Why Is China Ahead Of India
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GLOBAL ECONOMIC ENVIRONMENT ASSIGNMENT- 1
WHY CHINA IS AHEAD OF INDIA
SUBMITTED BY: DEVESH SHARMA-26 EKTA SANGHVI-27 EESHANI NAUTIYAL-28 GEOSTANY JOSE-29 GIA DCUNHA-30 WHY CHINA IS AHEAD OF INDIA
China scores well on the following consumer dimensions—on the infrastructure front, China has strong PSTN subscription (with a relative score exceeding 0.8); broadband penetration (as measured by the percentage of households with service) is also well above the average for “Resource and Efficiency Driven” economies. Unlike India, China is near the top in terms of coverage of the population by mobile networks, an impressive accomplishment given the sheer size of the nation. China’s performance on the consumer usage front is more mixed. Although it has a relatively high literacy rate, Internet usage is not as high as one might expect given the high levels of broadband penetration. This, however, reflects the fact that in certain higher-scoring countries on this measure (such as Iran, which scores highly on Internet usage) the primary access modes for Internet are public spaces, rather than at home. To some extent, China’s scores (like those of India) in both 2009 and 2008 have been adversely affected by the fact that the scorecard computes so many performance metrics on a “per capita” basis. However, despite these intrinsic disadvantages, China stands well above India in all measures of basic infrastructure deployment. It is possible that the “tyranny” of dividing by a large population base is more of a factor in producing low scores on the business metrics: but even if this is the case, the fact that China does so well on consumer infrastructure deployment suggests that there is the scope for improving business To the extent that China retains a “command and control” economic structure in place, this structure is well-suited to rolling out infrastructure and coordinating the required investment. However, as recent research shows, this sort of structure is not good at fostering innovation or adapting to rapid-fire technological change.1 China has a unique position in the world economy. It remains a highly state-directed economy, which means that there is a disconnect between aspects of infrastructure and network roll-out that have a “public good” element to them, and those aspects of infrastructure and usage that tend to be highly correlated to private and business usage. As the Chinese economy continues to open up, and as China exhausts the possibilities for “directed growth” or “extensive growth”, the importance of incentivising private and business usage of ICT will increase greatly. Overall, China’s performance reflects an element of “if you build it, they will come.”
However, there are limits as to how well this approach can work, especially when the demand for infrastructure is so driven by patterns of usage (as in the business sector). Despite these shortcomings, it should be recognised that
China has far outstripped India (the only real comparator country) in most aspects of Connectivity. China is at least a generation or two ahead of India when it comes to technology. China's leaders have been described as Technocrats, having high regard for Science and Technology. China has ploughed its huge reservoir of domestic saving — about 40% of GDP — into some of the best infrastructure in the world. And it has been brilliant in attracting massive inflows of foreign direct investment as the means to acquire technology, managerial expertise, and factories on a scale and with scope that is hard to believe. China has, in fact, leapt to the fore as the largest recipient of FDI in the world — some US$53 billion per year in 2002-03. India suffers in comparison basically from having none of the above. China possesses a diversified communications system that links all parts of the country by Internet, telephone, telegraph, radio, and television. System includes some of the most sophisticated technology in the world. R&D for further developments are still going on. China is already leading in the hardware sector in world. It is world’s largest cell phone users of 400 million and world’s largest cable TV subscriber base. It is world’s second largest PC market (20 mil/yr).It has 2nd largest internet users with a number of 162 million. China's software industry has been performing well despite the deepening world recession. In 2008, software exports reached US$14.2 billion, up 39% year-onyear. Services outsourcing grew at an even faster speed of 54.3% to $1.6 billion. The growth in the whole year was 6.2 points higher than in the first 11 months. During the current global recession, due to the downtown in the manufacturing and export sectors, China has selected outsourcing as a new arena for economic growth. While India's outsourcing entered difficult times, China saw opportunities, because India's limitations are China's strengths. China has abundant IT human resources available at low cost. The ratio of wages in China is about 1:7 now, a ratio much more advantageous than that for India. China also provides a