India vs China 2020

Topics: People's Republic of China, United States, Investment Pages: 2 (510 words) Published: August 31, 2012
India and China are the emerging economies. Both form an important part of BRICS. At present, China is the world’ second largest economy and India the Fourth (as per PPP). Both India and China have been said to be the global leaders in the coming 20 years. But what is it that will differentiate both the economies in 2020?? There is a whole range of differences between the Chinese and the Indian economy. Let us begin by analysing the demographics. The Chinese economy is at present having the advantage of a larger work force. But in the future as more and more of the population ages, their workforce will reduce and India’s workforce will rise. The average Population Growth in India and China is approximately 1.38% and 0.49% respectively. Also, the % of population dependent on others will also increase in the Chinese economy while at the same time the same is set to decrease in the Indian economy. Looking at it from the view point of macroeconomics. On the other hand, China follows a communist form of Government. Here, everything is owned and operated by the Government. Because of this, they have been able to drive the economy at a very high growth rate but there’s always a fear of public unrest if there’s a fall in the growth rates. On the other hand, India follows a democratic form of government and has a mixed economy. It is more open to the corporate sector and has become one of the most favourable destinations for investments by foreigners. China already has a GDP which is almost 3 times the Indian GDP and it has the largest foreign exchange reserves, which can be used to drive its growth. Though both the countries have the high growth rates, China could use these reserves to further push its economy upward. On the other hand, India needs to develop its infrastructure, simplify its taxation scheme, implement GST and reduce Government red tape and bottle necks to ensure that it can continue to grow at a good rate. China has one of the largest military budgets...
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