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Why India Will Displace China as Global Growth Engine

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What you stated isn't necessarily true. In fact the article title “Why India Will Displace China as Global Growth Engine” is proven wrong by the stark reality that India's economic growth figures are consistently being reappraised and dropping.

india-growth-outlook.jpg


India will definitely grow but definitely not at the speed people had incorrectly speculated would be the case.

Western companies are increasingly resisting the requirement that they transfer technical expertise to Chinese partners as the price of setting up production facilities in China.

This has nothing to do with the companies themselves but regulations imposed on them by their respective governments, particularly the US, which actually impedes their ability to grow and do business actually stifling the growth of the US economy.

For example, a recent story in the news was about Pratt & Whitney and Hamilton Sundstrand selling China software for the operation of the prototype engine in the WZ-10 attack helicopter. They had no problems making the sale and actually made quite a profit but the US government was very displeased and they were cited as having violated US law relating to such sales to the Chinese military and were forced to pay $75 million. So the US complains about large trade deficits with China but at the same time US companies are forbidden from selling their wares to countries like China which reduce that deficit.

Modern Submarines, ballistic missiles, nuclear bomb, etc... were all created by the Nazis and/or German scientists the US and other world powers at the time took hold of. People have always built upon the knowledge of others and that is how humanity continues to grow. Edison never invented the first bulb just the first commercially viable version of it so to say that the Chinese actually need to copy to come to the same conclusion is ridiculous. They will find their own way and now with an increasing GDP and more money available to spend on R&D they are coming out with some very innovative pieces of tech.

The number of 15- to 24-year-olds is already dropping and this group is projected to account for 150 million people in 2030, compared with 250 million in 1990. As a result, China’s labor force between the ages of 15 and 65 is expected to peak in 2014.
China’s ample labor has increased GDP growth by an estimated 1.8 percentage points annually since the 1970s, but the contraction will cut into growth by 0.7 percentage point by 2030. At the same time, better conditions in rural areas have reduced the availability of cheap labor in coastal cities.

This is the result of China's one child policy. There has been talk in the government to do away with the policy especially since there are way more boys than girls. If they abolish the policy you can be sure that the problem will quickly correct itself. I am not entirely sure why the policy was initiated since it was obvious that with increased economic growth would come higher standards of living and people would live longer unless someone actually believed that the "elderly" would die off quickly (ex. in their 40s) so there would have been a smaller population of young adults left getting an increased share of the resources.

However, what I suspect it might have to do with China is trying to move away from being the worlds producer of cheap toys and electronics and actually branch out into creating world class products as well as increasing R&D to get a bigger share of the worlds intellectual property rights which does not require as many people and in fact is rewarded by having more elderly and experienced researchers/workers.

British colonial rule left India with a vigorous democracy and a parliamentary form of government

Ahhh... I knew this would come up at some point.

I cant see how India is a democracy considering when they refuse to give the Kashmiri people the right to decide their fate in a referendum.

However, even if that was not the case India like virtually all other countries are not actual democracies but republics where rules and regulations are setup to prevent the majority from getting their way to “prevent the tyranny of the majority”. However, the problem with all modern republics is that they still utilize a democratic process of electing candidates which have the authority to change the constitution whenever they see fit thus no one is ever guaranteed security or prosperity. It was Winston Churchill who said “the best argument against democracy is a five-minute conversation with the average voter”. How are the illiterate an uneducated masses of India, let alone any nation, supposed to elect knowledgeable, upstanding politicians? People look at the official literacy rate in India being around 75% but forget that to be considered literate you simply need to be able to read and write your name it doesn't mean you can read newspapers or write papers.

Furthermore, China's rise itself proves that democracy is not necessary for economic growth or prosperity.

the British gave India the English language -- very useful in today’s world and a unifying force in a country with hundreds of languages and dialects.

This is just ridiculous.

If you look at PISA 2009 rankings the top spots are essentially held by countries that speak little to no English (with Shanghai, China taking top spots in every category):

07education_graph-popup.jpg


Furthermore, the PISA results actually disprove the old myth that all Asian countries do is memorize and regurgitate knowledge but cant actually apply what they learned to real life situations. However, as you would expect you have those in the west who refuse to accept the reality that things are changing and they will no longer be number one.

China, meanwhile, is burdened with government-controlled banks and other hugely inefficient state-owned enterprises

And you seriously think this is a bad thing?

The years when governments, particularly those of the third and developing world, had stricter state controlled economies (i.e between 1950 to 1973) the world economy grew by 3% a year. However, the moment countries followed the advice the west gave them and neoliberalism was introduced (usually as a precondition for trade agreements and aid during a financial crisis) from the 1980s onward the world economy has only grown by 1.5% a year. In fact following liberalization of finance and trade we have seen capital inflows surge, you have cases of massive speculation, credit booms and asset bubbles as well as current account deficits which resulted in the financial crises.

