Contents

Introduction

1.1. General characteristics of the reference countries

1. 1. China

1.2. India

2. Macroeconomic comparison of China and India

3. External development of China and India

Conclusion

References

Introduction

The main objective of this paper is a comparative

analysis of economies of China and India. Why chose

these two countries? Comparing India with China

regularly and of course: 2 countries with the largest

population in the world, top one billion, neighbors and

non-competitors who claim to be leaders in Asia and

around the world, having the highest GDP growth rates

among the G20 countries and many other similarities.

Annual economic growth of China in the last 26 years is

approximately 8-9%, India has the same growth rate in

the last decade. Therefore, China and India seem to be interesting countries to compare their

economies.

1. General characteristics of the reference countries

1. 1. China

Republic of China - a socialist state, established in October 1, 1949. Its area is 9.6 million

km2 (3rd place in the world), the population - 1.3 billion people (1 in the world). China is a

permanent member of UN Security Council. (Vani K, 2005)

China shares borders with more than ten countries: In the North - with Mongolia and

Russia and the West - with Kazakhstan and Afghanistan in the south-west of India, Nepal,

Bhutan, Burma, Thailand, Laos, Vietnam, and Korea in the East, has a marine border with the

Philippines and Japan.

China has enormous economic potential. Growth of industrial and agricultural products

are very high. In terms of GDP the country ranks second after the United States, and at the end of

XX century, China stood on the seventh place.

China Industry is diversified. With its industrial enterprises and the number of workers,

the country ranks first in the world. For the sectoral structure of industry are several disparities:

between mining and raw materials, raw materials and processing industries.

The highest rates of developing light industry of China, especially is its most important

industry - textiles. Developed as garments, knitwear, leather, footwear industry.

In second place is the food industry, which brings together flour, cereal, butter-fat, fish,

meat, fruits, salt, tobacco, tea, wine and others.

  Centers newest industries tend to coastal areas, which are better equipped with

human resources, have a favorable economic and geographical position, more sophisticated

production and social infrastructure.

Fuel and energy sector development are based on local raw materials. Annual coal

production is over 1 billion tons (potential reserves - 3.2 trillion. T, explored - 0.9 trillion. T).

Coal deposits are in almost all provinces and autonomous regions of China, but the volume of

reserves and production of secreted North China. (CIA World Factbook, 2011)

Oil industry is a relatively young industry. China ranks 5th in the world for oil

extraction, 4th place in the production of electricity.

Metallurgy is based on iron ore (third-second places in the world). The largest reserves

are found in Anshanskomu pool. Of all stages of metallurgical cycle, the largest companies are

located in areas of mining ore and coal. The country came out on top in the world production of

iron ore, pig iron and steel production.

Much attention is paid to the development of chemical industry, which is regarded as an

important means of intensification of agriculture. In recent years, intensive development of

production of resins and plastics.

Recently China developed its building materials industries. In cement production (0.2

billion tons per year) China ranks first in the world.

Agriculture. The leading branch of agriculture in China is crop production. It produces

60% of gross agricultural output. For a variety of agricultural products of China ranks first in the

world. Occupy first place for the harvest of wheat, rice, tobacco, peanuts, 2nd place - Cotton 3rd

- citrus. The largest number of pigs and sheep in the world, and for cattle takes second place. All

farmland in China is 52% of the country, including arable land - 10%, pastures - 41.7%. More

than a third of arable land needs irrigation. (CIA World Factbook, 2011)

  Rice is the main food crops. China growing conditions are different for irrigation (South

China) and irrigated (North China) of China. In southern China collect two harvests a year.

Wheat is the second most important crop. As China grows as a winter and spring wheat.

Winter wheat growing areas are located in the basin of the Yellow River.

    Among other crops important are maize, millet, haolyan, barley. Grain in China is 3 / 4

diet. Grow oilseeds such as peanuts and sesame.

 China has grown green and black tea. China is world's first production of silk. Also

cultivated sugar cane, sugar beet, jute, tobacco, fruits.

In China, traditionally there were two types of livestock. The first is associated with

agriculture and has an auxiliary character: in the agricultural plains mainly bred pigs, traction

cattle, poultry in the western districts extensive nomadic or seminomadic cattle. About 90% of

meat production accounts for pig production.

