INDIA-CHINA

Sonam Taneja (103)Sooraj R. (104)

EMERGENCE OF THE ASIAN GIANTS

Together account for 2.5 billion people.

Engines of growth in the midst of rapid economic transformation in the global economy.

Major factors behind the shifting of the global economic focus towards Asia.

Comparing Asian Giants

CHINA Population: 1.3

billion Driving Force:

Manufacturing Largest

Communist Country

Capital: Beijing Liberalization:

1978

INDIA Population:1.147

billion Driving Force:

Services Largest

Democracy Capital: New

Delhi Liberalization:

1991

Economic Indicators

Indicators India China GDP

(Official) $ 1.237 tr. $ 4.22 tr.

GDP per capita (PPP)

$ 2900 $ 6100

GDP composition (by sector)

Agriculture: 17.2%

Industry: 29.1%

Services: 53.7%

Agriculture: 10.6%

Industry: 49.2%

Services: 40.2%

Public Debt 5.1% of the GDP

15.7% of the GDP

Economic Indicators

Indicators India China

Exports $ 162 billion $ 1.465 trillion

Imports $ 260.35 billion $1.13 trillion

Forex reserves $ 249.27 billion $ 1.95 trillion

Mobile Users 362 million 600 million

Country Rank Exports in 2008 Contribution to GDP

Germany 1 $US 1.53 trillion 40%

China 2 $US 1.465 trillion

35%

USA 3 $US 1.377 trillion

9.3%

Japan 4 $US 776.8 billion 16%

France 5 $US 629.7 billion 21%

Italy 6 $US 566.1 billion 23.5%

Netherlands 7 $US 537.5 billion 59%

Russia 8 $US 476 billion 27%

UK 9 $US 468.7 billion 17%

Canada 10 $US 461.8 billion 29.5%

India 26 $US 162 billion 13.09%

Countries with largest exports in 2008

Country Rank Imports in 2008 Contribution to GDP

USA 1 $US 2.19 trillion 15.3%

Germany 2 $US 1.202 trillion 31.5%

China 3 $US 1.156 trillion

27%

UK 4 $US 645.7 billion 23.2%

France 5 $US 833 billion 28%

Japan 6 $US 696.2 billion 14.4%

Italy 7 $US 566.8 billion 23.7%

South Korea 8 $US 435 billion 50.7%

Netherlands 9 $US 485.3 billion 50.1%

India 16 $US 287.5 billion

23.2%

Countries with the largest imports in 2008

Country Current Account Balance

China $US 368.2 billion

India - $US 38.39 billion

USA - $US 568.8 billion

As the exports of China far exceed its imports, its current account balance is a positive value. On the other hand, India and USA have negative account balance as their imports exceed exports.

Current account balance

IMPACT OF THE FINANCIAL CRISIS

Global financial crisis- staple of front page news

Job losses

Exports

Imports

JOB LOSSES - INDIA

Indian Companies have cut half a million jobs between October and December 2008.

Slowest economic growth (5.3% in the fourth quarter) since 2003.

Global recession lowered demand for India’s goods overseas. Manufacturers cut production.

JOB LOSSES- CHINA

20 million workers have already lost jobs due to closure of export dependent factories.

China’s growth rate has now dropped for six consecutive quarters.

GDP growth of 6.8% in the fourth quarter. Lowest growth rate since 1991.

JOB LOSSES- U.S.A

The US unemployment rate rose to a 25 year high of 8.1% in February.

US February losses may have been the highest in six decades : Bloomberg.

650,000 jobs lost in February alone.

Economy has shed 4.4 million jobs since December 2007.

EXPORTS - INDIA

India’s exports dipped 13% in February, the fifth decline in a row.

India’s exports in February: $13.04 billion.

Revised exports’ target of $175 billion for the fiscal could not be achieved.

India’s exports for 2008-09 - $162 billion.

EXPORTS- CHINA

February - Exports dropped 25.7%.

Exports in February stood at $ 64.8 billion from a year earlier.

Biggest decline in 13 years.

China’s Exports (2008-09) -$1.465 trillion.

