Ind china eco ppt

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  • 1. OverviewIntroductionEmerging markets compared viz:Power sectorEducation systemOil and gas sectorPort and shippingAgriculture infrastructureService industryRole of FDITrade patternsTrade policiesconclusion

2. IntroductionIndia and china emerging global players: High economic growth ratesRapid raising share in worldLarge inflows of FDIEngines of demand growth in commoditiesPositive demographics 3. The first is look at china with infrastructure where is China andwhere is IndiaChina and India together account for about 37.5% of worldpopulation and 6.4% of the value of world output and income atcurrent prices and exchange ratesIf China opened up in 1978, India did so in 1991 i.e 14 yrs afterChina therefore any comparison of India of today should be madewith china as it was more than a decade ago as emerging globalpowers nowSince the two countries have similar labor endowments anddevelopment lags due to government controls and protectednature of their economies , they can be expressed to followsimilar growth paths on opening up 4. PRE-CONDITIONS FOR A PEACEFUL GLOBALPOWER TRANSITION Much of chinas dazzling infrastructure was beenbuilt in the late 1990s and India is gearing upto therepeat that performance in the latter part of thisdecade. Foreign inflows into china jumped substantially inthe early 1990s and those into India have jumped inthe mid -2000s. 5. Good education and health facilities are necessaryfor inclusive development they are state subjects inIndia and in China also, local government has thelarge share of the responsibility for their provision The Chinese culture is more homogeneous andIndian culture is great diversified Indian greater expertise with market also shows inthe financial sector, which is more deeper and morerobust than Chinese counterpart. 6. China Economic Fact SheetGDP real growth rate:9.8% (2008) country comparison to the world:13% (2007)11.6% (2006)GDP-Per capita (PPP-Purchasing power parity):$6,000 (2008)country comparison to the world:$5,500 (2007)$4,900 (2006)note: data are in 2008 US dollarsGDP composition by sector:agriculture: 10.6%industry: 49.2%services: 40.2% (2008) 7. India Economic Fact SheetGDP- real growth rate:6.6% (2008)9% (2007)9.6% (2006)GDP per capita (PPP Purchasing power parity)$2,800 (2008)$2,700 (2007)$2,500 (2006)note: data are in 2008 US dollarsGDP Composition by sector:agriculture: 17.2%industry: 29.1%services: 53.7% (2008) 8. Comparing India and Chinas Growth StoriesIndicators India ChinaPolitical System Multi-party One-party Democracy authoritarian ruleSpeed of Growth Economic reforms Economic reforms started in 1991.started in 1978. Average 6% growth Average 9.5% growth rate in past tworate in past two decades.decades.Areas of Rising power in Dominant in massSpecialization software, design, manufacturing, services, and electronics and heavy precision industry. industrial plants 9. Comparing India and Chinas Growth StoriesIndicatorsIndia ChinaGini index 47.0 (up 10 points(standard measure 36.8from 15 yrs ago)of inequality)Foreign Direct 6.8% (up from 0.3% 17.8%Investmentin 2004)Future Areas of R&D, bio-IT business, servicesgrowthtechnology, high-and continuedvalue IT enabled manufacturingservices (legal,medical, engineeringarchitecture),manufacturing, agro-based industry 10. Comparison India lags behind china in infrastructure. China has a weak banking and legal system. India has the advantage of the English language which has madeit easier to participate in the global economy. What holds India back are bureaucratic red tape, corruption andits inability to build infrastructure fast enough. According to Peter Drucker, India has managed rural to urbantransition in a relatively smooth and peaceful manner, whichChina is still struggling to do. 11. GDP Growth 2000 to 2050[2003 bn US Dollars]4500040000350003000025000200001500010000Japan Russia 5000 Brazil Germany 02000 2005 20102015 2020 2025 20302035 2040 2045 2050-8-Source: Goldmann Sachs: The Path to 2050 12. SECTOR-WISE BREAK-UP OF ECONOMIES CHINA & INDIA 100% 50%ServicesIndustryAgriculture0%SectorwiseSectorwiseSectorwiseSectorwiseBreak up of Break up of Break up of Break up ofChina GDP China India GDPIndiaPopulationPopulationIndias 54% of population is engaged in Agriculture but only accounts for 17% of GDP -12- 13. GROSS DOMESTIC SAVINGS CHINA & INDIA China & India: Gross Domestic Saving as a % of GDP70 China India605040302010019901992 1994 1996 1998 2000 20022004 2006 2008 -14- 14. India - Low penetration