India’s Economy Vs China’s Economy
College of Business Administration
Macroeconomics

Table of content

History of the Indian Economy 3 India GDP Growth Rate 3
History of the Chinese Economy 4 China GDP Growth Rate 4
Economy of India 5 GDP 5 Unemployment 6 Inflation 7
Economy of China 8 GDP 8 Unemployment 9 Inflation 10
India's Export and Import 11 China's Export and Import 12 China and India Export and Import 13
Analysis and Findings 14
Conclusion 15
References 16

India’s Economy Vs China’s Economy

History of the Indian Economy:
In the past India was centrally oriented where it had developed to be an open-oriented market economy in the 1990s. The reason behind this growth, is that India changed their policies and regulation in industry, owned enterprises, foreign trade, and investment; which this lead to an open market economy and accelerated its growth. India has a diversified economy that serves a multitude of services and products; agriculture, farming, handicrafts, and industries. India has enforced their education to educate the population and make them speak the international language “English” to become one the major exporters of workers. During the financial crises India didn’t get affected like other countries for its large number of population, where in 2010 it had a robust recovery and had growth rate that exceeded 8%. The Indian economy has developed and grew a lot over the last 10 years; it has changed its economic activities to mire open market. It has recorded an increase in the foreign direct investments, increase in the labor force, and rate of investments in the country has increase noticeably.
India GDP Growth Rate:

Data used to plot the graph: Year | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | Percentage | 5.50% | 6% | 4.30% | 4.30% | 8.30% | 6.20% | 8.40% | 9.20% | 9.00% | 7.40% | http://www.indexmundi.com/g/g.aspx?c=in&v=66 History of the Chinese Economy:
China’s economic revolution started back in 1970s, where it has transformed its markets from centrally oriented to a globally market oriented, as in 2010 China has declared to be the world’s leading exporter. Chinese products are everywhere in the world, as you move you see the tags written made in china. China’s economic growth started when the government encouraged the rural and private enterprises. It started to expand their production and exports to other countries; however the Chinese economy has been independent a lot on the exports rather than the domestic consumption. This means that china is facing an accumulation of resources, not increasing efficiency.
China GDP Growth Rate:

Data used to plot the graph: Year | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | Percentage | 7.00% | 8% | 8.00% | 8.00% | 9.10% | 9.10% | 10.20% | 10.70% | 11.90% | 9.00% | http://www.indexmundi.com/g/g.aspx?v=66&c=ch&l=en Economy of India:
India’s economy is recognizably growing. Starting from the 1990s, India’s economy has been developing yet keeping some of the previous conducts, such as “Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment” (South Asia :: India ). India was able to strongly recover from the “global financial crisis”. This was due to the high level of local demand. Therefore, growth increases by around 8% yearly (South Asia :: India ).
GDP:
India’s Gross Domestic Product is equal to $1,296 billion or 2.09% of the whole world’s economy. India’s economy has been developing since the 1960s pulling up the GDP along with it. The growth rate is said to be around 7% per decade since 1997 which also decreased poverty by 10% (India Gross Domestic Product (GDP)). | 2007 | 2008 | 2009 | 2010 | 2011 | Quarter 1 | | 9.7% | 6.1% | 6.5% | 8.2% | Quarter 2 | 9.6% | 8.5% | 5.8% | 8.6% | | Quarter 3 | 9.3% | 7.8% | 6% | 8.9% | | Quarter 4 | 9.4% | 7.5% | 8.6% | 8.9% | |
Source: http://www.tradingeconomics.com/india/gdp-growth

Unemployment:
The unemployment rate in India is equal to 9.4% (Economy of India). This 9.4% percent of unemployment is portrayed by around 40 million (Meganathan, 2010).

Data from: (India Unemployment rate, 2010)
However, in India many people are not even interested in work. It is found that only 359 out of every 1000 people are interested to work or already working.