Do not necessarily believe the advice the IMF and World Bank give since these are tools of the west used to keep them rich and everyone else poor.

outsource many back-office and even legal and medical services to India. Outsourcing now yields about $69 billion in annual revenue

What you are talking about is an outsource of the service sector which means nothing in comparison to China getting the outsource of manufacturing.

Service sector related jobs aren't secure since automated systems can be easily setup to replace them. Furthermore, they do not add to a countries technical capacity like manufacturing jobs (which go to China) would. For example, how much are you as a nation going to learn about building supercomputers by answering calls for Pizza Pizza or offering customer support for a company that retails body oils, office supplies, etc...?

Over the years from the outsourcing of manufacturing jobs also comes an outsourcing of capital equipment and technological know how. China has harnessed what it has learned and is now building upon that knowledge via the manufacture of various value added products particularly within the technological industry.

-----

That is my take on this subject. If anyone has anything to add or corrections they want to make I would be interested to read their point of view.
 
What you stated isn't necessarily true. In fact the article title “Why India Will Displace China as Global Growth Engine” is proven wrong by the stark reality that India's economic growth figures are consistently being reappraised and dropping.

india-growth-outlook.jpg


India will definitely grow but definitely not at the speed people had incorrectly speculated would be the case.



This has nothing to do with the companies themselves but regulations imposed on them by their respective governments, particularly the US, which actually impedes their ability to grow and do business actually stifling the growth of the US economy.

For example, a recent story in the news was about Pratt & Whitney and Hamilton Sundstrand selling China software for the operation of the prototype engine in the WZ-10 attack helicopter. They had no problems making the sale and actually made quite a profit but the US government was very displeased and they were cited as having violated US law relating to such sales to the Chinese military and were forced to pay $75 million. So the US complains about large trade deficits with China but at the same time US companies are forbidden from selling their wares to countries like China which reduce that deficit.

Modern Submarines, ballistic missiles, nuclear bomb, etc... were all created by the Nazis and/or German scientists the US and other world powers at the time took hold of. People have always built upon the knowledge of others and that is how humanity continues to grow. Edison never invented the first bulb just the first commercially viable version of it so to say that the Chinese actually need to copy to come to the same conclusion is ridiculous. They will find their own way and now with an increasing GDP and more money available to spend on R&D they are coming out with some very innovative pieces of tech.



This is the result of China's one child policy. There has been talk in the government to do away with the policy especially since there are way more boys than girls. If they abolish the policy you can be sure that the problem will quickly correct itself. I am not entirely sure why the policy was initiated since it was obvious that with increased economic growth would come higher standards of living and people would live longer unless someone actually believed that the "elderly" would die off quickly (ex. in their 40s) so there would have been a smaller population of young adults left getting an increased share of the resources.

However, what I suspect it might have to do with China is trying to move away from being the worlds producer of cheap toys and electronics and actually branch out into creating world class products as well as increasing R&D to get a bigger share of the worlds intellectual property rights which does not require as many people and in fact is rewarded by having more elderly and experienced researchers/workers.



Ahhh... I knew this would come up at some point.

I cant see how India is a democracy considering when they refuse to give the Kashmiri people the right to decide their fate in a referendum.

However, even if that was not the case India like virtually all other countries are not actual democracies but republics where rules and regulations are setup to prevent the majority from getting their way to “prevent the tyranny of the majority”. However, the problem with all modern republics is that they still utilize a democratic process of electing candidates which have the authority to change the constitution whenever they see fit thus no one is ever guaranteed security or prosperity. It was Winston Churchill who said “the best argument against democracy is a five-minute conversation with the average voter”. How are the illiterate an uneducated masses of India, let alone any nation, supposed to elect knowledgeable, upstanding politicians? People look at the official literacy rate in India being around 75% but forget that to be considered literate you simply need to be able to read and write your name it doesn't mean you can read newspapers or write papers.

Furthermore, China's rise itself proves that democracy is not necessary for economic growth or prosperity.



This is just ridiculous.

If you look at PISA 2009 rankings the top spots are essentially held by countries that speak little to no English (with Shanghai, China taking top spots in every category):

07education_graph-popup.jpg


Furthermore, the PISA results actually prove the old myth that all Asian countries do is memorize and regurgitate knowledge but cant actually apply what they learned to real life situations. However, as you would expect you have those in the west who refuse to accept the reality that things are changing and they will no longer be number one.



And you seriously think this is a bad thing?