and underserved marketPer Capita Consumption of Electricity Comparison with China 2200018,408India China14,240 (Kwh/year)Installed capacity in 2006132 622(GW)8,459 8,2317,4426,7566,425Per capita consumption618 1,684(per kWh) 2,3401,684Capacity growth rate over4.4%11.8%618the past 6 years 0Capacity addition in past 6 BrazilGermanyCanada FranceJapanChina UnitedIndiaFederation 30 303 StatesKingdom United Russianyears (GW) Low penetration providing significant opportunities for future growth Over 400million people without appropriate access to electricity Large investment required to achieve Govt. target of per capita consumption of 1,000 KWh by 2012Source: World Energy Outlook, 2006; Human Development Report 2007-08, Source: China Electricity Council, ChinaPower Year Book, Government of India, Ministry of Statistics & Programme Implementation16 15. INFRASTRUCTURE * INVESTMENTS* Transport, Communication & PowerSource: China Statistical Yearbook, RBI, Morgan Stanley Research -15- 16. Education systemGrowth rate-India@17%, China@13%Primary, secondary education, vocational education trainningin china results in 99.1% literacy rate.Where as in India it is 50 to 60 %Adult literacy India -61%China-91%Expenditure on education India- 10.7% China -12.8%But coming to quality education India is far more better thanchina 17. OIL AND GAS bl 18. Port and shippingIndian exports $13.94 billion in august 2009 where as china is $ 95.41 billion.Indian imports amounted to $130.36 billion where as china is 424.59 billionInstalled port capacity in China is 5.6 btpa vis--vis Indias capacity of ~0.75 btpa Container terminal capacity in China is ~100 m teus vis--vis Indias capacity of 8.6m teus. The largest container vessel calling at Chinese Port is more than 13,000 teus whereas at Indian container terminal (JNPT) is 6,000 teus.The draft at Shanghai is 19+ m where as at JNPT it is 11.5m and at Mundra it is 17.5m.The berth length at Shanghai is 13,800 m and that at hong kong is 4,426 m whereastotal container berth length at JNPT is 2000 m and at 1280 m at Mundra 19. Rates of investment The investment rate in China (investment as a share of GDP)has fluctuated between 35 and 44 per cent over the past 25years, compared to 20 to 26 per cent in India. Infrastructure investment from the early 1990s has averaged19 per cent of GDP in China, compared to 2 per cent in India. 20. Role of FDI in China China can afford to have such a high investment rate becauseit has attracted so much foreign direct investment (FDI. But FDI has accounted for only 3-5 per cent of GDP in Chinasince 1990, and at its peak was 8 per cent. In the period after2000, FDI was only 6 per cent of domestic investment.Where as India is only 4%. Recent inflows of capital have not added to the domesticinvestment rate at all, macro economically speaking, but haveled to the further accumulation of international reserves, nowincreasing by more than $120 billion per year. 21. Structural change China: classic pattern, moving from primary tomanufacturing sector, which has doubled its share ofworkforce and tripled its share of output. India: Move has been mainly from agriculture to services inshare of output, with no substantial increase inmanufacturing, and the structure of employment has notchanged much. Share of the primary sector in GDP fell from60 per cent to 25 per cent in four decades, but share inemployment still more than 60 per cent. 22. Trade patterns China: Rapid export growth involving aggressiveincreases on world market shares, based onrelocative capital attracted by cheap labour andheavily subsidised infrastructure. India: Lower rate of export growth, with cheaplabour due to low absolute wages rather than publicprovision and poor infrastructure development. Soexports have not yet become engine of growth,except in services. 23. Trade policies China: export employment was net addition todomestic employment, since until 2002 China hadundertaken much less trade liberalization than mostother developing countries. India: increases in export employment wereoutweighed by employment losses especially in smallenterprises because of import competition. 24. Poverty reduction China: Officially 4 per cent of the population now lives underthe poverty line, unofficially around 12 per cent. (Reflectsearlier asset redistribution and basic need provision in Chinaunder communism, plus larger mass market and role ofagricultural prices.) India: poverty ratio much higher and persistent, between 26per cent and 34 per cent depending upon how one interpretsthe NSS data.