safe and stable environment to overseas investors: no terror attacks have ever taken place in Chinese cities. Whereas India is yet to succeed in attracting manufacturing investments, China has been successfully garnering investments in the IT services projects as well as for R&D. This is mainly due to the well-educated and cheap labour force in China. The high influx of foreign investors into China has ensured the high demand for ICT products and services in the country. As per a Feb 2009 Report, “The Atlantic Century : Benchmarking EU & U.S. Innovation and Competitiveness” from The Information Technology & Innovation Foundation (ITIF), China stands at 33 with 36.0 points while India finishes the last in the list of 40 countries in the world with 21.6 points. And when it comes to overall change from 1999 to Feb 2009 on similar ranking, China tops the list with 19.5 points while India secured the spot of 14 with 13.6. So these rankings indicate that over the last 10 years, China is becoming competitive and innovative faster and better than the rest of the world. And India still lags behind
China with wider margin in both the change as well as absolute rankings. Government Policies: Freedom from Internal Control: In China, citizens need to fill out paper works in the local police departments where they relocate to a new place. This requirement for migrate workers to file documents enable the central census bureau to conduct their survey in population and overall economic statistics. However, citizens are free to create their wealth anywhere else in the country. Education: China’s school life expectancy is 11 years (2006), It is a quarter shorter compare to the U.S 15-16 years (2006), The total number of graduates from colleges and universities in 2004: 2.8 million, which is about 25% of the total high school graduate population. Number of Students in Colleges and Universities is 4.13 million, which is about 33% of the total young adult population. In contrary, the education quality is pretty good in China. Comparing to the USA, the ration of the colleges and universities students are much lower, is a result of greater restrictions to enter a university in China. And China has some historical and world famous universities, for instance, Beijing University, Tsinghua University and so on. Freedom from Outside Control: Undeniably, China is one of the strongest countries in the world, the country does not facing any threat from other countries, Chinese citizens are only under China’s jurisdiction. And as mention in the beginning, China’s military spending accounted for only 1.4 per cent of its GDP, compared to 4.6 percent for the United States, and more than 2 per cent for France and the United Kingdom. China (starting from the same level as India in 1978) achieved a more than tenfold increase in its output in the 27 years to 2005.Indiaís current urbanisation rate of 29% is still very low compared with 81% for South Korea, 67% for Malaysia and 43% for China. Rural-urban migration in India has the potential to accelerate to higher levels as, judging by the experiences of other countries, the pace of migration tends to accelerate after a critical level of 25%30% urbanisation is reached, and due to faster economic growth. Urbanisation is spurred by both push and pull factors. Deteriorating agricultural productivity, caste barriers and unemployment in villages push rural inhabitants out, while better opportunities in cities, very high growth in the construction industry and demonstration effects from other migrants pull rural workers into urban centres.
A brief comparision of some important factors is given below: Comparing criteria
GDP Based on PPP
Real GDP
GDP Growth rate
China
India
$7.8 trillion (2008 est.) country comparison to the world: 3 $7.104 trillion (2007) $6.475 trillion (2006)
$3.267 trillion (2008 est.) country comparison to the world: 5 $3.065 trillion (2007) $2.812 trillion (2006)
$4.222 trillion (2008 est.)
$1.237 trillion (2008 est.
9.8% (2008 est.) country comparison to the world: 8 13% (2007 est.) 11.6% (2006 est.)
6.6% (2008 est.) country comparison to the world: 41 9% (2007 est.) 9.6% (2006 est.)
$6,000 (2008 est.) country comparison to Per capita income(PPP) the world: 132 $5,500 (2007 est.) $4,900 (2006 est.)
$2,800 (2008 est.) country comparison to the world: 168 $2,700 (2007 est.) $2,500 (2006 est.)
agriculture: 10.6 % industry: 49.2% services: 40.2% (2008 est.)
agriculture: 17.2 % industry: 29.1% services: 53.7% (2008 est.)
Labour force
807.7 million (2008 est.) country comparison to the world: 1
523.5 million (2008 est.) country comparison to the world: 2
Labour force by
agriculture: 43%
agriculture: 60%
GDP-sector wise
occupation
Unemployment rate
Population below poverty line
Exchange rates
industry: 25% services: 32% (2006 est.)
industry: 12% services: 28% (2003)
4% (2008 est.) country comparison to the world: 46 4% (2007 est.) note: official data for urban areas only; including migrants may boost total unemployment to 9%; substantial unemployment and underemployment in rural areas
6.8% (2008 est.) country comparison to the world: 85 7.2% (2007 est.)
