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India V/S China The Future Economic Power

Presented By :• FARHAN RAJANI

China’s Economic Overview
China's economy during the last quarter century has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy. World's fastest-growing economies. From 1979 to 2007 China's real gross domestic product (GDP) grew at an average annual rate of 9.8%. Real GDP grew 11.4% in 2007 (the fastest annual growth since 1994). China's exports (at $1,218 billion) exceeded U.S. exports (1,162 billion) for the first time Well over half of China's trade is conducted by foreign firms operating in China. China the world's largest holder of foreign exchange reserves at $1.5 trillion at the end 2007

China's economic transformation was initially - necessarily - a top-down process because of the autocratic nature of its government. However, the process was shaped by Chinese historical and cultural factors, and was quickly influenced by grass roots initiatives as the Chinese people responded creatively and productively to their new opportunities.
 

Over-Population a Great Resource

foundation in agriculture, and the ratio between light and heavy industries was unbalanced. Since 1978, China has adopted a series of policies and measures giving priority to the development of light industry, expanding the import of top-quality consumer goods, strengthening the construction of basic industry and facilities, and devoting major efforts to developing tertiary industry, so as to make China’s economic structure more coordinated, optimized and balanced. The relations between different industries and within industries in terms of proportion have clearly been improved; the proportion of primary industry has declined, while that of the secondary and tertiary industries has grown; the growth of the overall national economy was driven formerly by the primary and secondary industries, but now it is being driven by the secondary and tertiary industries. Actually the growth of secondary industry becomes the main

U.S poll - China is top economic power
Hong Kong News. Net Thursday 21st February, 2008 A new poll has found that more Americans believe China, not the United States, is the world's top economic power. The Gallup World Affairs survey has found that four in ten Americans believe China's economy leads the world while only 33 percent chose the United States as world leader. In 2000, the United States was top in the poll, with the support of 65 percent. More than half of Americans polled eight years ago believed the U.S would be the world's powerhouse economy for the next 20 years. Now, more predict that China will be at the top in less than two decades

Central Intelligence Agency’s
World Fact Book Records……

Criteria
GDP (purchasing power parity):

China

India

$7.043 trillion (2007 $2.965 trillion (2007 est.) est.) GDP (official exchange rate): $3.249 trillion (2007 $1.09 trillion (2007 est.) est.) GDP - real growth rate: 11.4% (official data) 8.5% (2007 est.) (2007 est.) GDP - per capita (PPP): $5,300 (2007 est.)

$2,700 (2007 est.)

GDP - composition by sector: agriculture: 11.7% industry: 49.2% services: 39.1% note: industry includes construction (2007 est.)

agriculture: 16.6% industry: 28.4% services: 55% (2007 est.)

Criteria

China
Labor force: 803.3 million (2007 est.)

India
516.4 million (2007 est.) agriculture: 60% industry: 12% services: 28% (2003) 7.2% (2007 est.)

Labor force - by occupation: agriculture: 43% industry: 25% services: 32% (2006 est.) Unemployment rate: 4% unemployment in urban areas; substantial unemployment and underemployment in rural areas (2007 est.) Population below poverty line:

8% 25% (2007 est.) 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.)

Household income orlowest 10%: 1.6% consumption by percentagehighest 10%: 34.9% (2004) share:

lowest 10%: 3.6% highest 10%: 31.1% (2004)

Criteria

China

India

Distribution of family income - Gini index:47 (2007) Inflation rate (consumer prices):4.7% (2007 est.) Investment (gross fixed): 42.2% of GDP (2007 est.) Budget:

36.8 (2004)

5.9% (2007 est.)

31.8% of GDP (2007 est.)

revenues: $640.6 billion revenues: $145.2 billion expenditures: $634.6 billion expenditures: $182.4 billion (2007 est.) (2007 est.)

Public debt: 18.9% of GDP (2007 est.) 58.8% of GDP (federal and state debt combined) (2007 est.)

Criteria

China

India

Agriculture - products: rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish

rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes; cattle, water buffalo, sheep, goats, poultry; fish

Industries: mining and ore processing, textiles, chemicals, food iron, steel, aluminum, and processing, steel, other metals, coal; machine transportation equipment, building; armaments; textiles cement, mining, petroleum, and apparel; petroleum; machinery, software cement; chemicals; fertilizers; consumer products, including footwear, toys, and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; telecommunications equipment, commercial space launch vehicles, satellites

Criteria

China

India

Electricity - production: 3.256 trillion kWh (2007)

661.6 billion kWh (2005)

Electricity - consumption: 2.859 trillion kWh (2006)

488.5 billion kWh (2005)

Electricity - exports: 11.27 billion kWh (2006)

67 million kWh (2005)

Electricity - imports: 5.39 billion kWh (2006)

1.764 billion kWh (2005)

Criteria

China
Oil - production: 3.73 million bbl/day (2007 est.) Oil - consumption: 6.93 million bbl/day (2007 est.) Oil - exports: 79,060 bbl/day (2007) Oil - imports: 3.19 million bbl/day (2007)

India
834,600 bbl/day (2005 est.)

