India & China -A Comparative Analysis-YASH JAIN

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  • 1. The Institute of Chartered Accountants of India (Setup by an Act of Parliament) A Comparative Analysis A Presentation by : …………………………… ……………….……….... ………………………………
  • 2. ECONOMIES OF BOTH COUNTRIES Market based system Centrally planned Economy Foreign trade and foreign investment are integral part of Indian economy Private businesses and capitalism were suppressed Fastest growing economy World’s second largest labor force Privatization of Farmland Promotion of foreign investment Flourishing small scale entrepreneurs
  • 3. 50 yrs ago, India and China were among the poorest and economically most isolated countries in the world. How did China and India emerge as economic giants?
  • 4. Comparing India and China’s Growth Stories Indicators Political System Speed of Growth Areas of Specialization India China Multi-party Democracy One-party authoritarian rule Economic reforms started in 1991. Average 6% growth rate in past two decades. Rising power in software, design, services, and precision industry. Economic reforms started in 1978. Average 9.5% growth rate in past two decades. Dominant in mass manufacturing, electronics and heavy industrial plants
  • 5. What are India & China famous for today? CALL CENTRES & COMPUTER ENGINEERS LOW PRICED CONSUMER GOODS
  • 6. India – Economic Fact Sheet GDP- real growth rate: 6.5% (2012 est.) 7.7% (2011 est.) 11.2% (2010 est.) GDP – per capita (PPP – Purchasing power parity) $3,900 (2012 est.) $3,800 (2011 est.) $3,600 (2010 est.) note: data are in 2012 US dollars GDP – Composition by sector: agriculture: 17.4% industries: 26.1% services: 56.5% (2012 est.)
  • 7. China – Economic Fact Sheet GDP – real growth rate: 7.8% (2012 est.) 9.3% (2011 est.) 10.4% (2010 est.) GDP-Per capita (PPP-Purchasing power parity): $9,300 (2012 est.) $8,700 (2011 est.) $8,000 (2010 est.) note: data are in 2012 US dollars GDP – composition by sector: agriculture: 10.1% industries: 45.3% services: 44.6% (2012 est.)
  • 8. AGRICULTURAL SECTOR •India is an agricultural country. •Growth of service sector is pushing down the contribution of agriculture. •Contributing 17.2% of the GDP. •Largely depends on monsoon. •Provides employment to two-thirds of the total population. •15% of export earnings •Rural women play a vital role, 50% of rural labor force. •Yields per hectare of crops in India are very low Agriculture accounted for 10.6 % of the GDP 33o million- over 45% of labor force still makes living from farming. Farming methods have been improved in China. China produces wheat, rice, potatoes, peanuts, millet, c otton. Only 15 percent of the total land available in China can be cultivated. More than 75 percent of the total cultivated land is used for producing food crops.
  • 9. MANUFACTURING SECTOR •Manufacturing contributes around 15% of GDP of the country. •India rank’s among top 12 producers of manufacturing value added products. •Chinese manufacturing sector accounts for 43% of Chinese economy. •Its economy growth in average of almost 8% every year. •There are many Companies who wants to make India as their manufacturing hub, they are: •Chinese manufacturing sector ranks 4th in the world after US, Japan, & Germany. •LG wants to make India its global manufacturing hub for its mobile handsets. •China has 50% share of worldwide camera market & 30% of Air conditioners . •Hyundai has make India the manufacturing & exporting hub for its small cars. Their i10 is being manufactured only in India & exported to the world. •25% of Washing Machines & 20% of Refrigerators.
  • 10. Continued .. •Luxury brands like Louis Vuitton are looking at India as a manufacturing base for their products. •Skoda Auto plans to make India its regional manufacturing hub. • Aircraft manufacturing Airbus is considering India as one of the centers for design & development of its long haul A350 plane. •Samsung plans to invest 100 million US $ in its manufacturing plant near Chennai & make it its global hub. •China’s fast growing domestic market worldwide demand for Chinese goods & the cost advantage China offers to manufacturers are fueling the growth of manufacturing sector in China. •In all, China is much ahead of India in manufacturing sector * According to Investment Commission of India the manufacturing sector is estimated to have 180 billion US $ investment opportunity over next 5 years
  • 11. Service sector INDIA CHINA 54 per cent of GDP Below 41 per cent of GDP Since 1978 to 2011 : Average Annual Growth rate is 8.1% Average Annual Growth rate is 10.8% Employment Opportunities : Low Employment Opportunities : High Most advanced service sector : Delhi with a GDP share of 77 per cent Most advanced service sector : Beijing with a GDP share of 61 per cent A net exporter of services A net importer of services
  • 12. Service Sector Share over Total GDP
  • 13. GDP shares by sector in China and India
  • 14. CURRENCIES Indian Rupee Chinese Renminbi Current exchange rate 1.00 USD, = 62.1393 Current exchange rate 1.00 USD, = 6.05990 CNY *as on 10/02/2014
  • 15. India’s Problem Infrastructure sector. Insufficient investments. Losing the best and the brightest abroad. Constraint's in labor market needed for manufacturing Industry.
  • 16. China’s Problem Middle Income Trap (transition from middle income to high income status). Ageing population - "one child" policy. High domestic savings rate and correspondingly low domestic demand. As China's per capita income rises, its 1.34 billion people will increasingly yearn for real freedom: a free press, an open Internet and, most crucially, democracy.
  • 17. INDIA AND CHINA IN 2020 • According to a recent report from international economic think tanks, India and China soon plans to form a trade coalition in Asia and that is projected to boost 65% of world trade by near 2020.Both the countries India and China are determined to achieve that and create a huge impact on world economic bodies.
  • 18. India’s long-term prospects look Stronger India is no. 1 talent supplier in the world. India's advantage in having a large pool of English speaking people. India has the advantage of having a vibrant, energetic and creative NGO sector.
  • 19. India shouldn’t try to grow as rapidly as China “Growth has to be aimed within a relevant country context. India has its own unique past, a very different present, and will chart her own version of the future. In that future, the most critical component is to keep democracy safe.”
  • 20. PRESENTATION BY : ………………… ………………… ………………… THANK YOU
  • 21. THANK-YOU 