Data from: (India Unemployment rate, 2010)

Inflation:
India’s inflation rate has been facing some changes over the few past decades. In March 2011, India’s inflation was said to be 8.82% which is higher than the inflation rate in India from 1969 till 2010 (7.99%) (India Inflation Rate). India has faced two unusual inflation rates in the past: 34.68% in September 1974 and -11.31 in May 1976 (India Inflation Rate).

Data from: (India Inflation rate (consumer prices), 2010)

Economy of China:
For the past 30 year china has gone through a tremendous growth in the market-oriented system and in 2010 china has become the world's leading exporter and it also ranked as the world's largest economy subsequent to the United States of America and it is expected to grow more over the coming years (Anonymous, 2011).
GDP:
The Gross Domestic Product (GDP) of China has stretched out to 9.7% in the first quarter of 2011 said the Bureau of Statistics (TradingEconomics.com, 2011). International Monetary Fund (IMF) stated that the Chinese economy is expected to grow up to 9.6% this year. It was also stated that China will face a huge inflation risk (Guanqun, 2011). The consumer's price for the month March was 5.4% when it was predicted to be 5.2%, the producer's price of the month March was 7.3% when it was expected to be 7.2%, the industrial production price was 14.8% while it was expected to be 14.0%, and finally the retail's price was 17.4% while it was predicted to be 16.5% (TradingEconomics.com, China GDP Growth Rate, 2011). All those percentages show that China's GDP is growing quickly and more than expected.

Data used to plot the graph; | 2007 | 2008 | 2009 | 2010 | 2011 | Quarter 1 | | 11.2% | 6.8% | 10.7% | 9.8% | Quarter 2 | 13% | 10.6% | 6.2% | 11.9% | 9.7% | Quarter 3 | 12.6% | 10.1% | 7.9% | 10.3% | | Quarter 4 | 11.5% | 9.0% | 9.1% | 9.6% | | http://www.tradingeconomics.com/china/gdp-growth Unemployment:
The Urban unemployment rate in China is 4.1% stating from the last quarter of 2010 until the beginning of 2011. China's unemployment average rate from 2002 until 2010 has been 4.15% (Anonymous, China Unemployment Rate, 2010). China's problem of unemployment is from the fresh-graduate, un-experienced people. But over the entire problem is happening in the urban areas of china and this is all because of inflation.

Data used to plot the graph: | 2007 | 2008 | 2009 | 2010 | 2011 | Quarter 1 | | 4% | 4.2% | 4.3% | 4.1% | Quarter 2 | 4.1% | 4% | 4.3% | 4.2% | | Quarter 3 | 4.1% | 4% | 4.3% | 4.2% | | Quarter 4 | 4% | 4% | 4.3% | 4.1% | | http://www.tradingeconomics.com/china/unemployment-rate Inflation:
The inflation rate of China was 5.4% in March 2011. The average inflation rate was 4.25% from 1994 until 2010 (TradingEconomics.com, 2011). The prices of food, electricity and food have risen. China's consumer price rose 4.9% in January, the food price rose to 10.3% and the housing 6.8% (Censky, 2011).

