C Omparative E Conomic G Rowth the P Ost -M Ao E Ra in C Hina
C OMPARATIVE E CONOMIC G ROWTH
THE P OST -M AO E RA IN C HINA
AND
I NDIA
IN
Edward J. Sappin
Chinese Economic Reform since 1978
April 21, 2003
INTRODUCTION
India and China are the two nations with the largest populations on the planet. They are similar in many ways as both have diverse ethnic minorities, well-educated segments of their populations, and relatively stable governments. Nevertheless since 1978 China’s gross GDP and
GDP per capita have grown at high levels while India has had a mixed record of economic growth. This has led to many people in India to call for its government to emulate Chinese economic reforms in the post-Mao period in an effort to increase growth. However, what works in one country rarely works in another; whereas India is a democratic nation, China is not and the basis from which each country has pursued economic growth over the past quarter century was significantly different.
This paper will examine briefly the major engines for economic growth and China and
India’s experience and reforms in these areas over the last 25 years. After a recent economic history of the two countries, it will look at key statistics that highlight growth, provision of basic social services, the impact of the government on the economy, economic openness, and the banking system. We will examine China’s and India’s records in each area and seek to draw any lessons from the Chinese experience that may be applied to India. Finally, we will look at some of the fundamental differences between the two countries, and the challenges that they face in the future. It should be noted that this subject could easily be addressed in a paper double or treble in length of this one but the brief analysis provided here should help to shed some light on an important comparison.
After the establishment of the People’s Republic of China in 1949, it experienced uneven and sometimes negative growth rates in the pre-reform period up until
THE P OST -M AO E RA IN C HINA
AND
I NDIA
IN
Edward J. Sappin
Chinese Economic Reform since 1978
April 21, 2003
INTRODUCTION
India and China are the two nations with the largest populations on the planet. They are similar in many ways as both have diverse ethnic minorities, well-educated segments of their populations, and relatively stable governments. Nevertheless since 1978 China’s gross GDP and
GDP per capita have grown at high levels while India has had a mixed record of economic growth. This has led to many people in India to call for its government to emulate Chinese economic reforms in the post-Mao period in an effort to increase growth. However, what works in one country rarely works in another; whereas India is a democratic nation, China is not and the basis from which each country has pursued economic growth over the past quarter century was significantly different.
This paper will examine briefly the major engines for economic growth and China and
India’s experience and reforms in these areas over the last 25 years. After a recent economic history of the two countries, it will look at key statistics that highlight growth, provision of basic social services, the impact of the government on the economy, economic openness, and the banking system. We will examine China’s and India’s records in each area and seek to draw any lessons from the Chinese experience that may be applied to India. Finally, we will look at some of the fundamental differences between the two countries, and the challenges that they face in the future. It should be noted that this subject could easily be addressed in a paper double or treble in length of this one but the brief analysis provided here should help to shed some light on an important comparison.
After the establishment of the People’s Republic of China in 1949, it experienced uneven and sometimes negative growth rates in the pre-reform period up until