china a threat to india

8/6/2019 China a Threat to India

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Market based system

Foreign trade and foreign investment as integralpart if Indian economy

Fastest growing economy

World·s second largest labor force



Centrally planned Economy

Private businesses and capitalism weresuppressed

Privatization of Farmland

Promotion of foreign investment

Flourishing small scale entrepreneurs



50 yrs ago, India and China were among the poorest and economically

most isolated countries in the world.

How did China and India emerge aseconomic giants?



GDP ² 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 dollars

GDP ² composition by sector:

agriculture: 10.6%

industry: 49.2%

services: 40.2% (2008)

China ² Economic Fact Sheet



GDP- real growth rate:6.6% (2008)

9% (2007)

9.6% (2006)

GDP ² per capita (PPP ² Purchasing power parity)

$2,800 (2008)

$2,700 (2007)

$2,500 (2006)

note: data are in 2008 US dollars

GDP ² Composition by sector:agriculture: 17.2%

industry: 29.1%

services: 53.7% (2008)



Indicators India ChinaPolitical System Multi-party

Democracy

One-party

authoritarian rule

Speed of Growth Economic reforms

started 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 of Specialization

Rising power insoftware, design,

services, and

precision industry.

Dominant in massmanufacturing,

electronics and heavy

industrial plants



Indicators India China

Gini index

(standard measure

of inequality)

36.8

47.0 (up 10 points

from 15 yrs ago)

Foreign DirectInvestment

6.8% (up from 0.3%in 2004)

17.8%

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



AGRICULTURE AGRICULTURE SECTOR SECTOR



y India is an agricultural country.y Growth of service sector is pushing down thecontribution of agriculture.y Contributing 17.2% of the GDP.y Largely depends on monsoon.y Provides employment to two-thirds of the totalpopulation.y 15% of export earningsy Rural women play a vital role, 50% of rural labor force.y Yields per hectare of crops in India are very low



13.1 : India's Imports and Exports of Agricultural Commodities vis-à-vis

Total National Imports/ Exports During 1990-91 to 2007-08

(Value in Rupees

Crore)

Year Agriculture Total National %age Agriculture Agriculture Total National %age Agriculture

Imports Imports Imports to Total Exports Exports Exports to Total

National Imports National Exports

1 2 3 4 5 6 7

1990-91 1205.86 43170.82 2.79 6012.76 32527.28 18.49

1991-92 1478.27 47850.84 3.09 7838.04 44041.81 17.80

1992-93 2876.25 63374.52 4.54 9040.30 53688.26 16.84

1993-94 2327.33 73101.01 3.18 12586.55 69748.85 18.05

1994-95 5937.21 89970.70 6.60 13222.76 82673.40 15.99

1995-96 5890.10 122678.14 4.80 20397.74 106353.35 19.18

1996-97 6612.60 138919.88 4.76 24161.29 118817.32 20.33

1997-98 8784.19 154176.29 5.70 24832.45 130100.64 19.09

1998-99 14566.48 178331.69 8.17 25510.64 139751.77 18.25

1999-00 16066.73 215528.53 7.45 25313.66 159095.20 15.91

2000-01 12086.23 228306.64 5.29 28657.37 201356.45 14.232001-02 16256.61 245199.72 6.63 29728.61 209017.97 14.22

2002-03 17608.83 297205.87 5.92 34653.94 255137.28 13.58

2003-04 21972.68 359107.66 6.12 37266.52 293366.75 12.70

2004-05 22811.84 501064.54 4.55 41602.65 375339.53 11.08

2005-06 21499.22 660408.90 3.26 49216.96 456417.86 10.78

2006-07 29637.86 840506.31 3.53 62411.42 571779.28 10.92

2007-08(P) 29777.01 964849.76 3.09 77769.71 640172.14 12.15

P Provisional

Source : DGCI&S, Ministry of Commerce, Kolkata.



y Agriculture accounted for 10.6 % of the GDPy 33o million- over 45% of labor force still makes livingfrom farming.y Farming methods have been improved in China.

y China produces wheat, rice, potatoes, peanuts,millet, cotton.y Only 15 percent of the total land available in Chinacan be cultivated.

y more than 75 percent of the total cultivated land isused for producing food crops.



Variety 1949 1978 2005

grain 11,318 30,477 50,839

cotton 44.4 216.7 383.1

oil-bearing crops 256.4 521.8 2,601.2

sugarcane 264.2 2,111.6 7,470

sugarbeet 19.1 270.2 864

flue-cured tobacco 4.3 105.2 218.5

tea 4.1 26.8 67.6

fruit 120.0 657.0 6,237.6

meat 220.0 856.3 5,960.9

aquatic products 45 466 4,122

Increases in Output of Major Agricultural Products

(10,000 tons)



INDUSTRIAL SECTOR



y Manufacturing contributes around 15% of GDP of thecountry.y According to CSO data quartely estimate of GDP for

manufacturing stood at 38.1 billion US $.y According to the data the cumulative growth inmanufacturing index for April-June has been 3.2%.y In the manufacturing sector the value of new projectannounced in 2nd half of 2008-09 stood at 13.2 billion

US $.



y India rank¶s among top 12 producers of manufacturing

value added products.

y In Textile it ranks 4th after China, US & Italy.

y In Electrical machinery & apparatus India ranks 5th.y India holds 6th position in basic metals category.

y 7th in Chemicals & chemicals products, 10th in leather

& leather products, 12th in machinery & equipment &

motor vehicals.



y According to CSO the industrial output clocked an annual

growth rate of 6.8% in July 2009.