The years when governments, particularly those of the third and developing world, had stricter state controlled economies (i.e between 1950 to 1973) the world economy grew by 3% a year. However, the moment countries followed the advice the west gave them and neoliberalism was introduced (usually as a precondition for trade agreements and aid during a financial crisis) from the 1980s onward the world economy has only grown by 1.5% a year. In fact following liberalization of finance and trade we have seen capital inflows surge, you have cases of massive speculation, credit booms and asset bubbles as well as current account deficits which resulted in the financial crises.

Do not necessarily believe the advice the IMF and World Bank give since these are tools of the west used to keep them rich and everyone else poor.



What you are talking about is an outsource of the service sector which means nothing in comparison to China getting the outsource of manufacturing.

Service sector related jobs aren't secure since automated systems can be easily setup to replace them. Furthermore, they do not add to a countries technical capacity like manufacturing jobs (which go to China) would. For example, how much are you as a nation going to learn about building supercomputers by answering calls for Pizza Pizza or offering customer support for a company that retails body oils, office supplies, etc...?

Over the years from the outsourcing of manufacturing jobs also comes an outsourcing of capital equipment and technological know how. China has harnessed what it has learned and is now building upon that knowledge via the manufacture of various value added products particularly within the technological industry.

-----

That is my take on this subject. If anyone has anything to add or corrections they want to make I would be interested to read their point of view.

I can give you a Single line counter- India has an 'unofficial' black economy which is estimated to be as high as 40% of the reported GDP. That thing keeps growing and growing and growing....
 
India is always on track. Our problem is that we are impatient. We want everything right now. Look at the economic condition of other "more than $2 trillion economies." Actually, this year's 5% growth rate has shook our govt and pvt players from slumber. CCI has already cleared worth $27 billion projects in 4 months. GST and DTC are on the cards. FDI in retail and aviation are passed. $1 trillion is going to be invested in infrastructure in the next 4 years. Almost consensus has emerged in land bill and FDI in pension and insurance. Environment rules are diluted. So, lets watch and see. The economic slowdown came as blessings in disguise. No matter whoever comes to power in 2014, India is destined to meet its desired destiny.:police:
 
The day all the Chinese people start speaking in English, the English MUSE will commit suicide on Mt. Helicon by Siloa's brook. :smart:
 
Should the world count itself lucky to have “growth engine” of India's calibre?:azn:

To be named a growth engine,the economy of the country in question needs to be large(not a 2 trillion minnow)、trade-driven(not rural and agrarian)and growing at least 3 times the world‘s average growth rate(not barely scratching the average)。

India makes feeble recovery; Jan-March GDP up 4.8 pct

By Rajesh Kumar Singh

NEW DELHI | Fri May 31, 2013 6:41pm IST

NEW DELHI (Reuters) - India's economy began a feeble recovery in the first quarter of 2013, but weak private consumption, capital investment and slowing public spending offered little hope for a fast rebound in coming quarters.

Asia's third largest economy grew an expected 4.8 percent from a year earlier in the January-March quarter, slightly faster than an upwardly revised 4.7 percent growth in the previous three months, which was the lowest in fifteen quarters.

But the better headline GDP number was largely down to a statistical base effect rather than any substantial improvement in economy.

The data will offer scant relief to Prime Minister Manmohan Singh as his government heads into a busy election period dogged by graft scandals and criticism of its economic management.

Two quarters in a row of sub-5 percent expansion meant the economy recorded decade-low growth of 5 percent in the fiscal year 2012/13 (April-March), in line with an official forecast given in February.

"We don't see any dramatic turnaround soon," said Aninda Mitra, India Economist at Capital Economics in Singapore, who expected economic growth to range between 5-6 percent until next year.

This is disappointing for an economy that recorded 9 percent annual expansion until two years back and was widely expected to be one of the main drivers of the global economic recovery. It also poses a challenge for the octogenarian Singh to generate enough employment opportunities for a young, growing workforce.

In a sign of underlying weakness in the economy, April infrastructure output growth slowed down to 2.3 percent year-on-year from 3.2 percent expansion in March.

Infrastructure output measures items such as coal, oil, steel and electricity and accounts for 37.9 percent of India's industrial production, which grew just 1 percent in 2012/13 and was largely responsible for the overall growth slowdown.

WEAK INVESTMENTS, SLOWING SPENDING:omghaha:

Public spending growth slowed to an annual 0.6 percent during the quarter from 2.2 percent a quarter ago after Finance Minister P. Chidambaram slammed the brakes on public spending to retain India's investment-grade sovereign rating.

His belt-tightening helped New Delhi narrow the fiscal deficit to 4.9 percent of GDP in 2012/13, below a revised official estimate of 5.2 percent and much lower than 5.8 percent a year ago, government data showed on Friday.

But worryingly, growth in capital investment and private spending also slowed down.

Annual capital investment growth dropped to 3.4 percent in the March quarter from 4.5 percent year-on-year a quarter ago, in large part because of regulatory bottlenecks that hit investment in mining, roads, ports and power.

