade is more than twice that of India, showing China’s stronger connection to the region.
  16. 16. Indian Economy V/S Chinese Economy Page | 15 IV. POVERTY REDUCTION: CHINA China has maintained a high growth rate for more than 30 years since the beginning of economic reform in 1978, and thus sustained growth has generated a huge increase in average living standards. 250 years ago china had many characteristics in common with the rest of developing Asia: large population, low per capita income, and resource scarcity on a per capita basis. But in the 15 years from 1990-2005, China averaged per capita growth of 8.7%. The whole reform program is often referred to in brief as the open door policy. This highlights that a key component of Chinese reform has been trade liberalization and opening up to foreign direct investment but not opening up the capital account. China improved its human capital, opened up to foreign trade and investment and created a better investment climate for private sectors. INDIA India is widespread, with the nation estimated to have a third of the world’s poor. In 2010 the World Bank reported that 32.7% of the total Indian people fall below the International Poverty Line of US$ 1.25 per day. According to 2013 UN Report stated that a third of the world’s poorest people live in India. According to a 2011 poverty development goals report, as many as 320 million people in India and China are expected to come out of extreme poverty in the next four years, while India’s poverty rate is projected to drop to 22% in 2015.
  17. 17. Indian Economy V/S Chinese Economy Page | 16 However only India, where the poverty rate is projected to fall from 51% in 1990 to about 22% in 2015, is on track to cut poverty by half by the 2015 target date. The picture above clearly depicts the position of India in frount of China nd other Sounth Asian Countries. In order to go ahead ahead of China, India should firstly focus on the biggest problem i.e. POVERTY and should reduce it. The only way it can be done is by Educating the Uneducated and spraeding awareness with the educated as it has been a major issue prior to the independence.
  18. 18. Indian Economy V/S Chinese Economy Page | 17 V. HUMAN DEVELOPMENT: HDI is a composite statistic of life expectancy, education, and income indices used to rank countries in four tiers of human development. Since 2011, the UNDP report has included an inequality adjusted HDI, also known as IHDI, which attempts to include the effects of inequality on human development. The IHDI for India this year is 0.392. Since UNDP produced the first global Human Development Report (HDR) in 1990, HDRs have emerged as its flagship publication and one of UNDP’s most important policy analysis and advocacy tools. This is the seventh National Human Development Report (NHDR) produced in China since 1997. These NHDR exercises have proven to be successful and valuable, playing a unique role in UNDP’s endeavours to influence China’s development policymaking. CHINA: United Nations Development Program (UNDP) placed China 101st in a ranking of 187 countries and regions based on the quality of life enjoyed by their populations .China measured 0.699 in the UNDP's "human development index" (HDI) in 2012, up from 0.695 in 2011. It sees China remain above the average level of regions and the BRICS nations -- Brazil, Russia, India, China and South Africa, according to the 2013 Human Development Report -- The Rise of the South: Human Progress in a Diverse World. INDIA: Over the past three decades, India has made good progress on the human development index (HDI), says the Human Development Report 2013, released by the United Nations Development Programme (UNDP). However, India’s rank out of 187 countries is no better than last year’s. With a HDI value of 0.554 and a rank of 136 among 187 countries, which it shares with Equatorial Guinea, India is placed in the “medium development” category. There has been steady improvement in its HDI value, which was 0.345 in 1980.
  19. 19. Indian Economy V/S Chinese Economy Page | 18 India’s HDI Progress Report: Year HDI value 1980 0.345 1990 0.410 2000 0.463 2010 0.547 2012 0.554 The picture above clearly explains that China is ahead of India in Human Development Index too. Although India has made a drastic change in HDI but still to beat the Chinese Economy we need to pull up our socks and rise above the other nations.
