What can we expect in the next 5 year period (2011-2015) for China-India comparisons? A highly quoted Morgan Stanley economist believes Indian GDP growth will surpass the Chinese rate in that time period.* That might happen but even if China is no longer the fastest growing major economy, interest in China won't diminish but might actually double compared to the current level.
It's hard to imagine even more interest in China than now but the transformation of China over the next 5 years will even surprise those acclimated to the pace of miracle years. The Economist makes a projection: "China’s torrid growth puts it on course to hit the $16,740 GDP-per-head threshold by 2015..." Although Chinese GDP per capita (PPP) is $7500 for 2010, 2X+ growth in a short time is difficult to believe but highly plausible. If there is 8% real growth + 3-4% inflation + 3-4% currency appreciation over the next 5 years then the per capita will double. At the level of $16,740 per capita, China will be in the same league as countries like Chile, Mexico, and Russia (2010).
Even as someone used to miracle years, I still have a hard time imagining a huge, relatively poor country becoming a middle income country in 5 years. Everyone else will also struggle to make sense of such mind boggling overnight change.
*Update: In 2010 India was the fastest growing major economy. Read the Economist analysis.
China Over India: A critical view of the future of India compared with China based on sociology and human geography
Point of This Blog
By the way, why do you care so much about India versus China. Everyone who needs to know - potential investors/corporate titans - where India stands relative to China, already knows. If not, one visit is all it takes to disabuse oneself of such a delusion.
ReplyDeleteBragging can't change reality.
@Tai Chi:
ReplyDeleteAnother facet to this development is the increasing hyper-nationalism and protestations of racial superiority accompanying economic growth in China. The precedents of industrialization in Germany and Japan, both unremarkable nations theretofore, are alarming. In both cases, rapid parity achieved after centuries in obscurity made the population susceptible to theories of racial superiority and contibuted to world wars.
The parallels with China, also re-emerging after centuries as an underdog are compelling in my opinion. Already one can detect a shrill jingoism and claims of being a superior race etc. I wonder what level of conflict there will be.
I just don't see how India can out strip China in GDP terms in 56 months, unless there is some massive slowdown in Chinese growth, which is unlikely.
ReplyDeleteAs for nationalism/jingoism of the growing/emerging economies, that is natural, it happens in every country when it comes close to being developed.
Here's a possible topic for your next post.
ReplyDeleteChina has just committed to building 2 pebble rock reactors
http://www.nytimes.com/2011/03/25/business/global/25chinaside.html
It is also pressing ahead with a thorium reactor.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8393984/Safe-nuclear-does-exist-and-China-is-leading-the-way-with-thorium.html
Needless to say that these efforts can radically change the geopolitical energy landscape.
The speculation is that India growth rate may surpass that of China. That is a percentage comparison, not comparison of absolute GDP.
ReplyDeleteHere is one interesting Article from UK's prestigious TIME Magazine titled "China's Century — or India's?"
ReplyDeleteThe Article emphasized that in quantity Chinese economy is better but when it comes to quality of economic policies, it is Indian economy which has the edge because Indian economy is based on domestic consumption but Chinese is based mainly on risky exports sector.
http://www.time.com/time/specials/packages/article/0,28804,2099180_2099179_2099176-1,00.html