India’s Export and Import:
Exports make money for a country, but imports stand for expenses. For instance, India is a country that has enormous number of capable Workforce in some areas. This Workforce sells to other countries its services so that will help India economy. In contrast, India needs services that take it from other countries. So to fill the lacking of goods and services India pay out it earn through exports to import (differencebetween, Difference Between Import and Export).
India increased it production of precious stones and metals. Merchandise that India exports consist of: Petroleum products, Machinery, Iron and steel, Chemicals, Vehicles and Apparel. UAE, US, China, Singapore are India’s major export partners (India's Trade, Exports and Imports).
Indian imports are controlled by crude oil and machinery. Other imported supplies such as Precious stones, Iron and steel, and Metalliferous Ores & Products and other. China, Saudi Arabia, US, AE and Iran are India’s import partners (India's Trade, Exports and Imports). India's Trade with the World, 2001-10 ($ billions) | Source: http://commerce.nic.in/eidb/iecnttopnq.asp | | | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | Exports | 44.56028 | 43.827 | 52.71942 | 63.84254 | 83.53593 | 103.09052 | 126.41404 | 163.13217 | 185.29535 | 178.75142 | % change* | | -1.6 | 20.3 | 21.1 | 30.8 | 23.4 | 22.6 | 29.0 | 13.6 | -3.5 | Imports | 50.53644 | 51.413 | 61.41213 | 78.14909 | 107.13453 | 129.69177 | 185.73523 | 251.654 | 303.69626 | 288.37287 | % change* | | 1.7 | 19.4 | 27.3 | 37.1 | 21.1 | 43.2 | 35.5 | 20.7 | -5.0 | Total | 95.09672 | 95.24 | 114.1316 | 141.9916 | 190.67046 | 232.78229 | 312.14927 | 414.78617 | 488.99161 | 467.12429 | % change* | | 0.2 | 19.8 | 24.4 | 34.3 | 22.1 | 34.1 | 32.9 | 17.9 | -4.5 | Balance | -5.97616 | -7.5866 | -8.69271 | -14.3066 | -23.5986 | -26.60125 | -59.32119 | -88.52183 | -118.4009 | -109.6215 |

Source: http://commerce.nic.in/eidb/iecnttopnq.asp
China’s Export and Import:
Around twenty years ago, China became the largest and main trading country in Asia and the 32nd largest exporter in the world. Nowadays, China is the 3rd largest exporter in the world with exports. China can offer a wide range of products in a very amazing price. The list of the Chain’s export products never ends such as consumer goods, industrial equipment, food, medical equipment, timber, chemicals, garments, textiles, electronics, automobiles, ammunitions and firearms (Ryan) (Zwartz).
China’s population is increasing annually which will increase the workforce and make them more competitive with a sensible price of raw materials and inexpensive labour which cause the improvement in Chinas exports. China’s aim is to export higher quality products at lower prices (Import Export China Products).
China also exports the following products: “mercury, magnesium, manganese, tungsten, tin, antimony, salt and barite” (Money_Morning, 2011). Globally, for producing antimony, zinc, tin and tungsten they had ranked to be fourth in producing them, and they have ranked to be the third in salt production and sixth in gold, it’s a head in a minimum manufacture. China wants by 2015 to reduce it export by making import twice over. It is expected and estimated that china will raise their imports by 20% in 2011, meanwhile increasing their exports by 16%, which will probably reduce the trade surplus by 13.2%. (Money_Morning, 2011).

China's Trade with the World, 2001-10 ($ billions) | Source: http://www.uschina.org/statistics/tradetable.html | | | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | Exports | 266.1 | 325.6 | 438.2 | 593.3 | 762 | 968.9 | 1,217.80 | 1,430.70 | 1,201.60 | 1,577.90 | % change* | 6.8 | 22.4 | 34.6 | 35.4 | 28.4 | 27.2 | 25.7 | 17.5 | -16 | 31.3 | Imports | 243.6 | 295.2 | 412.8 | 561.2 | 660 | 791.5 | 956 | 1,132.60 | 1,005.90 | 1,394.80 | % change* | 8.2 | 21.2 | 39.8 | 35.9 | 17.6 | 19.9 | 20.8 | 18.5 | -11.2 | 38.7 | Total | 509.7 | 620.8 | 851 | 1,154.60 | 1,421.90 | 1,760.40 | 2,173.70 | 2,563.30 | 2,207.50 | 2,972.80 | % change* | 7.5 | 21.8 | 37.1 | 35.7 | 23.2 | 23.8 | 23.5 | 17.9 | -13.9 | 34.7 | Balance | 22.6 | 30.4 | 25.5 | 32.1 | 102 | 177.5 | 261.8 | 298.1 | 195.7 | 183.1 |

Source: http://www.uschina.org/statistics/tradetable.html
China’s and India’s Export and Import:
China and India have very different incomes. Both of them are still poor countries. If we want to compare between the two countries in terms of manufacturing China’s come first than India. China comes as the world’s third largest nation in conditions of manufacturing after the U.S. and Japan. China is absolutely now the bigger economy, it has a bigger export and import but that doesn’t mean that all the reward is going to China. India has a tax law that have advantageous in economic than China. India does not differentiate between manufacturing and services. In both countries export and import policy and system are pretty different. In Chain import process is faster and easier than India, for chain’s section dedicated works the whole year and the Indian stock price continue increasing (Runckel).

