Making an in depth study and analysis of India vs. China economy seems to be a very hard task.

Both India and

China rank among the front runners of global economy and are among the world's most diverse nations. Both the
countries were among the most ancient civilizations and their economies are influenced by a number of social,
political, economic and other factors. However, if we try to properly understand the various economic and market
trends and features of the countries, we can make a comparison between Indian and Chinese economy. Going by
the basic facts, the economy of China is more developed than that of India. While India is the 12th largest economy in
terms of the exchange rates, China occupies the third position. Compared to the estimated $1.209 trillion GDP of
India, China has an average GDP of around $7.8 trillion. In case of per capital GDP, India lags far behind China with
just $1016 compared to $6,100 of the latter. To make a basic comparison of India and China Economy, we need to
have an idea of the economic facts of the countries.

Facts India China

GDP around $1.209 trillion around $7.8 trillion
GDP growth 6.7% 9.1%
Per capital GDP $1016 $6,100
Inflation 7.8 % -1.2 %
Labor Force 523.5 million 807.7 million
Unemployment 6.8 % 4.3 %

If we make the analysis of the India vs. China economy, we can see that there are a number of factors that has made
China a better economy than India. First things first, India was under the colonial rule of the British for around 190
years. This drained the country's resources to a great extent and led to huge economic loss. On the other hand, there
was no such instance of colonization in China. As such, from the very beginning, the country enjoyed a planned
economic model which made it stronger.

Agriculture

Agriculture is another factor of economic comparison of India and China. It forms a major economic sector in both the
countries. However, the agricultural sector of China is more developed than that of India. Unlike India, where farmers
still use the traditional and old methods of cultivation, the agricultural techniques used in China are very much
developed. This leads to better quality and high yield of crops which can be exported.

Liberalization of the market

In spite of being a Socialist country, China started towards the liberalization of its market economy much before India.
This strengthened the economy to a great extent. On the other hand, India was very slow in embracing globalization
and open market economies. While India's liberalization policies started in the 1990s, China welcomed foreign direct
investment and private investment in the mid 1980s. This made a significant change in its economy and the GDP
increased considerably.

Difference in infrastructure and other aspects of economic growth

Compared to India, China has a much well developed infrastructure. Some of the important factors that have created
a stark difference between the economies of the two countries are manpower and labor development, water
management, health care facilities and services, communication, civic amenities and so on. All these aspects are well
developed in China which has put a positive impact in its economy to make it one of the best in the world. Although
India has become much developed than before, it is still plagued by problems such as poverty, unemployment, lack
of civic amenities and so on. In fact unlike India, China is still investing in huge amounts towards manpower
development and strengthening of infrastructure.

India vs. China: Whose Economy Is Better?