8% note: 21.5 million rural population live below the official "absolute poverty" line (approximately $90 per year); and an additional 35.5 million rural population above that but below the official "low income" line (approximately $125 per year) (2006 est.) Renminbi yuan (RMB) per US dollar - 6.9385 (2008 est.), 7.61 (2007), 7.97 (2006), 8.1943 (2005),
25% (2007 est.)
Indian rupees (INR) per US dollar 43.319 (2008 est.), 41.487 (2007), 45.3 (2006), 44.101 (2005),
8.2768 (2004)
45.317 (2004)
Foreign direct investment abroad
$139.3 billion (2008 est.) country comparison to the world: 21
$54.21 billion (2008 est.) country comparison to the world: 29
Foreign direct investment at home
$758.9 billion (2007 est.) country comparison to the world: 6
$142.9 billion (2008 est.) country comparison to the world: 23
External debt
$420.8 billion (31 December 2008 est.) country comparison to the world: 20
$163.8 billion (31 December 2008 est.) country comparison to the world: 27
Forex and gold reserves
$2.033 trillion (31 December 2008 est.) country comparison to the world: 1
$250 billion (31 December 2008 est.) country comparison to the world: 5
Imports
$1.156 trillion f.o.b. (2008 est.) country comparison to the world: 4
$287.5 billion f.o.b. (2008 est.) country comparison to the world: 17
Exports
$1.465 trillion f.o.b. (2008 est.) country comparison to the world: 3
$175.7 billion f.o.b. (2008 est.) country comparison to the world: 28
Current account balance
$368.2 billion (2008 est.) country comparison to the world: 1
Industrial production growth rate
10.7% (2008 est.) country comparison to
$-38.39 billion (2008 est.) country comparison to the world: 184 4.8% (2008 est.) country comparison to
Inflation rate(consumer prices)
the world: 11
the world: 64
6% (2008 est.) country comparison to the world: 101 4.8% (2007 est.)
7.8% (2008 est.) country comparison to the world: 127 6.4% (2007 est.)
WHY CHINA IS AHEAD OF INDIA
SUBMITTED BY: DEVESH SHARMA-26 EKTA SANGHVI-27 EESHANI NAUTIYAL-28 GEOSTANY JOSE-29 GIA DCUNHA-30 WHY CHINA IS AHEAD OF INDIA
China scores well on the following consumer dimensions—on the infrastructure front, China has strong PSTN subscription (with a relative score exceeding 0.8); broadband penetration (as measured by the percentage of households with service) is also well above the average for “Resource and Efficiency Driven” economies. Unlike India, China is near the top in terms of coverage of the population by mobile networks, an impressive accomplishment given the sheer size of the nation. China’s performance on the consumer usage front is more mixed. Although it has a relatively high literacy rate, Internet usage is not as high as one might expect given the high levels of broadband penetration. This, however, reflects the fact that in certain higher-scoring countries on this measure (such as Iran, which scores highly on Internet usage) the primary access modes for Internet are public spaces, rather than at home. To some extent, China’s scores (like those of India) in both 2009 and 2008 have been adversely affected by the fact that the scorecard computes so many performance metrics on a “per capita” basis. However, despite these intrinsic disadvantages, China stands well above India in all measures of basic infrastructure deployment. It is possible that the “tyranny” of dividing by a large population base is more of a factor in producing low scores on the business metrics: but even if this is the case, the fact that China does so well on consumer infrastructure deployment suggests that there is the scope for improving business To the extent that China retains a “command and control” economic structure in place, this structure is well-suited to rolling out infrastructure and coordinating the required investment. However, as recent research shows, this sort of structure is not good at fostering innovation or adapting to rapid-fire technological change.1 China has a unique position in the world economy. It remains a highly state-directed economy, which means that there is a disconnect between aspects of infrastructure and network roll-out that have a “public good” element to them, and those aspects of infrastructure and usage that tend to be highly correlated to private and business usage. As the Chinese economy continues to open up, and as China exhausts the possibilities for “directed growth” or “extensive growth”, the importance of incentivising private and business usage of ICT will increase greatly. Overall, China’s performance reflects an element of “if you build it, they will come.”