For graphic on India's GDP, click link.reuters.com/rad57s

Private spending grew an annual 3.8 percent during the quarter, slower than 4.2 percent year-on-year growth a quarter ago. Mitra of Capital Economics said private spending was likely to remain subdued so long as consumer confidence stays weak and people worry about rising prices.

"In this situation, the kick-up has to come from somewhere else," Mitra said. "We see a marginal kick-up to growth only from the lagged effect of monetary easing."

MONETARY EASING TO CONTINUE?:laughcry:

The Reserve Bank of India's (RBI) has cut its policy rate by a total of 75 basis points since January to spur economic recovery.

But the GDP data dampened market hopes for another interest rate cut at the central bank's policy review on June 17, sending the federal bond yield to a two-week-high of 7.49 percent. The 10-year bond ended the day flat at 7.44 percent.

Indian shares fell more than 2 percent and the Indian rupee hit its lowest level in 11 months as hopes for another rate cut faded next month.

The RBI has warned that upside risks to inflation and a high current account deficit have limited room for more monetary easing even though inflation is on a downward trajectory and economic growth remains weak.

"The central bank has been hawkish on inflation, and only if there is a sharper-than-expected decline in inflation can we see a little bit more aggression on part of the Reserve Bank of India," said D.K. Joshi, chief economist at CRISIL.

Singh's minority, coalition government has been weakened by a series of scandals linked to allocation of resources, including coal and telecoms. Opposition parties' attacks on the government have paralysed parliament, delaying legislation aimed at attracting funds to lift capital investment growth from an eight-year low. (Editing by Frank Jack Daniel and Ron Popeski)

India makes feeble recovery; Jan-March GDP up 4.8 pct | Reuters
 
India's GDP is actually going down or at a standstill each year buddy

What will you say for China....China's GDP also going down or at a standstill each year.....this called fluctuation...one can not go up all the time....but average / projected line is always up for India...

Good for Pakistan....they are sitting at bottom.... can not go further down :D
 
The day all the Chinese people start speaking in English, the English MUSE will commit suicide on Mt. Helicon by Siloa's brook. :smart:

You are obviously very proud of your colonial past。:laughcry:

What will you say for China....China's GDP also going down or at a standstill each year.....this called fluctuation...one can not go up all the time....but average / projected line is always up for India...

Good for Pakistan....they are sitting at bottom.... can not go further down :D

China's dollar GDP has more than doubled since 2008 while India’s has stayed put。:omghaha:
 
At this rate, the size of the Indian economy,when calculated in US dollars, will be 1 trillion dollar in 3 years,about 1/15th China's。:omghaha:

India’s rupee hits record low against the dollar

MUMBAI— India’s rupee hit a record low of 57.54 against the dollar on Monday, on growing demand for dollars among oil importers, while the greenback was also boosted by upbeat US jobs data.

The partially convertible rupee hit its previous low of 57.32 against the dollar on June 28 last year. On Monday it fell to a new record low before trading up slightly at 57.49 later in the morning.

India’s rupee hits record low against the dollar | Inquirer Business
 
India is recovering but what's about China??? Going down and down. This year you will grow slowest in 23 years.:help:

High FII inflow to aid rupee; may hit 53 by Dec: StanChart
Rupee may have hit a fresh over one-month low at 54.95 against the dollar, but according to Standard Chartered Bank higher FII inflows will postively impact rupee going forward.
 
in 2050, india's expected to have a larger economy than china and be the highest economy

this is mainly due to india being predicted to have a larger population than china, just like how china is the world's 2nd highest economy mainly due to it's enormous population

Year 2050: World's top 10 economies - Rediff.com Business

Your statement concerning India is right but the part about China is Totally wrong。

That China is predicted to surpass the US and become the world's largest economy in around 2018 is based on China's past record of consistently growing 9% plus average for the past 30 years。

India has no such record to contend with。

India is recovering but what's about China??? Going down and down. This year you will grow slowest in 23 years.:help:

High FII inflow to aid rupee; may hit 53 by Dec: StanChart
Rupee may have hit a fresh over one-month low at 54.95 against the dollar, but according to Standard Chartered Bank higher FII inflows will postively impact rupee going forward.

Recovering?

Where it says so?In your figment of imagination?

India is going down like there is no tomorrow。
 
In 2008, India's economy was $1.2 trillion , not $2 trillion.:azn:

Please check World Bank website.
 
India's growth rate in the past two quarters was 4.5% and 4.8%. With a negative outlook by all the major ratings agencies.

I don't know what world some people are living in. Low growth with a low base economy, that is a double whammy.

Even if America had only 1% growth of a 15 trillion GDP, they would be adding a hell of a lot more to their economy every year than India would, considering the difference in base economic size.
 
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