In the inevitable comparisons that economists and businesspeople make between Asia's two rising giants, China and
India, China nearly always comes out on top.
The Chinese economy historically outpaces India's by just about every measure. China's fast-acting government
implements new policies with blinding speed, making India's fractured political system appear sluggish and chaotic.
Beijing's shiny new airport and wide freeways are models of modern development, contrasting sharply with the
sagging infrastructure of New Delhi and Mumbai. And as the global economy emerges from the Great Recession,
India once again seems to be playing second fiddle. Pundits around the world laud China's leadership for its well-
devised economic policies during the crisis, which were so effective in restarting economic growth that they helped lift
the entire Asian region out of the downturn.(Read "Amid Recovery, China's Property Market Soars.")
Now, however, India may finally have one up on its high-octane rival. Though India still can't compete on top-line
economic growth — the World Bank projects India's gross domestic product (GDP) will increase 6.4% in 2009, far
short of the 8.7% that China announced in mid-January – India's economy looks to be rebounding from the downturn
in better shape than China's. India doesn't appear to be facing the same degree of potential dangers and downside
risks as China, which means policymakers in New Delhi might have a much easier task in maintaining the economy's
momentum than their Chinese counterparts. "The way I see it is that the growth in India is much more sustainable"
than the growth in China, says Jim Walker, an economist at Hong Kong–based research firm Asianomics.
India's edge is due to the different stimulus programs adopted by the two countries to support growth during the
downturn. China implemented what Walker calls "the biggest stimulus program in global history." On top of
government outlays for new infrastructure and tax breaks, Beijing most significantly counted on massive credit growth
to spur the economy. The amount of new loans made in 2009 nearly doubled from the year before to $1.4 trillion –
representing almost 30% of GDP. The stimulus plan worked wonders, holding up growth even as China's exports
dropped 16% in 2009.
But now China is facing the consequences of its largesse. Fears are rising that Beijing's easy-money policies have
fueled a potential property-price bubble. According to government data, average real estate prices in Chinese cities
jumped 7.8% in December from a year earlier — the fastest increase in 18 months. The credit boom has also
sparked worries about the nation's banking system. Many economists expect the large surge in credit to lead to a
growing number of nonperforming loans (NPLs). In a November report, UBS economist Wang Tao calculates that if
20% of all new lending in 2009 and 10% of the amount in 2010 goes bad over the next three to five years, the total
amount of NPLs from China's stimulus program would reach $400 billion, or roughly 8% of GDP. Though Wang notes
that the total is small compared with the level of NPLs that Chinese banks carried in the past, she still calls the sum
"staggering." Policymakers in Beijing are clearly concerned. Since December, they have introduced a series of steps
to cool down the housing market and restrict access to credit by, for example, reintroducing taxes on certain property
transactions and raising the required level of cash that banks have to keep on hand in an effort to reduce new
lending.(Read "Foreign Luxury Cars: Picking Up Speed in India.")
India, meanwhile, isn't experiencing nearly the same degree of fallout from its recession-fighting methods. The
government used the same tools as every other to support growth when the financial crisis hit – cutting interest rates,
offering tax breaks and increasing fiscal spending – but the scale was smaller than in China. Goldman Sachs
estimates that India's government stimulus will total $36 billion this fiscal year, or only 3% of GDP. By comparison,
China's two-year, $585 billion package is roughly twice as large, at about 6% of GDP per year. Most important, India
managed to achieve its substantial growth without putting its banking sector at risk. In fact, India's banks have
remained quite conservative through the downturn, especially compared with Chinese lenders. Growth of credit, for
example, was actually lower in 2009 than in 2008. As a result, economists see continued strength in India's banks. A
January report by economic-research outfit Centennial Asia Advisors noted that based on available data, "there was
no sign that domestic banks' nonperforming assets were deteriorating materially." Nor do analysts harbor the same
concerns that India's monetary policies are sending prices of Indian real estate to bubble levels. "India's growth,
though less stellar, does have the reassuring factor that the [risks of] asset price bubbles are less," says Rajat Nag,
managing director general of the Asian Development Bank in Manila.
India maintained robust growth without Beijing's hefty stimulus in part because it is less exposed to the international
economy. China's exports represented 35% of GDP compared with only 24% for India in 2008. Thus India was
afforded more protection from the worst effects of the financial crisis in the West, while China's government needed
to be much more active to replace lost exports to the U.S. More significantly, though, India's domestic economy
provides greater cushion from external shocks than China's. Private domestic consumption accounts for 57% of GDP
in India compared with only 35% in China. India's confident consumer didn't let the economy down. Passenger car
sales in India in December jumped 40% from a year earlier. "What we see [in India] is a fundamental domestic
demand story that doesn't stall in the time of a global downturn," says Asianomics' Walker.(See pictures of India's
"slumdog" entrepreneurs.)
The Indian economy is not immune to risks. The government has to contend with a yawning budget deficit, and last
year's weak monsoon rains will likely undercut agricultural production and soften rural consumer spending. But rapid
growth is expected to continue. The World Bank forecasts India's economy will surge 7.6% in 2010 and 8% in 2011,
not far behind the 9% rate it predicts for China for each of those years. Indian Prime Minister Manmohan Singh, when
speaking about his country's more plodding pace of economic policymaking, has said that "slow and steady will win
the race." The Great Recession appears to have proved him right.

Read more: http://www.time.com/time/world/article/0,8599,1957281,00.html#ixzz19UmsoLjZ

India vs China Economic Growth Potential

There is always a lot of talk about China, and how they will be the great nation to help out, or
perhaps solve all the world’s problems in the years to come. There are many different views on the
nearer term prospects for China. Is the rapid growth sustainable or are they heading into a bubble
that could burst? Is the Yuan going to continue to be tied closely to the Dollar or are they going to let
it float a bit wider to dampen the over stimulated economy?

