Forecasters and futurists are often divided between those who see China as the next global leader and those who argue it will be India. Teeshna Bahadur, a legal expert with Lenovo International, India and Sheila Enriquez ’08, a research associate with Global ID LLC, offer insights on which is most poised for dominance.
China appears to have many competitive advantages, but India will prevail by leveraging long-term opportunities. While China is definitely rising, the “One-Child” policy has led to an increasingly aging population: Growth stands at 0.87 percent compared to India’s at 1.51 percent — the largest growing population in the world and a major competitive threat for China.
China rose to power in part on its manufacturing base, fueled mostly by foreign investors, not Chinese companies. Foreign direct investment (FDI) has been a substitute for domestic entrepreneurship. In contrast, India is now well equipped, efficient, and emerging in the manufacturing sector. Indian democracy, efficient capital markets and a strong legal infrastructure have led to strong fundamentals that support entrepreneurs while China’s authoritarian communism exists only to support State interests. A recent study by Cap Gemini predicts India will overtake China in the manufacturing sector in the next three to five years. Indian companies such as Ispat, Tata, Sundaram Fasteners, and Dr. Reddy’s Labs are all entrepreneur-led, and many more are creating their niche in the world market. In a survey of leading Asian companies by Far Eastern Economic Review (FEER) on overall leadership performance, India registered a higher average score than any other country in the region.
As has been predicted by international pundits, within 50 years, India’s growth will beat China’s. This will be primarily due to a robust democratic system, a diverse, educated and technologically-savvy working class, well-laid financial and banking systems, a progressive and institutionalized legal structure and India’s rise militarily. Adding to that is the rise of IT and outsourcing services, growing tourism, and an ever-increasing English-speaking population ensuring India is emerging and is being propelled forward with maturity and depth to surpass Rising China as a world leader in the 21st century.
The Republic of China is often shamelessly referred to as the “Sleeping Dragon.” Nonetheless, it is not China which has slept for the past decade, but the people in the developing countries who failed to recognize the progress of this ambitious nation. Since the 1989 student protests at Tiananmen Square, the Chinese have fought diligently to regain the economic and technological advantages which once distinguished them as the ruling empire during the Imperial Era from 214 B.C. to 1911 A.D.
In 2007 — with a population of more than 1,303,701,000 and a per capita GDP of U.S. $5,300 — China claimed the second largest economy in the world. The market-oriented economy, which the Chinese adapted in the early 1970s after phasing out collectivized agriculture, has allowed for a large growing private sector and turned China into a major global player. At this very moment, more than 172 countries and regions of the world depend on Chinese direct foreign investment. Furthermore, China currently accounts for eight percent of the global manufacturing output and ranks third in industrial output.
Challenges, however, have arisen both in the Chinese and Indian economies. Due to the large amounts of direct investments and globalization, both markets have taken a downward plunge since the economic lapse in the United States. Higher oil and commodity prices, among other factors, have played a part as they detracted money from the eastern countries and attracted investors to Brazil where such resources are lower cost.
Luckily, China just closed the last economic quarter with successful Olympic games, and anyone who has travelled there can attest that the determination of the Chinese will surely drive them towards success.