y There are many Companies who wants to make India as their

manufacturing hub, they are

LG wants to make India its global manufacturing hub for its

mobile handsets.Hyundai has make India the manufacturing & exporting hub for

its small cars. Their i10 is being manufactured only in India &

exported to the world.



y Luxury brands like Louis Vuitton are looking at India

as a manufacturing base for their products.

y Skoda Auto plans to make India its regional

manufacturing hub. Aircraft manufacturing Airbus isconsidering India as one of the centres for design &

development of its long haul A350 plane.

y Samsung plans to invest 100 million US $ in its

manufacturing plant near Chennai & make it its globalhub.



y Suzuki too is making India its manufacturing hub for its

small cars.

y

According to Investment Commission of India themanufacturing sector is estimated to have 180 billion US $

investment opportunity over next 5 years.

y Manufacturing sector is the largest employer which

employes 25.5 million people of the total workforce.y Employment growth rate is 2.78%



y Chinese manufacturing sector accounts for 43% of

Chinese economy.

y Its economy growth in average of almost 8% every

year.y Chinese manufacturing sector ranks 4th in the world

after US, Japan, & Germany.



y China¶s fast growing domestic market worldwide

demand for Chinese goods & the cost advantage China

offers to manufacturers are fueling the growth of

manufacturing sector in China.y Purchasing Manager¶s Index (PMI) which measures

manufacturing activity nationwide.

y PMI index rose to 54 points in August up from 53.3 in

July.



y China has 50% share of worldwide camera market.

& 30% of Air conditioners .

y 25% of Washing Machines & 20% of Refrigerators.

y China¶s crude steel production rose by 28.25%.

y Investment in chemical industry grew by 35.9%.



SERVICE

SECTOR



Can be classified into 2 types:

Old

New

Old Services includes:

Petty Trading

Domestic Services

Catering and Hotel Services



New Services includes:

Communications

Business and legal practicesCulture, research and education.



INDIA V/S CHINA

INDIA CHINA

54 per cent of GDP Below 41 per cent of GDP

Since 1978 to 2008 :AverageAnnual Growth rate is 7.0% Average Annual Growth rate is 10.8%

Employment Opportunities :

Low High

Most advanced service sector :

Delhi with a GDP share of 77 per cent Beijing with a GDP share of 61 per cent

A net exporter of services A net importer of services



Service Sectors China India Australia Korea Japan UK US

Finance and Insurance 16.50 13.27 11.83 15.53 9.78 6.89 10.35

Government and SocialOrganizations

8.01 10.78 6.06 10.47 6.72 6.62 10.35

Real Estate 6.07 11.64 29.15 22.34 30.66 32.16 30.92

Wholesale, Retail Trade andCatering

23.57 30.39 19.15 17.98 18.54 20.81 20.05

Transport,

Telecommunications etc

16.96 19.18 12.11 13.09 8.91 10.00 7.89

Transport and Storage 8.76 10.86

Post andTelecommunications

8.20 8.32

Education, Health, Researchetc

28.87 14.73 21.69 20.59 25.40 23.51 20.44

Education, Culture and Arts 8.71 7.98

Health, Sports and SocialWelfare

2.96 2.14

Scientific Research andPolytechnic

2.25 0.89

Others 14.95 3.71

Total 100 100 100 100 100 100 100



Year 1 INR =

CYN

% Change 1 USD = INR % Change I USD =

CYN

% Change

2000 0.1910 43.55 8.2798

2001 0.1774 (7.12) 46.75 7.34 8.2773 (0.20)

2002 0.1714 (3.38) 48.28 7.15 8.2766 (0.20)

2003 0.1723 0.52 48.05 (0.47) 8.28 0.40

2004 0.1817 5.45 45.55 (5.20) 8.2767 (0.40)

2005 0.1912 5.22 43.35 (4.83) 8.2765 0.00

2006 0.1796 (6.06) 44.92 3.62 8.0702 (2.50)

2007 0.1764 (1.78) 44.24 (1.51) 7.8051 (3.28)

2008 0.1853 5.04 39.26 (11.08) 7.2755 (6.78)

2009 0.1409 (23.96) 48.41 23.30 6.8225 (6.22)



y The forex reserves of the Republic of Chinaamounted to US$332.24 bn at the end of Sep09,showing an increase of US$6.82 bn from the previous

month.y The main factors responsible for the increase are:1. The EUR, JPY and other major currenciesappreciated against the US dollar. Foreign exchangereserves denominated in these currencies were worth

more in terms of the base currency, the US dollar.2. Returns from foreign exchange reservesmanagement.



EFFECTIVE DATE OF

CHANGE DISCOUNT

ACCOMMODATIONS

WITH COLLATERAL

ACCOMMODATIONS

WITHOUT COLLATERAL

2009-02-19 1.25 1.625 3.5

2009-01-08 1.500 1.875 3.750

2008-12-12 2 2.375 4.25

2008-11-10 2.75 3.125 5

2008-10-30 3 3.375 5.25

2008-10-09 3.25 3.625 5.5

2008-09-26 3.5 3.875 5.75

2008-06-27 3.625 4 5.875

2008-03-28 3.5 3.875 5.75

2007-12-21 3.375 3.75 5.625

2007-09-21 3.25 3.625 5.5

2007-06-22 3.125 3.5 5.375

2007-03-30 2.875 3.25 5.125

2006-12-29 2.75 3.125 5

2006-09-29 2.625 3 4.875



y According to a recent report from internationaleconomic think tanks, India and China soon plans toform a trade coalition in Asia and that is projected to

boost 65% of world trade by near 2020.Both thecountries India and China are determined to achievethat and create a huge impact on world economicbodies.



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china a threat to india

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