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Chinaand
India
China and India
International Economic Environment
Chinaand
India
A tremendous growth
• China’s growth from 1980s to 1990s was an average of
10,3% a year
• India grew 5,7% a year in the same period
• From 1990 to 2004 china grew 10,6% to 9,4% while
India grew from 6% to 6,7%
• Only Vietnam had known a superior growth during this
period which was sustained
• It is expected that these growth rates should be
maintained until 2008
•
Chinaand
India
GDP and GNI
• GNI = Gross national product
• GDP = Gross domestic product
• PPP= Purchasing power parity
• China’s GNI (PPP)= 7,6 trillion dollars in 2004
• India’s GNI (PPP)=3,4 trillion dollars in 2004
• USA’s GNI = 11,7 trillion dollars
• China is considered to be the second larges economy
of the world
• India is considered to be the fourth largest economy in
the world after China and Japan
Chinaand
India
Evolution of GNI
• India’s share of world exchange rised from 4,3% in
1990 to 5,8% in 2004
• India’s growth during 2003 and 2004 represents 1/5th of
Asian growth and 1/10th of world growth
• While China’s growth reprsents 53% of Asian’s growth
and 28% of world growth
Chinaand
India
China nowadays
• The share of international trade wihin the chinese
economy = 65% in 2004 and 70% in 2006
• China’s potentials workers (15-59) = 67,7% in 2005
• However china has adopted the 1 child policy since
1979
• Saving rate =42% GDP
• Investment rate = 39% GDP
• Expected growth to diminish
• More than 50% of the population is working in
agricultural field and rural activities
• The expected decrease in growh is questionned
because there is a potential intersectoral move
Chinaand
India
India nowadays
• India demographics is similar to Chinese
• However no one child policy
• Some states have achieved the demographic transition
• Share of 15 to 59 is expected to rise
• A very large part of the population is still working in the
agriculture
• Great potential in intersectoral shift
• India’s saving and investment = 30% GDP and
forecasted to increase
Chinaand
India
Comparision between China and India
• India seems to be using capital less efficiently than
china (investment / growth)
• GDP share of industry is higher in china (4,6% china vs
2,7% India)
• India’s growth has been driven by less capital intensive
services (IT)
• However India’s manifacturing share is increasing
Chinaand
India
Total Factor Productivity
• The theory of total factor productivity is based on two
criterions
– Information and communication technology capital
vs Non ICT capital
– Labour hours vs Labour quality
• It suggests that china’s TFP have decreased between
the two periods ranging from 1989 to 1995 and 1995 to
2003
• Whereas Inida’s TFP between the two periods have
increased
Chinaand
India
China’s development routes
• China attracts more FDI than India
• FDI invested in China come namely from chinese
diaspora
• China has created SEZ (special economic zones) which
are free from the standrads regulation and acknowledge
he total foreign ownership, and have excellent
infrastructure
• China’s FDIs are export oriented and construction
oriented
Chinaand
India
Consequences of China and India developement
• Increased growth means increased demand and finally means increased imports
Chinaand
India
Textile and clothing
• MFA (multifiber agreement)
• From 1995 the quotas are decreased
• This leads to an increase in the chinese share of USA
and EU exports
• Therefore the USA and he EU have established
safeguard
• India din’t beneficiate as much as china from the end of
the MFA
• The Chinese share is expected to increase from 18% to
29% of EU imports and from 16% to 50% of the US
imports
• Indian share is expected to increase from 6% to 9% of
EU imports and from 4% to 15% of the US imports
Chinaand
India
Automobiles and Parts
• China and India share in the global parts market has
trippled between 1990 & 2004
• 3 car producers in India
• Heavy regulations
• India shifted to a very productive auto part industry
• China launched cherry motors internationnally
Chinaand
India
Pharmaceuticals & Chemicals
• India is a major producer of generics
• Generics manufacturers were free to produce as long
as the processing is different
• However in 1994 TRIPS were ratisfied by India during
the Uruguay round
• Even though the generics still contributes to curing big
illnesses like HIV/AIDS
Chinaand
India
Services
• India’s service sector grew at 7% A YEAR
• India’s service sector represents 54% of GDP in
2005/2006
• Domestic demand is a crucial contributor to growth in
transport, trade, storage, social & personal services
• Important exportations exist in sofware services

