The Rise of China The Rise of China & India& India

Rapid Economic Growth in Rapid Economic Growth in ChinaChina

Economic Growth rates of 9.5% are Economic Growth rates of 9.5% are expected to continueexpected to continue Economic growth of 10.7% from Economic growth of 10.7% from

January to September, 2007January to September, 2007

ManufacturingManufacturing

China is now the world’s China is now the world’s manufacturing centremanufacturing centre

Inflation fearsInflation fears

The rapid growth is leading to The rapid growth is leading to inflationinflation

Monetary PolicyMonetary Policy Beijing is taking measures to cool the Beijing is taking measures to cool the

economy from excessive liquidity and economy from excessive liquidity and huge investmenthuge investment

Money growth leads to lots of money available Money growth leads to lots of money available for lendingfor lending

Tight monetary policy is implemented by Tight monetary policy is implemented by revaluating the currency (pushing up the revaluating the currency (pushing up the value of the Yuan)value of the Yuan)

China’s central bank has increased interest China’s central bank has increased interest rates twice in 2006rates twice in 2006

Other attempts to slow Other attempts to slow down the Chinese economydown the Chinese economy

Lending is being directed away from Lending is being directed away from certain sectors certain sectors

The approval process for certain The approval process for certain investment projects are being investment projects are being delayeddelayed

Emerging East AsiaEmerging East Asia Comprised of China, Indonesia, Comprised of China, Indonesia,

Philippines, Thailand, Vietnam, and Philippines, Thailand, Vietnam, and smaller economies which include smaller economies which include Hong Kong, Singapore, South Korea, Hong Kong, Singapore, South Korea, and Taiwanand Taiwan

The number of people living in poverty The number of people living in poverty (<$1/day) has reduced by 25 million (<$1/day) has reduced by 25 million since 2005 since 2005

Outside factorsOutside factors Outside factors affecting growth, Outside factors affecting growth,

such as a recession in the U.S.such as a recession in the U.S. Not expected to have a huge impact on Not expected to have a huge impact on

Asian growth Asian growth Domestic consumption and domestic Domestic consumption and domestic

investment are expected to support growthinvestment are expected to support growth

Rise in Income statusRise in Income status

East Asia is increasingly becoming a East Asia is increasingly becoming a middle-income regionmiddle-income region

Challenges to the Asian Challenges to the Asian EconomiesEconomies

Rapid urbanizationRapid urbanization

Delivery of servicesDelivery of services

Social cohesionSocial cohesion

CorruptionCorruption

IndiaIndia

India is fast becoming the world’s India is fast becoming the world’s main provider of servicesmain provider of services

India’s Economic GrowthIndia’s Economic Growth

8.1% annually since 2003 (second 8.1% annually since 2003 (second only to China’s)only to China’s)

India’s Rising Middle India’s Rising Middle ClassClass

Since 1986, the middle class has Since 1986, the middle class has quadrupled to about 250 millionquadrupled to about 250 million

Rising IncomeRising Income

India’s per capita income has risen India’s per capita income has risen from $(US)1178 to $3051 over the from $(US)1178 to $3051 over the past 25 yearspast 25 years

EducationEducation

India has the 3India has the 3rdrd largest largest concentration of educated labour in concentration of educated labour in the worldthe world

The price of labour is 1/10 of that in The price of labour is 1/10 of that in the USthe US

ManufacturingManufacturing

Indian corporations have become Indian corporations have become leaders in the production of steel, leaders in the production of steel, motorcycle, auto parts, motorcycle, auto parts, pharmaceuticals, cement and pharmaceuticals, cement and footballs.footballs.

Foreign InvestmentForeign Investment

Over 80% of foreign investment goes Over 80% of foreign investment goes towards manufacturing, which is towards manufacturing, which is growing at 9% per year.growing at 9% per year.

BillionairesBillionaires

India has 23 billionairesIndia has 23 billionaires

India & ChinaIndia & China

Make up 1/3 of the world’s Make up 1/3 of the world’s populationpopulation

Represent the 2 economies with the Represent the 2 economies with the largest potential for economic largest potential for economic growthgrowth

HistoryHistory

The 2 countries were rivals since The 2 countries were rivals since 1962 over a border dispute1962 over a border dispute

20052005

The border dispute was resolvedThe border dispute was resolved

TradeTrade

In 2004, Indian exports to China In 2004, Indian exports to China increased by 80% and trade between increased by 80% and trade between the two countries was worth the two countries was worth $20(US) billion $20(US) billion

Trading PartnersTrading Partners

In the next couple of years, China is In the next couple of years, China is expected to replace the US and the expected to replace the US and the EU as India’s top trading partnerEU as India’s top trading partner

EnergyEnergy

In 2006, the two countries signed an In 2006, the two countries signed an energy cooperation agreement energy cooperation agreement involving the countries’ state oil involving the countries’ state oil companiescompanies

Share of ManufacturingShare of Manufacturing

China & India make up 57% of the China & India make up 57% of the world’s manufacturing outputworld’s manufacturing output

Asia’s total share is 70%Asia’s total share is 70%

Prospects for CanadaProspects for Canada

The economic rise of China & India The economic rise of China & India offer Canada and other middle offer Canada and other middle power countries an alternative power countries an alternative market in which to trade (rather market in which to trade (rather than the US)than the US)

Challenges for IndiaChallenges for India

India’s rural poor have benefited India’s rural poor have benefited little from its economic boomlittle from its economic boom

India has fallen from 124th to 127India has fallen from 124th to 127thth on the HDIon the HDI