  20. 20. Indian Economy V/S Chinese Economy Page | 19 VI. EMPLOYMENT GROWTH: China: As China spends less on stimulus and tolerates even less over-spending at the municipal level, the era of full-employment in the country may be coming to an end. In 2012, China’s total population (those aged between 15 and 59 years) was 937 million, down 3.45 million from the year before. This was the first time since records began in th A comparison of employment in India and China. The resulting employment series for India shows a resilient labor market from the late 1990s after a period in the mid-1990s when employment had been stagnant. Between 1998 and 2003, employment is estimated to have grown by 17% after having been almost stable in the previous five years. This growth in employment was associated with a marked increase in employment outside of the agricultural sector – more than 70% of the increase in employment came in the secondary and tertiary sectors of the economy. Most notable was the almost 50% increase in employment in the secondary sector of the economy that appears to have been mainly concentrated in small manufacturing plants in rural areas. Service sector employment, though still larger than the industrial sector, increased much less rapidly. The pace of change in the structure of employment has been slower than in China despite the strong restrictions on movement of workers and the absence of landless laborers in the Chinese countryside. Indeed, the speed of the decline in the share of agriculture inIndia was only half that observed in China in the period 1978 to 2003. Out of this working-age population, 767 million were employed, according to Statistics released by the Ministry of Health and Human Resources, an increase of 2.84 million compared with 2011. There were 371 million people employed in urban areas, an increase of 11.9 million over the previous year, accounting for 48.4% of the overall working population. From 2008-2012, the number increased while employment in rural areas dropped by 6% over those 5 years.
  21. 21. Indian Economy V/S Chinese Economy Page | 20 India: A decomposition of the proximate factors behind economic growth requires knowledge of the movement of factor inputs. The measurement of such inputs and, indeed, outputs is problematic in many developing countries where much economic activity takes place in the informal sector of the economy. People are often employed on a casual basis or are self-employed. Even a typical four-way split of employment (urban – rural, male – female) coupled with a three-way split of industries (primary, secondary and tertiary) results in adequate sample sizes. Despite the adequacy of the sample size for measuring employment, the National Sample Survey Organization (NSSO) has never published level data for employment. Rather it publishes long series of “worker participation rates”. These ratios measure the proportion of workers in the total population. They are presented for the typical four-way split described above. The output from these calculations is a set of twelve time-series showing employment by three principal industries (agriculture, secondary and tertiary sectors), two locational variables (rural and urban) and two gender variables. Given the problems of timing and the non-availability of annual population data, these series can only be regarded as approximate indicators. However, the only alternative to using the NSS surveys is to use the census data for employment. T This data source appears only once every ten years and appears to measure employment inadequately. In particular, there are large discrepancies between estimates of economically active women between the A person in casual, intermittent employment is, on the daily measure, likely to be counted as unemployed whereas in reality the person may be better classed as under- employed or employed on a part-time basis. On the other hand, the annual data counts people as employed even if their work is only seasonal. This study uses the weekly data series that lie in between these extremes.
  22. 22. Indian Economy V/S Chinese Economy Page | 21 VII. RATE OF INVESTMENT: In economics, investment is the accumulation of newly produced physical entities, such as factories, machinery, houses, and goods inventories. Gross fixed investment is defined as total business spending on fixed assets, such as factories, machinery, equipment, dwellings, and inventories of raw materials, which provide the basis for future production. It is measured gross of the depreciation of the assets, i.e., it includes investment that merely replaces worn-out or scrapped capital. Country Investment 2008 (Gross Fixed) (%age of GDP) Investment 2012(Gross Fixed) (%age of GDP) China 40.20 46.01 India 39.00 29.09 The investment rate in China (investment as a share of GDP) has fluctuated between 35 – 44% over the past 25 years, compared to 20 – 26% in India. Infrastructure investment from the early 1990s has averaged 19% of GDP in China, compared to 2% in India. China and India together account for about 37.5% of world population and 6.4% of the value of world output and income at current prices and exchange rates. As the two countries come to play an increasingly weighty role in the world economy, their expansion is having a noticeable impact on global growth, through a number of channels, with trade being arguably the strongest and most direct (Winters and Yusuf, 2007). Although the two Asian ‘mega-emergers’ appear to have much in common, they have in fact been following two different development paths. China initiated its state- led modernization reform in the late 1970s after many years of operating according to the Soviet model, whereas India relies largely on the private sector to drive reform.
