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2013

  • inflationBoth India and China saw a seven month spike in inflation rates in the ninth month of this year. Reuters reported on both nations – China’s annual consumer inflation rate rose to a seven-month high of 3.1 percent in September as poor weather drove up food prices, limiting the scope for the central bank to maneuver to support the economy even as exports showed a surprise decline. Inflation in India unexpectedly hit a seven-month high in September as food prices climbed, increasing the odds for yet another central bank interest rate hike even as the economy stumbles through its worst crisis since 1991.

    With spending on food being the prime expense of an average Chinese and Indian’s disposable income, this hike in inflation rates is sure to pinch the common man. In India where menu’s have already altered to keep out the once essential onion, consumers are gaining extremely weary of what they eat. Prices of onions jumped 322 percent annually as crop supply dropped and wholesale merchants hoarded the bulb for higher prices.

    Food prices in India rose to an annual 18.40 percent last month, the fastest clip since July 2010 and triple the 6.1 percent rise seen in China, according to Reuters. In China, Food prices gained 1.5 percent in September from August due to droughts and floods in some areas, pushing up the CPI by 0.51 percentage points, Yu Qiumei, a senior statistician at the bureau, said in a statement.

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  • A woman rides a bicycle past a row of neLong gone are the days when a Mumbai wanted to be a Shanghai, today Xiamen might be too much competition for the Indian commercial capital. Located on China’s South Eastern coast, in Fujian Province, Xiamen boasts to be China’s highest car ownership metro at present, with 30.5 cars for every 100 residents, leading many car manufacturers to increase distribution to smaller Chinese cities instead of large Indian metros.

    Armed with a high disposable income, good roads and poor public transport, Chinese in inland provinces and smaller coastal towns are rising up to become the largest group to purchase privately owned cars. So much so that auto manufacturers such as Volkswagen, which sells more cars in China than any other carmaker, will expand its joint venture manufacturing capacity there by at least a third to 4 million units by 2018. That is more than the entire manufacturing capacity for four-wheeled vehicles in India.

    Besides raising issues from the environment to oil consumption, the dilemma also poses a more serious question of inland China becoming more attractive to manufacturers and investors than metropolitan India. Reasons range from India’s sagging rupee rates to poor infrastructure, from high interest rates to rising  political ambiguity, yet when Indian cities compete with second the third tier Chinese cities our bilateral and multilateral trade face a serious problem.

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  • For the first time since 1954, leaders of India and China would have visited each others countries in the same year, the last time this happened was when Premier’s Zhou Enlai and Jawaharlal Nehru met. Then, was also the beginning of the formation of the cold war between the two neighbours, hopefully this time round these differences will melt into history.

    As Indian Prime Minister Manmohan Singh sets in gear a host of deals ahead of his October 23rd meeting with Chinese Premier Li Keqiang, he will also make history by being the second Indian leader to visit China in a reciprocal visit across the himalayas. Premier Li Keqiang visited Delhi and Mumbai in May this year.

    Plans for the leaders to announce big ticket deals are afoot with several high level delegations from Delhi already in Beijing. Over the past few days, dignitaries from the border security services, trade and finance, economy and policy have all been camped in Beijing ironing out last minute legalities before the leaders sign on the dotted line.

    With bilateral trade and investment affecting the globe on a multilateral level, both China and India are consumed with re-balancing their basket of goods. In a strong bid to attract increased FDI into India, the premiers are expected to sign larger agreements between the two countries, boosting infrastructure and financing large deals within India.

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  • The ballooning Indian trade deficit with China is no longer only affecting India, but is impacting China and their international play. India’s limited trade with China, means the country has few inroads into India, enabling less control over the region and a deferred geopolitics. In order to play the game right, China on her part has encouraged the Indian government and companies to increase bilateral trade and investments. Yet, as this has failed to see optimum results,signs are the Chinese government is taking matters into their own hands to make sure the basket of goods attains equilibrium.