China ranks third in the world for fishing and fish production. Important place in

agriculture of China occupy utility industries (weaving mats, baskets, collecting medicinal

plants), which are, as a rule, free from field work time.

Foreign economic relations. China maintains trade and economic relations with more

than 180 countries. Its main partners are Japan, U.S. and Western European countries, which

account for 55% of foreign trade turnover. In foreign markets exported 20% of gross output of

industry and agriculture of the country. About 40% of China's imports accounted for machines,

equipment and vehicles. The important role played by special economic zones, which account

for a quarter of foreign investments into the country.

1.2 India

India is located in the south of the Eurasian continent, the peninsula Hindustan. In the

northwest borders with Pakistan and Afghanistan (part of the Indian state of Jammu and

Kashmir, which borders Afghanistan, is under the control of Pakistan) in the north - with China,

Nepal and Bhutan in the east - from Myanmar and Bangladesh. In the south a narrow strait and

Polkska Manarska gulf separates it from Sri Lanka. Great Chennel Strait between the islands of

Sumatra and Great Nikobar passes maritime border between India and Indonesia.

      Area - 3,287.3 ths. km. The length from north to south - more than 3000 km from east to

west - about 2000 km. (CIA World Factbook, 2011)

The population - 1.21 billion people (2011)

Capital - New Delhi (over 13 million inhabitants).

During the years of independent development, India has developed from a backward

agrarian country that barely provided the domestic needs for food, to the modern industrial

agricultural, with developed industry, commerce and commodity-money relations.

            Mining industry is vital for the state in this area employed approximately 1.05 million.

Main products - coal from Bihar, Madhya Pradesh and West Bengal, oil from ACCA and Gujarat

(where developed as shelf deposits), iron ore of Bihar, Orissa and western Maharashtra and

limestone.

      India has significant reserves of minerals. Available for operation of coal reserves estimated

at 51 billion tons, however, since the deposits are in Bihar and West Bengal in the west, solid

funds are for transportation of coal in other parts of the country. (NMCC, 2005)

      Chemical Industry. In the chemical industry is allocated production of mineral

fertilizers and importance is growing of petrochemicals. It produces resins, plastics, chemical

fiber, synthetic rubber and has diversified globally in pharmaceuticals. Indian pharmaceuticals

companies have established their base in many CIS and middle east countries. Chemical

industry is represented in many cities.

Light industry is traditional sector of the economy of India. Especially highlighted cotton

and jute industry. The largest centers of cotton industry are situated in Bombay and Ahmadabad,

Jute specialization from Calcutta. Textile factories are in all major cities. In India's export of

textile products and apparel industry is 25%.

Food industry produces goods for domestic consumption and for export. The most

popular in the world enjoys Indian tea. Its production is concentrated in Calcutta and in the south

and in eastern parts of India.

Electronics and information technology sectors of Indian economy, which has developed

most rapidly in last two decades and IT technology has helped India to improve its performance

in all industrial sectors.

Agriculture employs about 64% of the population is 25% of gross national income i about

18% of total exports. (NMCC, 2005)

The leading branch of agriculture in India - crop (4 / 5 the cost of all products). Most of

the acreage occupied by food crops: rice, wheat, corn and others. The main industrial crops of

India is cotton, jute, tea, sugar cane, tobacco, oilseeds (canola, peanut, etc.). Also cultivated

rubber plant, coconut palm, bananas, pineapples, mangoes, citrus, spices and seasonings.

      Livestock is the second largest sector of agriculture in India, heavily yielding crop

production. Cattle used in farms, mainly as draft power. Manufactured in milk and animal skin.

      Forestry. Forests are mainly situated in mountainous and hilly areas that cover an area of

about 650 thousand square meters. km, or 19% of the country. 3 / 4 forest areas available for use

and are a source of income. Half of all forests are concentrated in the central states and one third

to one fifth of the north and the south of India. (Srinivasan, 2006)

Forests provide domestic needs in pitch and rosin, bamboo and cane, cattle feed, wood

and wood construction. Some tree species gathered at the rate of foreign demand. Exported as

plywood.

      Fishing brings the country a modest profit, but provides employment for more than 1 million

people.

      Shipping plays an important role in India, which has a large coastal strip of about 7516 km.