2.438 million bbl/day (2005 est.) 350,000 bbl/day (2005 est.) 2.098 million bbl/day (2004 est.) 5.848 billion bbl (1 January 2006 est.)

Oil - proved reserves: 12.8 billion bbl (2007 est.)

Natural gas - production: 58.6 billion cu m (2006 est.) 28.68 billion cu m (2005 est.) Natural gas - consumption: 55.6 billion cu m (2006 est.) 34.47 billion cu m (2005 est.) Natural gas - exports: 2.874 billion cu m (2006) Natural gas - imports: 976 million cu m (2006) 0 cu m (2005 est.) 5.793 billion cu m (2005)

Criteria

China
Current account balance: $363.3 billion (2007 est.) Exports:

India

-$18.53 billion (2007 est.)

$1.221 trillion f.o.b. $140.8 billion f.o.b. (2007 est.) (2007 est.)

Exports - commodities: machinery, electrical products, data processing equipment, apparel, textile, steel, mobile phones

petroleum products, textile goods, gems and jewelry, engineering goods, chemicals, leather manufactures

Exports - partners: US 21%, Hong KongUS 17%, UAE 8.3%, China 7.7%, 16%, Japan 9.5%, UK 4.3% (2006) South Korea 4.6%, Germany 4.2% (2006)

Criteria
Imports:

China

India

$917.4 billion f.o.b. (2007 est.)

$224.1 billion f.o.b. (2007 est.)

Imports - commodities: machinery and equipment, oilcrude oil, machinery, gems, and mineral fuels, plastics, fertilizer, chemicals LED screens, data processing equipment, optical and medical equipment, organic chemicals, steel, copper

Imports - partners: Japan 14.6%, South Korea China 8.7%, US 6%, Germany 11.3%, Taiwan 10.9%, US 4.7%, Singapore 4.6% (2006) 7.5%, Germany 4.8% (2006)

Criteria

China

India

Economic aid - recipient: $1.641 billion (FY07)

$1.724 billion (2005)

Reserves of foreign exchange and gold:$1.493 trillion (31 December $239.4 billion (31 December 2007 est.) 2007 est.)

Debt - external: $363 billion (31 December 2007 est.)

$165.4 billion (30 June 2007)

Stock of direct foreign investment - at home:$758.9 billion (2007 est.)

$67.72 billion (2006 est.)

Criteria

China

India

Stock of direct foreign investment - abroad:$93.75 billion ( 2007 est.)

$21.11 billion (2006 est.)

Market value of publicly traded shares$4.477 trillion (31 December $818.9 billion (2006) 2007 est.)

Currency (code): Renminbi (RMB); note - also referred to by the unit yuan (CNY) Exchange rates: yuan per US dollar - 7.61 (2007), 7.97 (2006), 8.1943 (2005), 8.2768 (2004), 8.277 (2003) Fiscal year: calendar year

Indian rupee (INR)

Indian rupees per US dollar 41.487 (2007), 45.3 (2006), 44.101 (2005), 45.317 (2004), 46.583 (2003)

1 April - 31 March

THREATS

The emergence and development of a buyers' market in China have increased market competition and caused difficulties for many SOEs in China. This problem has become more serious in recent years. It is estimated that more than

SOME OTHER THREATS

Disciplining local government behavior. Local officials’ primary priority has been to promote themselves and their careers by pushing for high investment rates and output levels. In contrast, central officials are more concerned with excessive investment, unsold inventories, and local policies’ risking nationwide price inflation. 

One of China’s most serious problems, corruption, is shared with other developing countries. In China it is mainly a local government phenomenon. 

Rapid financial liberalization and privatization, pose a greater threat to sustained growth, though it is greatly beneficial for now. 

China has long refused to import more than a very small share of the grain it needs to meet domestic demand. This current pattern encourages stepped-up rural-urban migration, but it also risks heightened related social tensions—both in urban and rural areas. 

But all these threats are minute or they can be cured in the long-run.

A Little chance for India
Two years ago the view that India might have a more competitive economy than China was met with incredulity. Now a comparison of the two countries offers valuable insights for anyone studying economic growth. A fundamental distinction is that China’s growth stems from resource accumulation while India’s is rooted in increasing efficiency. Those who warned that India attracted too little foreign direct investment undervalued its business environment, characterized by entrepreneurship, healthy competition, and minimal political intervention. Another myth is that China’s rise was due to major investment in infrastructure, when economic liberalization and institutional reforms deserve more credit. YaleGlobal

Indeed, Yasheng Huang of MIT notes that single-minded development of infrastructure has its drawbacks, and – China pursued this goal while giving less priority to education. India’s educational system, on the other hand, has steadily improved, especially in rural areas. For these and other reasons, he postulates, India could outperform China over the next 20 years - unless that is, the Chinese learn from their neighbor and rival. –

But a Great Chance for China

Together are World Leaders.

Thank You

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