Analysis of the Findings and Decision on which Economy is More Sustainable:

According to our analysis and data that we have collected, we have seen how China is growing at faster pace and how its economy it’s blooming. However, does this means that China will remain in this performance and become the world’s largest economy! After further analysis and reading articles we have concluded that India’s economy will surpass China’s economy is the future, and this is due to different reasons that we have concluded:
First of all, the population: India’s population is growing and it’s predicted to surpass the Chinese population in the next decade. In India they have youngest population than china, which means that India has a largest rate of fresh minded entering into different sectors that will help to boost the economy. While, China are trying to limit the population and have an unequal sex ratios will lead to problems in the future. It is predicted that in 2015 the Chinese population will reach its maximum, and then it will start to decrease gradually.
Secondly, the economy: the reason behind Chinese economic growth is the resource accumulation from exports; they are focusing on marketing their goods and services to the global market rather than increasing the inside sector efficiency. While, India has been from the beginning focusing on the internal growth of the economy by increasing and developing the internal sector by specializing in different fields and increasing their qualities such as: the IT sector in India cannot be beaten by any other country. Also, the outsourcing to India has increased at high pace, where almost every major company started to invest in India and they rely on their massive minded engineers.
Thirdly, the industry: China is known that it’s a leading producer in the economic world; they are increasing their production sector to stay on the lead. Meanwhile, India is increasing their focus on the IT sector, design and a specific industry to lead the roles in the upcoming future. When you look at the products coming from China are those light products such as: toys, t-shirts, bags, and etc. while, India are producing the heavy products such as: the steel that is used to build the skyscrapers and ships, cars, and gold. So, the comparison is easy and obvious on which will be more sustainable and surpass the other. China will face problems by producing the heavy industry; they are achieving returns from selling common goods, but what about the future and long run! China failed has failed in attempting to produce automotive products, while India has taken over large companies in U.S and making deals with westerns companies. This is a gauge that shows that India will expand and seek the worldwide.
Fourthly, education system: India is the 2nd largest country that its population that speaks English, India has invested a lot in their education to make everybody able to talk and communicate in English. Yet, both India and China produce approximately the same number of fresh graduates of engineers with high degrees. Comparing it to each other China is still unable to speak English at the rate that India does. The world international language is English and to be globally reached you have first to learn the language as India did.
Fifthly, growth investments: China investments are mostly from foreign investments, and open its markets on 1970s before India in the (1990s). The Chinese stock market gone down and they are still recovering from it, and 70% of Chinese banks had declared bankruptcy. While china was depending in foreign investments, India was developing and making their economy more innovative and sustainable, it didn’t rely on exporting their product they rely on quality and efficiency. Good quality and sustainable growth should come from the inside to outside not like the performance China is adapting.
Finally, India’s companies and manufacturers didn’t get affected as China during the financial crises; it was due to the right tactics and procedures that have been taken for future implications. India showed the opposite where it was taking over European and American companies, and escalating and getting their global reach bigger.

Conclusion:
In conclusion, India is performing in the right way to maintain a rigid and strong economy. India’s growth rate is 1% to 2% lesser than china, this means that India is able and capable to surpass china in the future. India’s is growing and expanding from their own proficiency leading to high be more effective and efficient, not growing on accumulation of resources. India has a valuable business environment that cultivates entrepreneurship and a healthy competition with less forceful political intervention than China.

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