Comparative Study of India and China

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FOR BRAZIL, Russia, India and China, the acronym is BRIC. Out of these four counties the last two ‘IC’- India and China - are in limelight in the eyes of worldwide investors. Chinese dailies are full of the news of huge market capitalisation of top five Chinese companies, one of which (Petro China) has created a world record by being first company of the world to have market capitalisation of over one trillion dollars. This article compares the two hot countries of Asia.  

Comparison of economies
 
As per IMF (International Monetary Fund) Report, China was the fourth largest economy of the world by nominal GDP in 2006, whereas India was 12th.  
China registered GDP growth rate of 11.3 per cent in the first half of 2007, whereas India has registered a 9.3 per cent GDP growth in April-June 2007.  
Chinese economy is worth $ 3.1 trillion (that is, $ 3100 billion), whereas Indian economy is worth of $ 900 billion.  
China’s forex (foreign exchange) reserves exceed one trillion dollars (excess of $1000 billion) whereas India is having forex reserves in excess of $ 265 billion.   
Chinese largest company Petro China is having M-Cap (market capitalisation) of $ 1.6 trillion (as on November 5, 2007), whereas India’s largest company RIL (Reliance Industries Ltd) is having M-Cap of $ 96.02 billion (as on November 2, 2007).  

China boasts of having five out of 10 biggest companies of the world in terms of M-Cap, whereas India has not a single company listed in top 10 companies of the world in terms of M-cap.  
Interest rates comparison
 
Nominal interest rate on loan and advances in China is 7.25 per cent, whereas it is 12.75-13.25 per cent in India.  
Real interest rate on loan and advances (interest rate minus inflation) in China works out to be 3.36 per cent in China, whereas it is 9.65-10.15 per cent in India.  
Deposit rates in China are in the range of 2.07-4.95 per cent, whereas it is in the range of 7.5-9.6 per cent in India.  
One-year yuan lending rate of Peoples Bank of China (China’s Central bank) is 6.12 per cent, whereas bank rate and reverse repo rate of RBI is 6 per cent.  
Central bank’s prescribed reserve ratio for banks is 13 per cent in China (October 2007), whereas RBI prescribed 32 per cent (25 per cent statutory liquidity ratio and 7 per cent cash reserve ratio) reserve ratio.  

Trade data comparison
 
China contributes 8 per cent to the world trade, whereas India’s contribution in the world trade is less than one per cent (0.8 per cent).  
China is in surplus in both fiscal and merchandise trade terms, whereas India was having a trade deficit of $ 21.6 billion in April-June 2007, which is 7 per cent of India’s GDP.  
Other Data
 
Exchange rate one US dollar = 7.48 yuan, whereas one US dollar = 39.33 Indian rupees.  
Average salary increase of workers in 2007 was 8 per cent in China, whereas it was 14 per cent in India.  
Average human life expectancy was 74 years in China, whereas it was 64 years in India.  
China has 900 universities, whereas India has 363 universities.  
Functional literacy is 93 per cent in China, whereas it is 33 per cent (66 per cent as per government of India) in India.  
Transmission and Distribution losses of electricity in China stand at only 8 per cent, whereas it varies from 15-25 per cent in India.   
Number of villages in China are 930, 000,whereas India has 638,365 (as per 2001 census) villages.

Key determinants of the different GDP growth rates in India and China An earlier entry on this blog considered India and China’s efficiency of investment in terms of GDP growth. This analysis was carried out in terms of their relative Incremental Capital Output Ratios (ICOR) – the percentage of GDP which is invested to generate a unit increase in GDP. An advantage of using this measure is that many countries, including India, produce quarterly GDP figures which allow up to date calculation of results – valuable for practical current policy making. China does...
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