However, there are limits as to how well this approach can work, especially when the demand for infrastructure is so driven by patterns of usage (as in the business sector). Despite these shortcomings, it should be recognised that
China has far outstripped India (the only real comparator country) in most aspects of Connectivity. China is at least a generation or two ahead of India when it comes to technology. China's leaders have been described as Technocrats, having high regard for Science and Technology. China has ploughed its huge reservoir of domestic saving — about 40% of GDP — into some of the best infrastructure in the world. And it has been brilliant in attracting massive inflows of foreign direct investment as the means to acquire technology, managerial expertise, and factories on a scale and with scope that is hard to believe. China has, in fact, leapt to the fore as the largest recipient of FDI in the world — some US$53 billion per year in 2002-03. India suffers in comparison basically from having none of the above. China possesses a diversified communications system that links all parts of the country by Internet, telephone, telegraph, radio, and television. System includes some of the most sophisticated technology in the world. R&D for further developments are still going on. China is already leading in the hardware sector in world. It is world’s largest cell phone users of 400 million and world’s largest cable TV subscriber base. It is world’s second largest PC market (20 mil/yr).It has 2nd largest internet users with a number of 162 million. China's software industry has been performing well despite the deepening world recession. In 2008, software exports reached US$14.2 billion, up 39% year-onyear. Services outsourcing grew at an even faster speed of 54.3% to $1.6 billion. The growth in the whole year was 6.2 points higher than in the first 11 months. During the current global recession, due to the downtown in the manufacturing and export sectors, China has selected outsourcing as a new arena for economic growth. While India's outsourcing entered difficult times, China saw opportunities, because India's limitations are China's strengths. China has abundant IT human resources available at low cost. The ratio of wages in China is about 1:7 now, a ratio much more advantageous than that for India. China also provides a safe and stable environment to overseas investors: no terror attacks have ever taken place in Chinese cities. Whereas India is yet to succeed in attracting manufacturing investments, China has been successfully garnering investments in the IT services projects as well as for R&D. This is mainly due to the well-educated and cheap labour force in China. The high influx of foreign investors into China has ensured the high demand for ICT products and services in the country. As per a Feb 2009 Report, “The Atlantic Century : Benchmarking EU & U.S. Innovation and Competitiveness” from The Information Technology & Innovation Foundation (ITIF), China stands at 33 with 36.0 points while India finishes the last in the list of 40 countries in the world with 21.6 points. And when it comes to overall change from 1999 to Feb 2009 on similar ranking, China tops the list with 19.5 points while India secured the spot of 14 with 13.6. So these rankings indicate that over the last 10 years, China is becoming competitive and innovative faster and better than the rest of the world. And India still lags behind
China with wider margin in both the change as well as absolute rankings. Government Policies: Freedom from Internal Control: In China, citizens need to fill out paper works in the local police departments where they relocate to a new place. This requirement for migrate workers to file documents enable the central census bureau to conduct their survey in population and overall economic statistics. However, citizens are free to create their wealth anywhere else in the country. Education: China’s school life expectancy is 11 years (2006), It is a quarter shorter compare to the U.S 15-16 years (2006), The total number of graduates from colleges and universities in 2004: 2.8 million, which is about 25% of the total high school graduate population. Number of Students in Colleges and Universities is 4.13 million, which is about 33% of the total young adult population. In contrary, the education quality is pretty good in China. Comparing to the USA, the ration of the colleges and universities students are much lower, is a result of greater restrictions to enter a university in China. And China has some historical and world famous universities, for instance, Beijing University, Tsinghua University and so on. Freedom from Outside Control: Undeniably, China is one of the strongest countries in the world, the country does not facing any threat from other countries, Chinese citizens are only under China’s jurisdiction. And as mention in the beginning, China’s military spending accounted for only 1.4 per cent of its GDP, compared to 4.6 percent for the United States, and more than 2 per cent for France and the United Kingdom. China (starting from the same level as India in 1978) achieved a more than tenfold increase in its output in the 27 years to 2005.Indiaís current urbanisation rate of 29% is still very low compared with 81% for South Korea, 67% for Malaysia and 43% for China. Rural-urban migration in India has the potential to accelerate to higher levels as, judging by the experiences of other countries, the pace of migration tends to accelerate after a critical level of 25%30% urbanisation is reached, and due to faster economic growth. Urbanisation is spurred by both push and pull factors. Deteriorating agricultural productivity, caste barriers and unemployment in villages push rural inhabitants out, while better opportunities in cities, very high growth in the construction industry and demonstration effects from other migrants pull rural workers into urban centres.
