TOPIC-Factors Behind China’s

Success. Compare The Growth And

Development Of China With That Of
India

BY: Animesh Kumar Singh

Ankit Gupta
Ankit Ray
Manawir Ahmad
Mohit Kumar
Sahil Chaubey
Somesh Raj
 HISTORY OF CHINA
Prior to the initiation of economic reforms and trade liberalization nearly
40 years ago, China maintained policies that kept the economy very poor,
stagnant, centrally controlled, vastly inefficient, and relatively isolated from
the global economy. Since opening up to foreign trade and investment and
implementing free-market reforms in 1979, China has been among the
world’s fastest-growing economies, with real annual gross domestic
product (GDP) growth averaging 9.5% through 2018, a pace described by
the World Bank as “the fastest sustained expansion by a major economy in
history.” Such growth has enabled China, on average, to double its GDP
every eight years and helped raise an estimated 800 million people out of
poverty. China has become the world’s largest economy (on a purchasing
power parity basis), manufacturer, merchandise trader, and holder of
foreign exchange reserves. This in turn has made China a major
commercial partner of the United States. China is the largest U.S.
merchandise trading partner, biggest source of imports, and third-largest
U.S. export market.
 FACTORS BEHIND CHINA’S
SUCCESS
Political system -The non-democratic and
authoritarian political regime in China has meant that it
has been possible to embrace western-style free market
economics while maintaining control over the political
system.
 Since Mao in 1953, the government has followed a
series of Five Year Plans which have enabled the
government to enact any reforms it feels is necessary.
Strong leadership-Chinese politicians are said to feel
a greater responsibility to the nation than to themselves.
Strong leadership from the head of state has been a
major factor contributing to economic success. 
Free market economics -China first began moving
away from a centrally planned economy towards a market-
oriented system in 1978. Deng Xiaoping was Mao’s successor
and he sought to bring an end to China’s relative economic
isolation.
Labor supply -There is a plentiful supply of workers in
China with a steady stream of rural-urban migrants in search
of work. This is due to the mechanisation of
agriculture leading to unemployment and under-employment
in rural areas and concurrent growth in industrial work in
urban areas.
Wages and unemployment -The unemployment rate
has fallen in recent years but high rates in the past drove down
wages. If workers demand higher wages, there are many more
who will take the jobs available. Wages in other East Asian
countries earn up to 10 times more than Chinese workers.
Investment in infrastructure -The government has built many
new roads, improved the rail system and made China’s major rivers
navigable all year round. China has five of the ten largest container ports
in the world (including Shanghai and Shenzhen). Urbanization
has also been encouraged. with a robust urban-construction programme.
Going global -China has started to globalize economically by buying
up foreign companies in North America and Europe particularly. In fact,
in 2010 China invested $56bn in in outward Foreign Direct Investment.
With inward FDI averaging some $60bn per year, China had, by 2015,
converted from a net recipient to a net investor in FDI, a marker of its
economic maturity in many respects. 
Raw materials -China has a great wealth of natural resources,
having vast reserves of coal, oil and natural gas. These are being
used to fuel the industrial development of the country. However, so
large is the country’s requirement for raw materials to feed its
manufacturing industries, that it is a major importer of oil, gas,
coal, iron-ore, copper and other key commodities in world trade. 
China V/S India
China’s
Economy is Four Times Larger Than India’s
Economy.... The GDP of India is close to $1.5 trillion. At the
same time, the GDP of China is close $7 trillion. The economy of
China is at least 4 times as big as the economy of India. This
means that even if China grows at the rate of a meager 1.5% and
India grows at a rate of 7%, the Chinese economy would have
added the same amount in output as the Indian economy would
have! Comparing the GDP growth rates of India and China is
therefore a pointless exercise. China’s growth rate has been
consistently higher than India’s growth rate over the past three
decades or so. India has barely overtaken the Chinese growth rate
for a couple of quarters. Only if India can continue to beat the
Chinese growth rate by a huge margin for the next two to three
decades, does India stand a chance of overtaking the Chinese
economy.
 GDP Of INDIA And
CHINA

http://statisticstimes.com/economy/china-vs-india-
economy.php
China V/S India
China’s Manufacturing Productivity is 1.6 times than that of
India…
China produces a lot more than India does. It also does so remarkably
more efficiently. Given the better quality infrastructure and better
production techniques at China’s disposal, it is not astounding that the
average Chinese worker produces 1.6 times more output than that of
the average Indian worker. This means that the productivity of China
as a nation is 60% higher.
The Indian manufacturing sector has multiple problems. These
problems include erratic electricity supply, slow and expensive
transport systems as well as lack of skills that increase manufacturing
productivity.
Given that a large portion of these problems are structural in nature, it
seems unlikely that India will be able to overcome them in the near
future.
China V/S India
Inflation in India is 6 times higher than it is
in China…India’s GDP growth has been accompanies by
runaway inflation in the country. Growth rate accompanied by
inflation cannot last for a long period of time. Instead, such
growth rate is indicative of the short term impetus that has been
given to the economy by the monetary policy.
On the other hand, China’s inflation has been relatively stable at
a negligible 0.8% for many years. This has been accomplished
despite the fact that China has been recording fiscal surplus for
the past many years and ideally should be reeling with inflation.
To the contrary, China has established sovereign wealth funds,
which invest the additional cash in foreign assets keeping the
inflation rate low.
Given the fact that Indian economy is severely marred by
inflation, it seems unlikely that they will be able to compete
against China in the long run.
Conclusion
 In conclusion, even if the Indian PIL growth is faster than the
Chinese, the Indian economy and its process of development
are far from passing their Chinese counterparts. Indian
development is constantly slowed by insufficient
infrastructure, stagnation of the agricultural sector, internal
conflicts, social instability, and political division at the heart
of the government.
 On the other hand, the main role of the Chinese government
is to avoid the “trap of median income”, better the quality of
economic growth, promote greater scientific development,
and increase the efficiency of the economy in general.
 One last difference between the development models of
China and India is that whereas the former has based its
growth on labor-intensive sectors, the latter tends to promote
sectors with high levels of competency.