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Presented By : SHARVESHKUNWARAMANDEEPIpshita

PGDM

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Overview

Introduction

Emerging markets compared viz:

Power sector

Education system

Oil and gas sector

Port and shipping

Agriculture

infrastructureService industry

Role of FDI

Trade patterns

Trade policies

conclusion

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Introduction

India and china emerging global players:

High economic growth rates

Rapid raising share in world

Large inflows of FDI

Engines of demand growth in commodities

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Contd.

China and India together account for about 37.5% of worldpopulation and 6.4% of the value of world output and income at

current prices and exchange rates

IfChina opened up in 1978, India did so in 1991 i.e 14 yrs after

China therefore any comparison of India of today should be made

with china as it was more than a decade ago as emerging global

powers now

Since the two countries have similar labor endowments anddevelopment lags due to government controls and protected

nature of their economies , they can be expressed to follow

similar growth paths on opening up

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PRE-CONDITIONS FOR A PEACEFUL GLOBAL POWER

TRANSITION

Much of chinas dazzling infrastructure was been

built in the late 1990s and India is gearing upto the

repeat that performance in the latter part of thisdecade.

Foreign inflows into china jumped substantially in

the early 1990s and those into India have jumped in

the mid -2000s.

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Good education and health facilities are necessary

for inclusive development they are state subjects in

India and in China also, local government has the

large share of the responsibility for their provision

The Chinese culture is more homogeneous and

Indian culture is great diversified

Indian greater expertise with market also shows inthe financial sector, which is more deeper and more

robust than Chinese counterpart.

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GDP real growth rate:9.1%(2009)

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 dollars

GDP composition by sector:

agriculture: 10.6%

industry: 49.2%services: 40.2% 2008

China Economic Fact Sheet

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India Economic Fact Sheet

GDP- real growth rate:7.4%(2009)

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 dollars

GDP Composition by sector:

agriculture: 17.2%

industry: 29.1%

services: 53.7% (2008)

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Comparing India and Chinas Growth Stories

Indicators India ChinaPolitical System Multi-party

Democracy

One-party

authoritarian rule

Speed of Growth Economic reformsstarted in 1991.

Average 6% growth

rate in past two

decades.

Economic reforms

started in 1978.Average 9.5% growth

rate in past two

decades.

Areas ofSpecialization

Rising power insoftware, design,

services, and

precision industry.

Dominant in massmanufacturing,

electronics and heavy

industrial plants

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Comparing India and Chinas Growth Stories

Indicators India China

Gini index

(standard measure

of inequality)

36.8

47.0 (up 10 points

from 15 yrs ago)

ForeignDirectInvestment(growth)

8.5% yearly 10% yearly

Future Areas of

growth

R&D, bio-

technology, high-

value IT enabledservices (legal,

medical, engineering

architecture),

manufacturing, agro-

based industry

IT business, services

and continued

manufacturing

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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 made

it 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.

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GDP Growth 2000 to 2050

Source:Goldmann Sachs: The Path to 2050

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

[2003 bn US Dollars]

GermanyBrazil

JapanRussia

-8-

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SECTOR-WISE BREAK-UP OF ECONOMIESCHINA & INDIA

0%

50%

100%

Sectorwise

Break up of

China GDP

Sectorwise

Break up of

China

Population

Sectorwise

Break up of

India GDP

Sectorwise

Break up of

India

Population

Services

Industry

Agriculture

Indias 54% of population is engaged in Agriculture but only accounts for 17% of GDP

-12-

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GROSS DOMESTICSAVINGSCHINA & INDIA

0

10

20

30

40

50

60

70

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

China India

China & India: Gross Domestic Saving as a % of GDP

-14-

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16

India - Low penetration and underserved market

Low penetration providing significant opportunities for future growth Over 400

million people without appropriate access to electricity

14,240

8

,231

8

,459

7,442

6,7

56

6,425

2,340

1,684

618

18,408

0

22000

Canada

United

States

France

Japan

Germany

United

Kingdom

Russian

Federation

Brazil

China

India

(K

wh/year)

Source: World Energy Outlook, 2006; Human Development Report 2007-08, Source: China Electricity Council, China

Power Year Book, Government of India, Ministry of Statistics & Programme Implementation

Per Capita Consumption of Electricity

Large investment required to achieve Govt. target of per capita consumption of 1,000 KWh by 2012

India China

Install apacity in 6

( W)132 622

Percapitaconsumption(per kW ) 618 1,684

Capacity rowth rateover

thepast6years4.4% 11.8%

Capacityaddition inpast6

years ( W)30 303

Comparison with China

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INFRASTRUCTURE * INVESTMENTS

* Transport, Communication & Power

Source: China Statistical Yearbook, RBI, Morgan Stanley Research -15-

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Educationsystem

Growth rate-India@17%, China@13%

Primary, secondary education, vocational education trainning

in 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 than

china

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OILAND GAS

b l

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Port and shipping

Indian 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 billion

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 17.5

m.

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

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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 ofGDP 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.

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Structural change

China: classic pattern, moving from primary to

manufacturing sector, which has doubled its share of

workforce and tripled its share of output.

India: Move has been mainly from agriculture to services in

share of output, with no substantial increase in

manufacturing, and the structure of employment has not

changed much. Share of the primary sector in GDP fell from

60 per cent to 25 per cent in four decades, but share in

employment still more than 60 per cent.

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Trade patterns

China: Rapid export growth involving aggressiveincreases on world market shares, based onrelocative capital attracted by cheap labour and

heavily subsidised infrastructure.

India: Lower rate of export growth, with cheaplabour due to low absolute wages rather than public

provision and poor infrastructure development. Soexports have not yet become engine of growth,except in services.

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Trade policies

China: export employment was net addition to

domestic employment, since until 2002 China had

undertaken much less trade liberalization than most

other developing countries.

India: increases in export employment were

outweighed by employment losses especially in small

enterprises because of import competition.

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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 of

agricultural prices.)

India: poverty ratio much higher and persistent, between 26per cent and 34 per cent depending upon how one interpretsthe NSS data.

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