    On its part one of the more large scale operation the Chinese government is considering is building manufacturing excellence within a large plot of land owned jointly by Chinese companies. Similar to export promotion zones of various caliber build in China, this large plot of land within India is expected to have world class infrastructure and manufacturing facilities, from which Chinese companies will be able to take advantage of India’s talented yet cheaper workforce and export quality made in Inchin goods. The facility which is yet under consideration, will enable the Chinese to control the production and logistics supply chain and enable India to export goods to international markets, raising her stature in the global game.

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  • Nazia Vasi, Founder, CEO, Inchin CloserA representative of the Mumbai Global Shapers Community at the World Economic Forum, Annual Meeting of New Champions, in Dalian, China Inchin Closer Founder and CEO, Nazia Vasi got a ring side view of the thought leaders, discussions and opinions shaping the world.

    A three day conference in the mountainous seaside resort town neighboring Korea, summer Davos as the conference is otherwise known – was a great platform to meet and understand game changers the world over. Selected as one of the four representatives from India, Ms. Vasi was particularly interested in learning more about the evolving education space. The need for teaching online Vs offline, a blended approach to teaching or a mass based tutoring via MOOC’s. The options are plenty and while the vote was definitely in favour of a more online approach, the experience of discussing the same with education veterans from both prestigious Chinese as well as American universities was enlightening and resourceful. Hearing about how cities in Africa educate their youth via mobile phones because students don’t have access to brick and mortar classrooms, how MOOC’s work well as a fun way to learn, but do not yet replace a university degree, how culture plays such an important role in defining the success of an online educational tool and how students are broadly benefiting from interacting with peers around the world, were all issues that were debated and discussed on both a global and local level.

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  • We always knew a time would come when the world could tell whether the China model of over zealous, doctrine led growth would prove as a better developing economic model or India’s democratic, slow and steady pace would prove to be a better launch pad into the developed world.

    Well, maybe this is the time when economists, analysts and sooth sayers alike need to step in and assess the situation. Today India’s economy is in the doldrums, forex reserves are abysmally low, the Indian rupee is highly depreciated and the current account deficit is highly low. China on the other hand, continues to maintain one of the highest forex reserves in Asia, has maintained trade targets with an appreciated yuan and continues to achieve her projected GDP growth.

    When both nations face the same external economic threats and yet see diverging growth numbers, optimism in investment sentiments and influence on foreign relations, its time to assess the growth models and finally conclude which is the better one. While the study can be a never-ending assessment of the two nations, Inchin Closer feels 30 years post economic libralisation is a good barometer from where to take cognizance of our two countries nation building.

    While China’s economy did have a headstart of a decade, opening up to the west in the 1980’s, libralising her policies and ushering in foreign investments, India quickly caught up in the 1990’s with her own libralisation policies. For India and China watchers, the two nations have played an interesting game over the past few decades, with various groups commenting on the pros and cons of each nations race towards a more developed country. Below we take you on a journey over the mega differences.

  • Neighbours, trade titans and sweet and sour siblings, China and India have upped the number of bilateral meetings in the recent past. Following the high level trade delegation led by Premier Li Keqiang earlier this year, foreign secretaries of the two nations have also been meeting to iron out both bilateral and multilateral issues.

    During the first week in August, India and China met in Beijing for their first ever dialogue on Central Asia. Today (August 20), Indian foreign secretary Sujatha Singh will meet her counterpart, Chinese vice foreign minister Liu Zhen Min, in New Delhi to hold the fifth high-level strategic dialogue since November, 2010. Later this month, a high level Indian military delegation will travel to China to work out details of joint naval and air force exercises. The move is part of a larger effort to quell tensions over disputed territories. All these meetings will culminate in Indian Prime Minister Dr. Manmohan Singh’s visit to Beijing in October.

    As Indian national elections are due in 2014, Dr. Singh’s Beijing visit might be one of his last foreign trips as prime minister of India, a significant sign off to Chinese Premier Li Keqiang’s first trip as Chinese premier to India.

