“A decade ago, India and China had roughly the same GDP per capita. Now India’s is about $460 and China’s $840. If India continues to grow at 5.4%–a rate it has never been able to sustain over any length of time–it would take 12 years for it to reach China’s current income level and decades more to reach that of Thailand or Korea.”, writes
Anthony Paul in Fortune.
Paul mentioned South Korea. It may be hard to believe today but “in 1960, India and South Korea were both very poor. India, at least until the 1990s, was not much involved in the world economy. South Korea staked its future on engagement in the economy. Today, its per capita income is about 20 times higher than India’s.”, writes Daniel Yergin in the International Herald Tribune.
There is little doubt that China has left India behind in the most important race that matters – the economic one. Writes John Thornhill in the Financial Times (April 12, 2002):
China and India, the two dominant powers in mainland Asia, seemingly have a lot in common. Both countries boast ancient civilisations, spicy cuisines, nuclear missiles, diverse populations of over 1bn people, and apparently limitless economic potential. They also share many problems: mass poverty, growing urban-rural divides, oppressive bureaucracies, and widespread corruption.
Yet to outside investors the differences appear starker than the similarities. While China’s relentless economic expansion continues to mesmerise foreign investors, India remains something of an afterthought in investment terms. While the sleeping giant that was China has woken with a vengeance, India still appears to be quietly dozing in the corner.
That impression is certainly reflected in the hard statistics. In 1999, China sucked in more than $ 40.3bn in foreign direct investment compared with $ 2.1bn in India. Foreign portfolio investors too have been busily buying into giant Chinese corporations while largely ignoring India’s smaller companies.
At $ 54.7bn, the market capitalisation of the China Mobile, the country’s most valuable company, equals 45 per cent of the total value of the Indian stock market. “China is a must-have in any global equity portfolio,” says one fund manager. “India is still not in that category.”
The latest Business Today (April 28, 2002) has a cover story on China. Begins the story:
In today’s global economy, countries are either on the bus or off it. China is firmly on it. India is sometimes on, sometimes off. China has constructed some 50,000 kilometres of expressways in the past decade, 25,000 kilometres since 1998, or a little over 17 kilometres a day. India still can’t get over the 13,151 kilometre long Golden Quadrilateral that will be in place by 2007.The Shanghai skyline, by some estimates, has seen the emergence of 20,000 high rises over the past 10 years. India is still raving over Delhi’s satellite township Gurgaon and Mumbai’s Bandra Kurla complex which together, boast less than 100 high rises.China has 160 million phones, India has a mere 6 million.
A conservative estimate puts China’s total inbound traffic at 60 million annually, whereas India has been able to attract a mere 2.5 million tourists annually.
China has set a goal to become the number one destination in Asia with 130 million foreign visitors by 2020. According to comparative data of World Tourism Organisation, China’s total inbound traffic grew to 27 million in 1999 from 10.5 million in 1990, whereas India’s total inbound traffic could only grow from 1.7 million in 1990 to 2.5 million in 1999.
This is mainly because China has adopted a policy of focusing growth in the core regions including Beijing, Xian, Guangdong and Shanghai. Now all provinces are in competition to attract tourists, said Mr Bhoothalingam, Manas Advisory chief executive. As a result, the country has been able to offer over 6,000 star-rated hotels, 126 airports, and 1,286 international travel services.
So, even as China powers ahead, India ponders and flounders. The areas that India is ahead of China is in software and IT services, which are now seen as India’s hope for the future.