The opinions range from Jim Rogers who thinks they are the next dominant force of the world, to Jim
Chanos who thinks they are on the brink of collapse. Chanos, who is most known for shorting Enron,
compared the credit expansion in China to the U.S. subprime market, and the housing boom before
they went bust.

In any event, I thought I would share a few thoughts about another China like contender.

The Pulitzer Prize winning author Will Durant once said, “India was the mother of our race, and
Sanskrit the mother of Europe's languages. She was the mother of our philosophy, mother through
the Arabs, of much of our mathematics, mother through Buddha, of the ideals embodied in
Christianity, mother through village communities of self-government and democracy. Mother India is
in many ways the mother of us all."

I found it interesting that in the Barron’s roundtable, no one mentioned India as a place to invest long
term; After all they are the second largest country in the world (over a billion people) in terms of
population, growing at around 8% per year, with a staggering 50% of the population under 25 years
old.

India has also implemented a whopping $500 Billion dollar plan to build and upgrade it’s
infrastructure of highways, airports, and transportation, and have a goal of completion by 2012.

I would think the infrastructure build out, and the population distribution alone, would bode very well
for some industries. With a half a billion people under 25 years old, certainly they will be interested at
some point in a cell phone, and driving a car. (If they are anything like Americans)

In fact, according to a paper written by Marc Faber it’s already happening. “In the year to March
2009, India added 125 million mobile phone subscribers, and whereas Indian auto sales are tiny
compared to China’s vehicle sales (running currently at an annual rate of over 12 million units and
up over 90% year on year), they are nevertheless up 39% year on year, with an annual rate of 1.6
million sales.”
Faber also pointed out in his research “India’s middle class is estimated at 170 million (half the
population of the US), and the country has one of the lowest vehicle-penetration rates in the world.
Given that India also has one of the youngest populations – half of its 1.1 billion-plus people are less
than 25 years old, compared to 42% in Brazil, 36% in China, and less than 30% in the developed
nations – car sales will undoubtedly continue to soar in the next few years.

In this respect, we should also take into account that India’s population will continue to grow rapidly
and will exceed China’s population before 2030. McKinsey estimates that by 2025, India’s middle
class (households with disposable incomes of from 200,000 to one million Rupees a year) will
increase to close to 600 million people, or more than 40% of the population.”

If that growth estimate is somewhat accurate, 600 million people in the middle class equals
approximately two America’s with middle class purchasing power.

Faber points out “This is not to say that India is free of problems. Its rapid population growth will be
challenging. India’s land mass is only a third that of China or the United States, yet its population will
exceed 1.4 billion in 20 years’ time. With close to 20% of the world’s population, India has just 4% of
the world’s water resources and is likely to suffer in future from water scarcity.”

“I should stress that I am far from certain about current stock prices providing an ideal entry point;
however, given the country’s size and economic potential, investors who either have no exposure to
India’s economy and vibrant corporate sector or are massively underweight Indian stocks should
gradually become more involved in this promising country.”