EXPORTS- USA

Total export volumes of US fell 4.4% in the final quarter of 2008 YOY.

US trade dropped 18% between July and November 2008.

The monthly deficit, the difference between what the US exports and imports narrowed 4% to $39.9bn from November's $ 41.6bn.

IMPORTS- INDIA

February: India’s imports fell for the second consecutive month by about 18%.

Imports in February - $ 17.02 billion.

Cumulative Imports (2008-09)- $287.35 bn as compared to $215.22 bn in 2007-08.

IMPORTS- CHINA

China's imports fell 24.1% in February to $ 60bn.

2008- China’s imports stood at $1.156 trillion.

China’s consumption as a % of the GDP has shrunk from 47% in 1997 to 37% in 2007.

IMPORTS- U.S.A

Recession depressed demand for imports.

US imports dropped 5.9% in the final quarter of 2008 to $173. billion in December 2008.

Imports of autos and auto parts dropped to $14.9 billion, the lowest level since May 1999.

Trade deficit in December fell 4% to $39.9 billion from $ 41.6 billion in November.

Services

India 53.7% of GDP US $ 664 billion Employs 28% of labor

force Export oriented• Indian edge - IT and

ITES

China 40.2% of GDP US $ 1.7 trillion Employs 32% of

labor force Domestic demand

I T industry

India China

Total Revenue $ 71.7 bn $920 bn

Growth 12% 12.5%

Hardware $ 21.1 bn $ 871

Software and Services

$ 59.6 bn $ 49 bn

Total Exports $ 47.3 bn $ 522 bn

Software and Services export

$ 47 bn $ 3 bn

Industry

India 29.1% of GDP US $ 360 billion Employs 12% of

labor force Domestic demand

driven

China 53.7 % of GDP US $ 2.08 trillion Employs 25% of

labor force Export driven Chinese edge-

Manufacturing

Agriculture

India 17.2% of GDP US $ 213 billion Employs 60% of

work force Ranks second in

farm output

China 10.6% of GDP US $ 447 billion Employs 43% of

work force Ranks first in farm

output

Infrastructure

India China

Airports 346 467

Railways 63221 75438

Roadways 3316452 km 1930544km

SEZ 63 (234 approved) 129

Telephones 38.76 million 365.4 million

Mobile phone 362 million 600 million

Internet Users 80 million 253 million

Electricity 665.3 bn kwh 3.256 tn kwh

Expenditure $500 bn (2007-12) $1 tln (2006-10)

Ease of doing business

India China US

Ease of doing business 122 83 3

Starting a business 121 151 6

Employing workers 89 111 1

Getting credit 28 59 5

Protecting investors 38 88 5

Paying Taxes 169 132 46

Closing a business 140 62 15

India-China trade relations

1984,India & China signed a Trade Agreement which provided for Most Favored Nation Treatment

1994, the two countries signed an agreement to avoid double taxation

2006,border trade between India and Tibet after 40 years

India’s export to China -US $ 13.16 billion(8.7%) India’s Import from China - US $ 24.43 billion(10

.6%)

Year Brazil China India Russia US

2000 762 1,078 469 391 9825

2010 668 2,998 929 847 13271

2020 1,333 7,070 2,104 1,741 16415

2030 2,189 14,312 4,935 2,980 20833

2040 3,740 26,439 12,367 4,467 27229

2050 6,074 44,453 27,803 5,870 35,165

Projected GDP US $ Billion

FUTURE

Require enormous natural resources Will outsource manufacturing to other

resource rich nations especially in Africa The global integration of China and India

will be radically different Future survival of most admired enterprises

will depend on how quickly they participate in ensuing rise of China and India

Will result in a change in power equations of the world

FUTURE

China has an aging population.By 2050 India will have 220 million more workers than China.

China will have to concentrate on their economic software while India more on its economic hard ware.

China need to concentrate on innovation while India need to refocus on Manufacturing.

Takeaways’

India and China are the fastest growing economies. India driven by services and China by

manufacturing. Economic meltdown had a greater impact on China

than India. By the middle of this century world’s economic and

political axis will shift to Asia. India’s growth model more sustainable than China

in the long run.