So whose ahead in the race now?So whose ahead in the race now?
August 27, 2013

india vs chinaWe 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.

When China led as the factory of the world, labour welfare enthusiasts lambasted her for cheap labour and unfair treatment to employees. India then sat back on her laurels of labour unrests in the 1960’s and resigned to slower growth, yet prosperity for her people. China then conceded to India’s 6 percent GDP growth rates yet happier people.

Further, both economies gradually gave in to foreign investments. While China changed her model and tried to erase the past and learn from the future, she was hailed as the messiah of the developing world – by encouraging adoption of new technologies, domestic markets flourished and a citizens standard of living increased. India on the other hand, added regulations to protect her people and economy from over zealous foreigners who they feared would re-colonise the nation. With fresh wounds from the independence struggle barely healing in parliament, India decided it would be prudent to regulate and structure processes, creating more loopholes for companies intent on taking their piece of India.

Different political models in both nations also led to wide-sweeping variances in the way the neighbours took decisions and developed. India’s pluralistic, democratic government gave every voter an opinion. Leading to multiple sides to every decision, huge time delays in taking simple decisions, often directly affecting her people. On the other hand China’s autocratic government learnt from her communist forefathers, if the nation was to progress, the state as an extension of the family would be the omnipresent provider and decision maker. Numbers mattered, and yes eventually the people would benefit.

Lastly, the social index is where both nations have faltered. Indian’s still don’t have enough food to eat, a proper education nor all a shelter. The environment has been raped in both nations on the reprise of development. China’s healthcare system is absymal, her hukou system is as segregating as India’s caste system is today and her media stymies freedom of expression. Although women are slightly better off in China than in India, female infanticide continues in both nations. One can’t really map demographics of happiness in China or India, wealth, education, status, healthcare and a million other parameters bar us from a fair assesment, so whose to tell which nation has fared better over the past three decades?

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