Thursday, December 10, 2009


Making an in depth study and analysis of India vs. China economy seems to be a very hard task. Both India and China rank among the front runners of global economy and are among the world’s most diverse nations. Both the countries were among the most ancient civilizations and their economies are influenced by a number of social, political, economic and other factors. However, if we try to properly understand the various economic and market trends and features of the countries, we can make a comparison between Indian and Chinese economy.

Going by the basic facts, the economy of China is more developed than that of India. While India is the 12th largest economy in terms of the exchange rates, China occupies the third position. Compared to the estimated $1.209 trillion GDP of India, China has an average GDP of around $7.8 trillion. In case of per capital GDP, India lags far behind China with just $1016 compared to $6,100 of the latter. To make a basic comparison of India and China Economy, we need to have an idea of the economic facts of the countries.

GDP (India: around $1.209 trillion - China: around $7.8 trillion)
GDP growth (India: 6.7% - China: 9.1%)
Per capital GDP (India: $1016 - China: $6,100)
Inflation (India: 7.8 % - China: -1.2 %)
Labor Force (India: 523.5 million - China: 807.7 million)
Unemployment (India: 6.8 % - China: 4.3 %)

If we make the analysis of the India vs. China economy, we can see that there are a number of factors that has made China a better economy than India. First things first, India was under the colonial rule of the British for around 190 years. This drained the country’s resources to a great extent and led to huge economic loss. On the other hand, there was no such instance of colonization in China. As such, from the very beginning, the country enjoyed a planned economic model which made it stronger.


Agriculture is another factor of economic comparison of India and China. It forms a major economic sector in both the countries. However, the agricultural sector of China is more developed than that of India. Unlike India, where farmers still use the traditional and old methods of cultivation, the agricultural techniques used in China are very much developed. This leads to better quality and high yield of crops which can be exported.

Liberalization of the market

In spite of being a Socialist country, China started towards the liberalization of its market economy much before India. This strengthened the economy to a great extent. On the other hand, India was very slow in embracing globalization and open market economies. While India’s liberalization policies started in the 1990s, China welcomed foreign direct investment and private investment in the mid 1980s. This made a significant change in its economy and the GDP increased considerably.

Difference in infrastructure and other aspects of economic growth

Compared to India, China has a much well developed infrastructure. Some of the important factors that have created a stark difference between the economies of the two countries are manpower and labor development, water management, health care facilities and services, communication, civic amenities and so on. All these aspects are well developed in China which has put a positive impact in its economy to make it one of the best in the world. Although India has become much developed than before, it is still plagued by problems such as poverty, unemployment, lack of civic amenities and so on. In fact unlike India, China is still investing in huge amounts towards manpower development and strengthening of infrastructure.

So the British (the John Bull) colonial rule in India for around 190 years was the main reason India went broke and lagged behind China in development. Otherwise, India today could have been the No.1 economy in the world.

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