In early 2000, there were 102 marine companies, including navigability Indian union. This union

is the largest carrier in India i have merchant fleet of 112 ships. Main ports: Bombay, Calcutta,

Madras. (China and India, 2011)

Foreign trade. The basis of Indian exports is 15 commodity groups. In particular,

agricultural and industrial raw materials, food and textile products, Pharmaceutical products,

jewels, rice, tea, wool, yarn, metal products, machinery and equipment, production software.

      Leading imports - oil, petroleum products, machinery and equipment, vehicles, ferrous and

nonferrous metals, electronic components and fertilizers.

The main trading partners are U.S., EU, Japan and Russia, Iraq, Iran and Central and

Eastern Europe. (China and India, 2011)

2. Macroeconomic comparison of China and India

Dynamics and structure of GDP. The result of high economic dynamics of China's recent

decades is that a country with a total volume of production, became the second country in the

world (after the U.S., ahead of Japan in 2010, the economy of a long time were not attainable for

all other countries). India still can not argue with many developed countries in the ranking in

terms of the economy (Human Development Report, 2011). At present, China's GDP in dollar

terms over four times India's GDP ( see Table 1). However, since the price level in India is still

relatively low (low purchasing power of the general population and poverty for the country

remains in place), then taking into account purchasing power parity (PPP) differences in the total

GDP and GDP per capita vary significantly less ( see Table 1) (Human Development Report,

2011).

Resistance economic growth contributes to the preferential solution of inflationary problems

(IMF, 2011). China managed to better cope with inflation - the average annual inflation in the

last decade has dropped to 3% (from 6% in the previous decade). India is not yet possible to

achieve sustainable low inflation (see Table 2) (IMF, 2011). .

Table 1

Compare GDP of China and India

($ Trillion., At the current rate * 2010.)

GDP PPP $ trillion.

Table 2

Inflation

Obviously, differences in income is largely due to the fact that upward of a typical higher

salaries in industry - in China in this sector forms almost 50% of GDP (see Table 3) (World

Bank, 2011). In India, it markedly expands current scope of services - its share steadily over the

50% level (see Table 4) , which promises to be the foundation for sustainable prosperity in the

future, but still forms a lower income (compared with industrial-oriented China)(China and

India, 2011)

Table 3

GDP (PPP) per capita

$ PPP

GDP by sector 2010

% of total

Table 4

Macroeconomic structure formation of GDP

% of GDP

GDP

$ bn

Agricultural

sector

Industry Services

1995 2008 1995 2008 1995 2008 1995 2008

China 728 4327 20 11 47 49 33 40

India 356 1159 26 17 28 29 46 54

Dynamics in certain sectors confirms the orientation of the policy development in the

countries: support industry in China and the dominance of the service sector in India. Drivers of

economic success of India was elected, except the service sector, knowledge-intensive industries

such as information technology or pharmaceutical, with the dominant role was played by a

steady and reliable functioning private sector. Note that in recent years, China is also trying to

expand the scope of services (a percentage of GDP continuously increases) (see Table 5) (World

Bank, 2011).

Table 5

Economic dynamics by sector,

average annual growth,%

GDP

$ bn

Agricultural

sector

Industry Services

1990-

2000

2000-

2008

1990-

2000

2000-

2008

1990-

2000

2000-

2008

1990-

2000

2000-

2008China 10,6 10,4 4,1 9,4 13,7 11,7 11,00 10,7

India 5,9 7,9 3,2 3,2 6,1 8,4 7,7 9,5

Of course, the nature of economic growth in many respects determined by the structure and

volume of natural resources and their efficient use. Arguably, one could argue that while there is

considerable potential in both countries. Thus, the agricultural sector is still growing relatively

slower rate in both countries and without reform and intensification is unlikely to satisfy

domestic demand, particularly given the significant improvement in purchasing power and

welfare in general due to high economic dynamics (in China today, in India - in perspective .)

It should be pointed out that the expansion of industry and services in both countries is,

in fact is due to the agricultural sector (including as a result of the rapid outflow of labor from

rural states in large cities), and therefore in some way enhanced food security risks. Expansion is

the service sector in both countries in some way reflects the natural process of the globalization

era.