    The increasing frequency of meetings is proof that both nations are attempting to quell differences between the neighbours. With China taking a more aggressive resolution to smooth over relations, India might be encouraged to dampen disagreements considering the Indian economy is floundering and support from her largest trading partner can protect her.

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  • Chinese companies high on softly wooing the booming Indian telecom and technology space are finding a profitable niche for themselves. In 2002 it was handset maker Huawei that stormed the Indian telecom space, more recently instant messenger service Wechat broke ground by introducing India to voice chats – a league above the popular incumbent whatsapp and now, Chinese mobile browser UC Browser claims to have powered 29.9 percent or every 1 in 3 of total Internet traffic on phones.

    While the Indian government remains apprehensive and often takes a stand against such software’s surreptitiously entering the Indian marketspace, UCWeb has big plans for India. In addition to hiring local talent, the Chinese browser which is available on most Nokia Symbian and Google Android devices is also looking at tying up with local Indian handset makers to increase its presence. Further, its increased market share (60 times growth within India alone in the last three years) is also due to the company extending its global partnership with Samsung and LG to the Indian market.

    India continues to remain one of the worlds fastest growing telecom markets, which makes her an attractive playing ground for many mobile software and hardware producers.  Additionally, with both neighbours facing similar last mile issues, technologies developed for specific problems in both economies tend to excel. Analysts assuage UC Browsers success in India to its features as a modern, easy to user interface. Especially, its ability to cach video for offline viewing, This they say is itself is a great feature in India, as not all mobile users have access to fast downloads, either because of their network, data plan, or device itself.

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  • manufacturingThe time for Indian manufacturing to bask in the sunlight has come, however shrouded in archaic laws and regulations, dimmed by a weakening economy and lack of government support, manufacturing in India might remain away from the limelight.

    Explaining how India could have been a China by exploiting her comparative advantage, Shankar Acharya, former economic adviser to the Indian government told the Financial Times “Over the past four decades, India, like China before, should have become a big producer and exporter of clothing, shoes and toys. Instead, highly restrictive and old-fashioned labour laws have undermined the advantages of India’s low nominal wage costs and discouraged formal employment, driving employers to hire casual labour and keep their firms as small as possible.

    Add to that a recent survey conducted by PwC and FICCI titled — “India Manufacturing Barometer”, which finds that the major growth barriers to Indian manufacturing are higher interest rates, lack of domestic demand and other concerns like pressure for increased wages, legislative or regulatory pressures, decreasing profitability and increased competition from foreign markets.

    Compound this with India’s notorious bureaucracy, poor transport and electricity infrastructure, and the occasional imposition of retrospective taxes and you have a recipe for driving away both Indian and foreign prospective investors.

    Yet, what persuades companies to set up factories in India?

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  • Fiscal pressures have contributed to Beijing following New Delhi in contributing to freeing the economy and liberalize growth. Barely a week after India opened FDI in the telecom and defence sectors amongst others, China announced tax breaks for 6 million small businesses, reduced fees for cash strapped exporters and paved the way for the opening up of railway construction. At a time when banks in both nations are constricted for cash, governments have no choice but to release the economy through alternate means.

    Post a meeting by China’s state council, Beijing announced what is expected to be the first of a series or micro-measures to boost the economy whose purchasing managers index and growth rate slumped drastically. Forecasting a similar trend for the rest of the second quarter, China economy watchers expect the government to open additional sectors to FDI, thereby boosting growth. Unlike 2009 when the government gave banks the green signal to flood the economy and boost consumption, this time round the banks have little bite, leaving the onus of bailing the economy on both central governments.

    Pledging to keep the yuan’s exchange rate which has risen the most amongst Asian currencies, stable,  Beijing is also encouraging domestic private investments in specified sectors. With several local governments unable to propel the weight of the economy alone, President Xi has hinted that in order to achieve the Chinese dream, private players too will have to pay their part. Expect large ticket investments from private Chinese players, which will change the economic landscape of China which has until now heavily depended on state owned entreprises. The announcement of a tax fillip to Chinese SME’s is a step in this direction.

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