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China indiaiee3

  • 2. Chinaand India A tremendous growth • China’s growth from 1980s to 1990s was an average of 10,3% a year • India grew 5,7% a year in the same period • From 1990 to 2004 china grew 10,6% to 9,4% while India grew from 6% to 6,7% • Only Vietnam had known a superior growth during this period which was sustained • It is expected that these growth rates should be maintained until 2008 •
  • 3. Chinaand India GDP and GNI • GNI = Gross national product • GDP = Gross domestic product • PPP= Purchasing power parity • China’s GNI (PPP)= 7,6 trillion dollars in 2004 • India’s GNI (PPP)=3,4 trillion dollars in 2004 • USA’s GNI = 11,7 trillion dollars • China is considered to be the second larges economy of the world • India is considered to be the fourth largest economy in the world after China and Japan
  • 4. Chinaand India Evolution of GNI • India’s share of world exchange rised from 4,3% in 1990 to 5,8% in 2004 • India’s growth during 2003 and 2004 represents 1/5th of Asian growth and 1/10th of world growth • While China’s growth reprsents 53% of Asian’s growth and 28% of world growth
  • 5. Chinaand India China nowadays • The share of international trade wihin the chinese economy = 65% in 2004 and 70% in 2006 • China’s potentials workers (15-59) = 67,7% in 2005 • However china has adopted the 1 child policy since 1979 • Saving rate =42% GDP • Investment rate = 39% GDP • Expected growth to diminish • More than 50% of the population is working in agricultural field and rural activities • The expected decrease in growh is questionned because there is a potential intersectoral move
  • 6. Chinaand India India nowadays • India demographics is similar to Chinese • However no one child policy • Some states have achieved the demographic transition • Share of 15 to 59 is expected to rise • A very large part of the population is still working in the agriculture • Great potential in intersectoral shift • India’s saving and investment = 30% GDP and forecasted to increase
  • 7. Chinaand India Comparision between China and India • India seems to be using capital less efficiently than china (investment / growth) • GDP share of industry is higher in china (4,6% china vs 2,7% India) • India’s growth has been driven by less capital intensive services (IT) • However India’s manifacturing share is increasing
  • 8. Chinaand India Total Factor Productivity • The theory of total factor productivity is based on two criterions – Information and communication technology capital vs Non ICT capital – Labour hours vs Labour quality • It suggests that china’s TFP have decreased between the two periods ranging from 1989 to 1995 and 1995 to 2003 • Whereas Inida’s TFP between the two periods have increased
  • 9. Chinaand India China’s development routes • China attracts more FDI than India • FDI invested in China come namely from chinese diaspora • China has created SEZ (special economic zones) which are free from the standrads regulation and acknowledge he total foreign ownership, and have excellent infrastructure • China’s FDIs are export oriented and construction oriented
  • 10. Chinaand India Consequences of China and India developement • Increased growth means increased demand and finally means increased imports
  • 11. Chinaand India Textile and clothing • MFA (multifiber agreement) • From 1995 the quotas are decreased • This leads to an increase in the chinese share of USA and EU exports • Therefore the USA and he EU have established safeguard • India din’t beneficiate as much as china from the end of the MFA • The Chinese share is expected to increase from 18% to 29% of EU imports and from 16% to 50% of the US imports • Indian share is expected to increase from 6% to 9% of EU imports and from 4% to 15% of the US imports
  • 12. Chinaand India Automobiles and Parts • China and India share in the global parts market has trippled between 1990 & 2004 • 3 car producers in India • Heavy regulations • India shifted to a very productive auto part industry • China launched cherry motors internationnally
  • 13. Chinaand India Pharmaceuticals & Chemicals • India is a major producer of generics • Generics manufacturers were free to produce as long as the processing is different • However in 1994 TRIPS were ratisfied by India during the Uruguay round • Even though the generics still contributes to curing big illnesses like HIV/AIDS
  • 14. Chinaand India Services • India’s service sector grew at 7% A YEAR • India’s service sector represents 54% of GDP in 2005/2006 • Domestic demand is a crucial contributor to growth in transport, trade, storage, social & personal services • Important exportations exist in sofware services