Brief Notes on China Vs. India’s Economy

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India is the second largest big emerging economy of BRIC (Brazil, Russia, India, China) march in the process of globalisation in the contemporary era of he new country.

India has introduced a large number of economic reforms towards liberalisation and global integration of the economy since 1991.

In the recent years, foreign direct investment (FDI) registered an increasing trend in India.

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Most MNCs have considered India as a platform for the FDI mainly by the lure of its big domestic market potential. However, FDI inflows in the Indian economy has remained low compared to many other countries. This is mainly attributed to political troubles and tax system in India.

China vs. India:

China has been attracting more FDI flows than India, even today. This may be attributed to the fact that:

1. GDP growth rate of China (10%) is higher than that of India (7%).

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2. Manufacturing sector of China is far superior than that of India.

3. India has specialisation in IT services due to its knowledge workers availability. China is also improving on this count.

4. China has better business-friendly and FDI-oriented policies than India.

5. China is now relatively less bureaucratic than India.

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6. China makes quicker decisions than India.

7. China opened up its economy in 1979, while India in 1991.

8. China’s investment environment and returns are better than that of India.

9. China has a global network due to Chinese Common Wealth. There is no such India network, not Indian Common Wealth.

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China’s per capital income has been more than double (81,100) than that of India (8530) in 2003.

China’s poverty level is just about 5% in comparison to India’s 25% level of poverty.

By 2003, China claimed 5.6% of world merchandise exports and 5.3% of imparts as against India’s share being less than 1% in world trade.

In the year 2000, India’s Exports-to-GDP ratio was 9.8%, whereas, that of China was estimated to the over 23%.

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