3. External development of China and India

Different models of economic development of China and India do not find their best

reflection characteristic in balance of payments. Export-oriented expansion of China has formed

a significant positive balance of payments (see Table 6) (IMF, 2011). Orientation is India's

internal resources and relatively low volumes of exports of goods (which are not keeping pace

with increasing domestic demand) induced the formation of the country's trade deficit, which,

however is not threatening the macroeconomic stability of the country. (World Trade

Organization, 2011)

Table 6

The current account balance % of GDP

2003 2005 2007 2008 2009 2010 2011 2012

China 2,8 7,1 10,6 9,6 6,0 5,2 5,7 6,3

India 1,5 -1,3 -0,7 -2,0 -2,8 -3,2 -3,7 -3,8

Along with this, while exports of goods as significant as China, the amounts, and their

place in the structure of GDP, India's service sector is much broader niche in the structure

formation of GDP than is observed in the structure of China's GDP (see Table 7 ) (IMF, 2011).

Table 7

International trade in GDP

% of GDP

Goods Services

Conclusion

India and China - are very similar to each other, ranging from the history of creation, ending

with international ties. These countries have similarities in location and method of placement of

common neighbors and relations with each other. Also, many countries have the resources,

mineral resources, industry, environmental problems, which are also very similar or identical. Of

course, India and China are connected by highways.

In my opinion, the country has a very advantageous position, because having access to

the seas and oceans, they expand their opportunities in industry, so those external relations, and

this in turn gives a large profit. For example, countries can build international ports, use sea and

ocean resources. In addition they have nearby islands, which also provides certain advantages.

You can use the islands and agriculture and industry.

And yet, whose economy is stronger than China or India, who will become a powerful

country in Asia? Today, of course in all respects is leading China, but if you look and compare

the main differences between India and China, we can say with confidence that India can

become a financially powerful nation.

And what are these differences in the way of the financial power?

India has to copy the model of China's exports of labor-intensive start with the

goods

It found a suitable niche for himself - took up the export of services:

1. Computer Programming,

2. Outsourcing

3. banking services.

A recent example of outsourcing - the transfer of Boeing, and Reuters in India of its

centers of information support and accounting. India over the years evolved into the first

exporter of information services, today they make up half of the country's exports. China is

engaged in the development of industrial production.

development of high-tech industries in India:

pharmaceutical, biotechnology, automotive, and in this field, India has made impressive

progress.

rate for skilled labor

In India, a bet not just for cheap labor, as in China, and the skilled labor force.

 Many world famous companies (General Electric, Intel, Texas Instruments) have opened their

laboratories in India, because skilled labor is here many times cheaper than the U.S.. In fact, if

the average annual salary in America, a programmer in 2007 was $ 90 thousand, in India - $ 30

thousand

less dependent on foreign investment

Indian model is less than China in FDI, China depends on massive inflows of foreign

investment. Direct investment gives India the Chinese figure at times. Here the growth is

primarily due to clever use of internal resources, active development of its own private business,

especially small and medium.

focus on the huge domestic market

The orientation of India's huge domestic market, whose volume can be compared with the

market ... the whole EU.

Experts McKinsey Global Institute predicts that in the next 20 years just domestic

consumption will be the engines of economic development in India, and in 2025 it would turn

into the 5th world market. Because of India's population is regarded not as cheap labor, but as a

vast army of consumers.( Indian Economy, 2011)

democratic political system

India called the largest democracy in the world. Due to the fact that elections are held in

the country for three whole weeks, and even in five stages, they are even listed in the Guinness

Book of Records. UK «The Economist» at the time called democratic system of India, an

important advantage to authoritarian China.

Among these advantages, the experts are usually called as follows:

- Building a business from the bottom up, not top, as is done in China;

- Distraction centers of power, and therefore, the best competition;

- Responsive to emerging opposition parties, etc.

In general, the political system in India has the flexibility which is lacking in China.

You can also select multiple advantages of India over China:

1. China is already close to the peak of ultrahigh growth rates, production-based

"standard" products: already risen considerably workforce investments will

continue to grow at several times, the interest, China's share in world markets is

very large, etc.

2. Reforms in India began a decade later than China, which means that it has a

decent head start.

3. China has invested annually in its economy up to 50% of GDP, India - no more

than 25-35%.

4. India has a more transparent and efficient financial market and legal system.

5. The Indian economy is affected by the crisis less than China, it has a high position

in the service sector, which according to experts, is the future of the global

economy.

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