Whether Rogers’s assessment turns out to be correct or Marc Faber’s view comes to pass, there are
problems in China, and I’m sure you will see some similar problems in India. On the other hand, it
looks like India should not be overlooked for long term investment anymore than China, especially in
sectors that will benefit from such a young and growing population.
It’s the season for India versus China
The next Economist, or at least the Asian one, is going to have “Contest of the Century: India versus China” as its
cover. I just reviewed a book on India vs China by an Indian businessman. And there are more than a few oped items
on this issue in the media.
What gives? Personally I think it’s largely about the fact it’s August. “The month nothing happens,” as an article in
the Guardian UK recently noted. So media turn to lists of things. Predictions. Big picture stuff like India vs China.
Especially since the future of Obama, future of Pakistan, future of climate change and so on have been done to
death.
Otherwise, almost anyone you ask, including any Indian who’s actually been to China, will say there’s no contest.
China is roughly four to five times wealthier, has done more on infrastructure – social and physical, has piled up huge
mountains of cash, and has a political leadership who have effectively transformed into an executive class.
And yet.
Besides it being the silly season let me list why a minority are suddenly talking about their actually being a fight.
One, is a very real expectation India’s economic growth rate will overtake that of China’s in a decade or so. India has
to get a few things right, not too much, to push its growth rate from its present 8.5 per cent to about 10 per cent.
Control government red ink. Pass the GST, unifying the country’s disparate revenue systems. Let its manufacturing
sector continue to move, as it is, rapidly up the value ladder. And at least get some infrastructure right – power I think
is doable in the coming five years. Mathematically that should be enough. China, on the other hand, can be expected
to sink to about nine or 10 per cent as its ageing population begins to hoard money for their retirement.
Once India begins growing even a little bit faster, the gap between the two will shrink rapidly. India may never
overtake. But it may be just a few steps rather than many leagues behind.Two, is the real economic difference
between India and China is that one has a world class government while the other has a world class corporate sector.
By all accounts, the biggest Chinese firms are, inside, poorly managed and often little more than extensions of the
government. India has come up with globally competitive industries at a remarkable rate. Its government is
hopelessly dysfunctional.
Which will triumph in the long run? Looking at the historical experience of the United States, I would argue it is the
corporate sector that matters the most. Not least because it transforms the state along the way. The state tends to
suffocate the private sector if given half a chance.
Three, the biggest but not to be exaggerated risk is that the Chinese state has none of the resilience of the Indian
democratic system. It is efficient because it cannot afford to be. If Beijing is perceived to have failed, all hell breaks
loose on the streets. In New Delhi they wait for the next election.
This has been known but the argument was the Chinese Communist Party was too smart to make that sort of
misstep. But I’m now seeing a lot of China watchers wondering if that is true. The party has made missteps and big
ones. It is struggling with a needed economic transition because it can’t figure out how to sell the policy. It has also
been unable to resist throwing its weight around the region, stirring up some anti-China geopolitical balancing. So we
are seeing the rise of a school of China bears. They see speculative bubbles, poor demographics, a bloated heavy
industry sector, bad geopolitical ploys and social unrest coupled with mediocre leaders. It is fair to say the Indian bulls
are still pretty rare but the China negatives are at least raising questions.
As one China watcher told me, “The Chinese leadership know their growth rate is going to fall. And they worry about
India beating them one day. But they calculate New Delhi will make a hash of it and miss the chance.”
Let me put it another way. China has some big flaws in the structure of its economy and polity. But it combines a
decisive and far-seeing leadership with oodles of money to cover up and repair these flaws. If you doubt the leaders
and the stash shrinks, then all these mistakes become serious. Which is why China is suddenly finding itself being
thrown in the same league as India, at least speculatively. But the speculation has a core of empiricism in it.I went
back and read a book or two about China during the early phase of its reforms. It was like reading about India. And
this was all true until about 2002 or so. Not so far behind
Will India Surpass China?
The meteoric rise of China and India has been one of the greatest geopolitical and economic stories of the last two
decades. The ascent of these two giants has tipped the world’s balance of power farther to the east than it has been
in centuries. Right now, China is decidedly the more influential of the two emerging powers. India, however, is no
small player in the global arena and it possesses certain advantages that some believe could make it the most
powerful nation in Asia.

India and China represent two vastly different ways of doing things. India has a decentralized and often chaotic
manner of governing that at times threatens its rapid growth rate. The Chinese government is highly centralized with
a commitment to unity and social stability that can border on obsession. India has largely friendly relations with the
West, though these relations can become strained at times. China has a more steely relationship with Western
nations, though a growing recognition of interdependence has made Beijing more open to cooperation. There is a
growing debate about which of these approaches will prove more successful in the 21st century.

India vs. China: Economy

China is currently well ahead of India in the economic race. The People’s Republic boasts a Gross Domestic Product
of $8.8 trillion (PPP, 2009 est.) compared to India’s $3.5 trillion. China also has a higher rate of real GDP growth
compared to India; 8.7% vs 6.5%, respectively. China’s infrastructure is far superior to India’s as well. The Chinese
government has sponsored what is perhaps the largest investment in infrastructure in human history.

China’s Economic Growth versus India