A brief comparision of some important factors is given below: Comparing criteria
GDP Based on PPP
Real GDP
GDP Growth rate
China
India
$7.8 trillion (2008 est.) country comparison to the world: 3 $7.104 trillion (2007) $6.475 trillion (2006)
$3.267 trillion (2008 est.) country comparison to the world: 5 $3.065 trillion (2007) $2.812 trillion (2006)
$4.222 trillion (2008 est.)
$1.237 trillion (2008 est.
9.8% (2008 est.) country comparison to the world: 8 13% (2007 est.) 11.6% (2006 est.)
6.6% (2008 est.) country comparison to the world: 41 9% (2007 est.) 9.6% (2006 est.)
$6,000 (2008 est.) country comparison to Per capita income(PPP) the world: 132 $5,500 (2007 est.) $4,900 (2006 est.)
$2,800 (2008 est.) country comparison to the world: 168 $2,700 (2007 est.) $2,500 (2006 est.)
agriculture: 10.6 % industry: 49.2% services: 40.2% (2008 est.)
agriculture: 17.2 % industry: 29.1% services: 53.7% (2008 est.)
Labour force
807.7 million (2008 est.) country comparison to the world: 1
523.5 million (2008 est.) country comparison to the world: 2
Labour force by
agriculture: 43%
agriculture: 60%
GDP-sector wise
occupation
Unemployment rate
Population below poverty line
Exchange rates
industry: 25% services: 32% (2006 est.)
industry: 12% services: 28% (2003)
4% (2008 est.) country comparison to the world: 46 4% (2007 est.) note: official data for urban areas only; including migrants may boost total unemployment to 9%; substantial unemployment and underemployment in rural areas
6.8% (2008 est.) country comparison to the world: 85 7.2% (2007 est.)
8% note: 21.5 million rural population live below the official "absolute poverty" line (approximately $90 per year); and an additional 35.5 million rural population above that but below the official "low income" line (approximately $125 per year) (2006 est.) Renminbi yuan (RMB) per US dollar - 6.9385 (2008 est.), 7.61 (2007), 7.97 (2006), 8.1943 (2005),
25% (2007 est.)
Indian rupees (INR) per US dollar 43.319 (2008 est.), 41.487 (2007), 45.3 (2006), 44.101 (2005),
8.2768 (2004)
45.317 (2004)
Foreign direct investment abroad
$139.3 billion (2008 est.) country comparison to the world: 21
$54.21 billion (2008 est.) country comparison to the world: 29
Foreign direct investment at home
$758.9 billion (2007 est.) country comparison to the world: 6
$142.9 billion (2008 est.) country comparison to the world: 23
External debt
$420.8 billion (31 December 2008 est.) country comparison to the world: 20
$163.8 billion (31 December 2008 est.) country comparison to the world: 27
Forex and gold reserves
$2.033 trillion (31 December 2008 est.) country comparison to the world: 1
$250 billion (31 December 2008 est.) country comparison to the world: 5
Imports
$1.156 trillion f.o.b. (2008 est.) country comparison to the world: 4
$287.5 billion f.o.b. (2008 est.) country comparison to the world: 17
Exports
$1.465 trillion f.o.b. (2008 est.) country comparison to the world: 3
$175.7 billion f.o.b. (2008 est.) country comparison to the world: 28
Current account balance
$368.2 billion (2008 est.) country comparison to the world: 1
Industrial production growth rate
10.7% (2008 est.) country comparison to
$-38.39 billion (2008 est.) country comparison to the world: 184 4.8% (2008 est.) country comparison to
Inflation rate(consumer prices)
the world: 11
the world: 64
6% (2008 est.) country comparison to the world: 101 4.8% (2007 est.)
7.8% (2008 est.) country comparison to the world: 127 6.4% (2007 est.)
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