Finance, Forex and Investments

India Vs. China economy question?

Economists and reports (newspapers) in general keep saying that in the long run India will become the worlds largest and fastest growing economy , and it will rise as a superpower even above china. Most of these economists and reports back this belief by saying that China will have a reduced workforce due to its "One family one child" policy, so the population/workforce will shrink and the already existent people will age and expire. But what makes people think Communist China will stick to this policy? I mean they possibly cant respect their communist values above the love they have for their nation? I don't understand what makes this policy so static? They'll obviously change the policy if the need to compete with India ever arises, correct? Why are economists so bent on making claims as if this policy would be certain for the next 20-40 years?

Public Comments

1. China is going to have some demographic problems alot sooner than that, due to their one child policy and the fact their culture is wholly based around greed many baby girls are thrown in the garbage. Baby boys are much more valuable as they can go out and earn money for the family etc but due to the scale of this china is seeing a real imbalance in the genders. That said Indias somewhat tense relationship with its muslim neighbours might become an issue sooner than chinas raging homosexuality.
2. What a mishmash: 1. If India does manage to grow faster than China, then it won't be because of its larger population or larger workforce. Unless there is a huge discrepancy in population growth rates, what counts is growth per capita. 2. High population growth rates are part of what is holding India back - India's population is younger than China's and India isn't doing a very good job in educating its youth. http://en.wikipedia.org/wiki/Education_Index Large uneducated populations do not improve economic performance. Furthermore, all societies seem to have their birth rates fall as they get richer. So if India eventually does catch up, it birth rate will probably fall. http://en.wikipedia.org/wiki/Demographic_transition 3. Look at the numbers. In terms of both aggregate and per capita GDP, India is at least a factor of 4 behind China: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal) http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita Let's suppose India does start growing faster than China, and by 2% per year (China is currently growing faster than India by about 2%; this postulates a reversal). Then it would take about 70 Years for India just to catch up. In the current world, 70 years is almost forever: - Neither India nor China have maintained a coherent economic policy for anywhere near that long. http://en.wikipedia.org/wiki/Chinese_economic_reform http://en.wikipedia.org/wiki/Economic_liberalisation_in_India - The entire world economy is going to be changing in the next 70 years. Not only will the world be facing major energy issues (particularly in the area of oil), but the impact from global warming will be clearly felt. - The world hasn't gone 70 years without a major war in over a thousand years. Who knows when the next war involving China and or India will be and what affect it will have? etc. The notion of making accurate predictions about the relative sizes of different economies 70 years from now sounds like a joke. And every year of delay until India's growth rate passes that of China would add two years to the catch-up time as China goes further ahead, making the notion even more ridiculous. 4. Why would anyone believe that India' s rate of growth is going to surpass China's any time soon? The most optimistic argument I've seen is this: http://chrisblattman.com/2008/08/20/who-will-grow-faster-in-the-future-china-or-india/ On the other side, you have this argument that even the kind of corruption that India has is worse than the kind that China has: http://www.project-syndicate.org/commentary/bhagwati7/English It is impossible for a developed country to maintain the kind of growth rate that China has, so over the long term China's growth rate will have to fall, giving India a chance to catch up. But if China's growth rate falls because of its development success, then as India catches up, its growth rate will fall as well. 5. Though economic prowess is clearly important to a superpower, it is far from enough. http://en.wikipedia.org/wiki/Superpower For example, There were periods when Japan had a higher GDP than the Soviet Union but was not considered a super power, while the Soviet Union retained that designation to the end. 6. If I had to guess, I'd guess Europe will become a super power long before India. All they have to do is unit into a single country (though that will not be easy and so is not likely to happen soon either). They already have a larger population and a larger economy (in aggregate) than does the U.S. So if you are looking for things that aren't worth worrying about, consider that the Sun will eventually use up its supply of hydrogen.