Simon Long, the author of The Economist's survey on India and China, pointed out that one of the reasons why China's economic development is better than India's is that it started earlier. In addition, China has made more efforts than India in providing education and medical care for the poor and integrating into the global economy. In contrast, China has made greater progress in reform and opening up, so it has also made greater achievements.
China and India are facing the same challenges: unemployment, regional differences and farmers' poverty are the primary economic problems. The two countries have a large population, and the demand for resources has increased accordingly. How to prevent environmental pollution is also an important issue. In the survey report, Simon Lang thinks that India needs to learn from China's economic model.
India's economic development has been surpassed.
It was not until the early 1990s that China's gross domestic product (GDP) surpassed that of India. Since then, the economies of the two countries have developed rapidly. In 1980s, India's GDP grew at an average annual rate of 5.6%, from 199 1 to 5.8% in 2003. China's growth rate is similar, but the starting point is higher. In 1980s, China's GDP grew at an average annual rate of 9.3%, 199 1 to 9.7% in 2003.
Due to the rapid population growth in India, the gap between the per capita GDP of the two countries is even greater. 1990 to 2003, China's per capita GDP grew at an average annual rate of 8.5%, while Indian GDP grew at an average annual rate of 4%. In 2003, the per capita national income of China reached $65,438 +0, 100, while that of India was only $530. When converted into purchasing power per capita, China is 70% richer than India.
In international trade, the difference between China and India is more obvious. From 65438 to 0990, China's share of world exports and imports was 1.9% and 1.6% respectively. By 2003, China's share in world exports and imports increased to 5.8% and 5.3% respectively. Last year, China's two-way trade increased by 36%, and China surpassed Japan to become the third largest trading country in the world, next only to the United States and Germany. However, India's two-way trade volume is less than 1% of the world total.
Due to the rapid economic growth, the poverty level in China has dropped significantly. From 198 1 to 200 1, the number of people whose daily income is less than 1 in China decreased by about 400 million. 1977 between 2000 and 2000, the number of poor people in India decreased by 69 million. At present, 35% of Indians earn less than 1 USD, while China 17% earn less than 1 USD.
The world is optimistic about China's economy
There are other main reasons for economic growth in China and India, namely "foreign direct investment" (FDI). At present, China attracts the most foreign direct investment in the world. Last year, China's total foreign direct investment reached $60 billion, which was 12 times that of India. China has two major attractions for foreign investors: a huge potential domestic market and a convenient export environment.
According to the estimation of a multinational company, the population with disposable consumption income in China has reached 300 million, far more than the Indian population of 50 million. In addition, China has excellent infrastructure. For example, the total length of its expressways is 30,000 kilometers, which is 10 times that of India. Meanwhile, the number of mobile phones and fixed telephones per 65,438+0,000 people in China is six times that of India.
India's advantages are still its well-educated middle class and "soft infrastructure" such as laws, institutions and financial markets. In the high-end market, there are a large number of Indian technicians who are fluent in English, while in labor-intensive manufacturing, China workers have great advantages in basic education.
With more foreign investors favoring China, more and more cooperation projects are beneficial to investors, and China's accession to the WTO has also made its economic activity liberalization process much faster than that of India.
Industry and agriculture
Although India has well-known IT expertise and a prosperous outsourcing industry, it has nothing to do with the general public. There are only about 6,543,800 employees in the whole IT industry, and the output value accounts for only 4% of India's GDP. Simon Lang believes that the growth rate of India's manufacturing industry is much lower than that of the service industry, and it provides few employment opportunities, which is a worrying phenomenon. In 2002, the Indian manufacturing industry only absorbed 6.2 million workers, while China's manufacturing industry had 65.438+600 million employees. China has successfully become the factory of the world.
At the end of 1970s, China began to carry out reform and opening up, which not only increased farmers' income, but also sent tens of millions of employees to new township enterprises. Such a miracle is impossible in India, but efforts are still needed to transfer farmers from farms to factories.
At present, the rural population in India accounts for about 70% of the total population, while the rural population in China accounts for 60%. China and India face the same agricultural problems: low productivity, small farms and limited ability of farmers to invest to increase production.
A competitor or a partner?
In fact, China and India are not real competitors. Although India may take China as the standard to measure its economic growth and international influence, China takes the United States as the comparison object. In addition, the relationship between China and India is changing. At present, the diplomatic relations between the two countries are very friendly and bilateral trade is prosperous. Simon Lang estimates that India and China will become "competitive partners". India is worried that China may replace its leading position in IT services and outsourcing. In a few short years, China will be able to train as many software engineers and college graduates who can speak fluent English as Indians. In view of its great influence in the global economy, China may replace India's indisputable competitive advantage.
More importantly, can India compete with the China Chamber of Commerce in export-oriented labor-intensive manufacturing? This is the only way for Indian economic growth to catch up with the level achieved by China in the past 20 years. India hopes to become a big exporter, but it can't achieve this goal before major changes take place.
In the next few years, both China and India will face great challenges in solving regional differences. How to solve this problem will help to determine whether it can maintain the current high growth rate. For India, this will also determine whether it can increase the current growth rate. Simon Lang pointed out that it is impossible for India to reach the growth rate of China, let alone catch up with the development level of China, without the second drastic reform. This kind of reform seems unlikely at present, but it is not impossible.
Information: The Economist magazine