Moralejo, John Michael

4DLM February 18, 2014

http://jmmoralejo.wordpress.com/2014/02/18/the-tiger-and-the-dragon-of-asian-economy/
The Tiger and The Dragon of Asian Economies
Fastest emerging leaders of the world, fastest growth and development. Massive sourcing
hubs for all kind of industries. Especially for apparels/garments, their rivalry is famous across the
globe. Both of them have abundance of resources, capital, skilled human resources, technology
and globalization. Both them have stabilized government and economy. Both them have strong
demand, infrastructure, affordability, state of the art technology and attitude. These characterizes
China and India, the two monsters in Asia.
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. Reforms began with the phasing out of collectivized agriculture, and expanded to
include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state
enterprises, creation of a diversified banking system, development of stock markets, rapid
growth of the private sector, and opening to foreign trade and investment. China has
implemented reforms in a gradualist fashion. In recent years, China has renewed its support for
state-owned enterprises in sectors it considers important to "economic security," explicitly
looking to foster globally competitive national champions. 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 and social strife related to the economy's rapid
transformation. 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. One consequence of population control policy is that China is now
one of the most rapidly aging countries in the world.
India is developing into an open-market economy, yet traces of its past autarkic policies
remain. Economic liberalization measures, including industrial deregulation, privatization of
state-owned enterprises, and reduced controls on foreign trade and investment, began in the early
1990s and have served to accelerate the country's growth, which averaged under 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, business outsourcing 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. The outlook for 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. India has many long-term challenges that it has yet to fully
address, including poverty, corruption, violence and discrimination against women and girls, an
inefficient power generation and distribution system, ineffective enforcement of intellectual
property rights, decades-long civil litigation dockets, inadequate transport and agricultural
infrastructure, limited non-agricultural employment opportunities, inadequate availability of
quality basic and higher education, and accommodating rural-to-urban migration.
In the end, India and China have brought along several changes. The production process
has been modified and higher quality goods are produced at lower costs, increasing companies'
revenues and reducing the prices faced by the consumers. There is also a competition for jobs as
white-collar jobs are moving offshore. The existent competition between domestic and foreign
countries as well as between Westerners and Middle East workers will constitute an engine of
growth for the world. Companies will focus on producing higher quality, cheaper goods while
people will invest more education in order to possess advantages with respect to others. Overall,
this will be positive for every country.
The two Asian giants India and China have shown several developments in different
sectors from the early times, which eventually contributed towards a steep rise in the economy of
the respective countries. However, when it comes to comparing the economy of both the
countries, China usually stays on the top. The economists points out, Chinese Government
constantly implies new, which certainly has an impact in the first rising economy. Both the
countries are putting in their best efforts to analyze their core economic strengths and gradually
establish themselves as the superpower in the World Economy. Comparing several factors, China
and India stands at more or less at the same juncture of economic development. Both the
countries are looking forward to approach constructive developmental strategies to increase their
effectiveness. While, China has opted for manufacture-led growth strategy, India finds it better to
stick to the service based development models for an enhanced growth in economy. Apart from
these strategies, overall encouragement in labour and manpower is required which would further
be effective in combating unemployment challenges.