  23. 23. Indian Economy V/S Chinese Economy Page | 22 While China built up its economic strength by investing heavily in the manufacturing industry and facilitating foreign trade, the service sector has become the leading driver behind India’s economic growth, contributing to more than half of its total economic growth since the 1990s. despite their very different approaches, however, both countries can learn from each other in many ways. Stronger integration in the global Economy Foreign investment: Foreign direct investment (FDI) is also an area where India appears to lag behind China. In 2006, China attracted 10 times more FDI than India owing to its more liberalized policies for foreign investors. Moreover, the Chinese economy is growing faster and its Infrastructure is better. Although strict protection policies remain in place in selected Sectors in China, such as automobiles, India’s restrictive labour laws and limits affecting foreign shares in ownership restrain foreign investment in general (Urata, 2007). In particular, India’s inadequate infrastructure development makes it very difficult for multinational companies to ship products in and out of the country, and even within the country. China is certainly a star performer in attracting FDI, but India did not perform Commensurately badly, given the large disparity in performance. China accounts for 5% of world GDP and India for about 2%, at current exchange rates (World Bank, 2007a). As bigger economies normally attract more investment, China currently tends to be the 5 preferred destination for foreign investors. But in terms of FDI percentage of GDP, China’s figure is less stunning – only two and a half times that of India Summary of Rate and Investment The fast economic growth of China and India is not unusual in Asia. But size does matter when it comes to China and India: the sheer size of their markets means they may influence the whole world in a way that smaller economies did not. But why did these two ‘mega-emergers’ need so long to take off and why should they have been so behind the take-off curve? Is this indicative of a fundamental weakness in these two giants, which may also be an impediment to their future
  24. 24. Indian Economy V/S Chinese Economy Page | 23 economic growth? Political constraints are probably one factor. Their immature legal systems may be another, and it takes time for these to be constructed. And size matters again. While smaller economies may have more flexibility to mobilize their resources and push themselves ahead fairly quickly to OECD standards, this may not be easy to handle for big economies with huge populations and vast disparities between different regions. China achieved productivity growth of 8.7% per year on average between 2000 and 2005 (as opposed to 3.1% per year on average between 1995 and 2000). India’s productivity growth was lower – 4.1% on average in 2000–04. This corresponded with a similar phase of modest increase in China during the late 1980s and early 1990s (Conference Board, 2006). However, China needs to further improve productivity in manufacturing industries in order to respond to changing patterns of global production networks. To some extent, China can still attain global competitiveness or maintain existing positions thanks to its huge pool of cheap labour for at least 10–15 years, but the country has to find the ways to move up in the global production chains to sustain its economic growth in the long run and shift its model from being investment-and- exports-driven to being consumption-driven. In recent years, China has been quick in changing sectors to prop its export growth. Office machinery and equipments are becoming the fastest-growing area for China’s exports. The electrical equipment industry gained a bigger share from 5.9% in 1995 to 10.0% in 2004, while textiles lost share, from 26.0% in 1995 to 16.2% in 2004 . Even if China’s share of office machines and telecommunications equipment in world exports rapidly rose to 15.2% in 2004, from only 1.0% in 1990 , this is a sector, unlike 7 footwear and clothing, with few trade disputes with OECD countries because China does not compete directly with Europe and US in this category.
  25. 25. Indian Economy V/S Chinese Economy Page | 24 CONCLUSION: We conclude by saying that there are various issues where India is ahead of China and various issues which leads china. India is ahead of china regarding banking or legal sector. China is far ahead regarding infrastructure. These all issues create differences between the two economies but at the same time by promoting various advanced technologies and renewable energies the solutions can be found to these problems. India only exceeds China in its BPO / IT sector, rest among all the sectors it is China which is ahead whether it is agriculture, trade patterns, employment growth, human development etc. Thus in the coming future we can say that it can be India and china together instead of India V/S China.
  26. 26. Indian Economy V/S Chinese Economy Page | 25 Basis China India GDP(expenditure approach) $8.358 trillion (2012) $1.824 trillion PPP(purchasing power parity) $12.406 trillion (2012) $4.684 trillion GDP Growth 7.8% (2012) 3.9% GDP per capita $9233 (2012) (PPP) $3829 (2012) (PPP) GDP by sector agriculture 10.1% 17.4% Industry 45.3% 25.8% Services 44.6% (2012) 56.9% (2012) Population below poverty line 13.1% (2008) 29.8% (2010) Unemployment 4.1% (2012) 3.8% (2011) Inflation 2.5%(2012) 9.31%(2013) Labor force 795.5 million(2010) 498.4 million(2012) Labor force by occupation Agriculture 36.7% 51.1% Industry 28.7% 22.4% Services 34.6% 26.6%(2012) External exports $2.021 trillion(2012) 309.1 billion(2012) Imports $1.78 trillion(2012) $488.6 billion(2012) Revenues $1.838 trillion(2012) $171.5 billion(2012) Expenses $2.031 trillion(2012) $281 billion(2012) Foreign reserves $3.44 trillion(2013) $295.29 billion(2012)