CHINA VS. INDIA: WHO WILL WIN?

CASE STUDY
 I. CASE SUMMARY

India and China are considered as the largest

emerging economies, contributing nearly 30
percent to global economic growth. Each has
particular strengths and competitive advantages that
have allowed each of them to weather the recent
global financial crisis better than most countries.
China’s economic growth is mainly from
investmentsand exports, focusing on low-cost
manufacturing, while India’s growth came mostly
from a strong services sector and domestic
consumption. In the second quarter of 2010, China
leapfrogged over Japan and became the world’s
number two economy. These results in the largest
reduction of poverty and one of the fastest increases
in income levels ever seen. In contrast with India
where 456 million people still live below the
poverty line as defined by the World Bank.
These countries have distinctly different
approaches—India with a ‘grow first, build later’
approach versus a ‘top-down, supply-driven’
strategy in China. It says that by 2025, the largest
markets in India will be transportation and
communication, food, and health care followed by
housing and utilities, recreation, and education.
Each country has several strengths and
weaknesses that contribute to the competitive
battleground between them and clearly shows that
India and China will continue to grow in the
coming decades offering global businesses new
domestic markets.
 II. CASE PROBLEM

What economic practices do developing

countries like India and China need to
maintain or eliminate to ensure
economic growth?
 III. CASE FACTS

CHINA
• China has been mainly investment and export-driven,
focusing on low-cost manufacturing, with domestic
consumption as low as 36 percent of gross domestic product
(GDP).
• China prioritized the development of the country’s
infrastructure including roads and highways, ports, airports,
telecommunications networks, education, public health, law
and
 order, mass transportation, and water and
sewer treatment facilities.
• China has developed a set of internally
consistent practices across every element of
the urbanization operating model: funding,
governance, planning, sectorial policies, and
shape.
• The market-oriented reforms China has
implemented over the past two decades
have unleashed individual initiative and
entrepreneurship.
• China has been in conflict with the West
and affects trade relations.
India
•India derived mostly from a strong
services sector and buoyant domestic
consumption.
•India has prioritized the development of
its technology and outsourcing sectors
and leads them to be the global leader in
• India’s domestic economy provides greater cushion from
external shocks.
•India’s widespread economic liberalization opened gates
to businesses worldwide.
•India has barely paid attention to its urban
transformation.
IV. ALTERNATIVE COURSES OF ACTION

• China should strengthen its domestic demands and

consumption.
• China should establish a good political relation
with other countries to develop strong trade
partnership.
• India should pay attention to mature urban planning
that will emphasize the systematic development of
 run-down areas with long-range plans for land
use, housing, and transportation.
India should strengthen political systems to avoid
disruption on business’ administrative policies.
• India should adopt a more pragmatic perspective
on many political and socioeconomic problems
that will increase their income and will reduce
poverty.
• Both countries should consider increasing wages
to improve standard of living which increases the
purchasing power of individuals.
• Both countries should invest more on improving
factors in relation to Human Development Index
to lift more people out of the poverty line.
V. SOLUTION AND RECOMMENDATION
SOLUTION

Both China and India have impressive economies

for decades. However, even the largest economies
have downsides to improve. These countries should
begin reassessing the economic practices they have
done throughout the years to refresh their plan of
action and expand even more. The China’s key to its
aggressive modernization is its fast-acting
government that implements policies with
blinding speed, thus, this strategy should be
maintained. India, however, has strong service
sector and should keep producing technologically
competent and English-speaking. On the other
hand, China should abstain from creating conflict
with other countries and instead, build a good
political relation that would bring long-term
benefits. India should start investing on urban
planning and develop infrastructure that attracts
foreign investments. This only means that
countries should strengthen what benefits their
economy and refrain from doing things that
drawback their success.
 RECOMMENDATION

China and India are two Asian giants in terms

of economic development. Both countries
implement different strategies on how they will
expand their economy. In order for them to
maintain sustainability, they must analyze the
engagements they implement for economic
development and stick to what approach is more
beneficial for their growth. These countries must
take necessary actions on their weaknesses that
hinders continuous development, and focus on
firming up their strong point. Moreover, instead
of intensifying the conflict between them, these
countries may create trade relation and use this
as a competitive advantage against other
economic giants.
VI. CONCLUSION

In this world with fast-changing economies,

one requirement for a country to acquire and
maintain economic growth is to have maximum
flexibility. Through extensive research in past
business trends and reliable predictions for future
drifts, developing countries like India and China
should be watchful in applying practices that
should foster economic growth and not otherwise.