China and Indian Economy under check

China and India are two of the major economies in Asia. China takes the second position while India takes the fifth in the list of world’s largest economies. Both countries grew from the ashes of colonial rule, but each took a different economic and social development system. India is a democratic country, while China is a Communist republic.

China economy and that of India were at par in 1950. China at that time was at a disadvantaged position given that India had better infrastructure and also the India currency was ranking higher than the China currency in strength. Both countries took different economic and political plans, which led to China’s per capita income growing to 4.6 times that of India. indian economy growth, on the other hand, is also steady, but there is a lot that India can learn from China economy growth. Below are some of the differences between the two economies.

Human Development Index

China did well in human development right from the start. China emphasised on its healthcare and education facilities development before India. By 1980 Chinese life expectancy was 64 years while that of Indians was 54. When it comes to literacy rate, China had 66 per cent around that time and India 43.6 per cent. This huge difference in literacy levels and life expectancy had a considerable impact on the difference in economic growth. China maximised on the availability of human capital when introducing economic reforms under Deng’s time.

Industry Types

Both countries took different paths in regards to the focus on the type of industries. China took advantage of the availability of cheap labour and adopted labour-intensive sectors like electronics, engineering and textile. Most of these industries were set-up in special economic zones and were mainly export-oriented.

China did well in human development right from the start. China emphasised on its healthcare and education facilities development before India. By 1980 Chinese life expectancy was 64 years while that of Indians was 54. When it comes to literacy rate, China had 66 per cent around that time and India 43.6 per cent. This huge difference in literacy levels and life expectancy had a considerable impact on the difference in economic growth. China maximised on the availability of human capital when introducing economic reforms under Deng’s time.

India’s focus at the time was on heavy industries that were capital-intensive with little labour requirement. India was also late in implementing policies that would attract foreign investments, as the use of instruments like Special Economic Zone came much later. This difference in industries enabled China to attract more foreign direct investments than India. India later tried to push to labour-intensive manufacturing, but the sector never picked, making the India economy service-led, while China became a manufacturing giant.

Political Systems

Another factor that contributed to the difference in economic growth was their political systems. India chose to become a democracy after independence, while China is not a democracy. Democratic nations have to deal with the long democratic decision-making processes, especially if there are political differences in infrastructure spending. China was in an advantageous position when it comes to infrastructure development because it is not a democracy. The ruling party decides what to build without the challenge of political wars due to political interests. For that reason, China’s GDP per capita growth has always been better than that of India.

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