China will eclipse India after 50 years?

China and India, with their respective nicknames “Dragon” and “Elephant” are successful in drawing global attention. The fertile ground of liberalization and globalization have given both “shape” and “hope” for these two relatively late but better performers. Nevertheless, the trillion dollar question is:Which country will come out as leader in around 2065, China or India?

Future orientation and innovation

Solving past and present problems is not sufficient to become a leading nation. Predicting the future and moving strategically into international systems (WTO, UNO, G20, BRICS) and spending more money for research and development can be a way. Innovation to win competition is one modus operandi of market. New ideas, findings, exploration and readiness to learn from others are also important. In this regard, definitely China is and will be ahead of India.

Productive human resources

Productivity of human resources is an important input for national total production. And product of work labor and human capital will be greater if size of working population as well as the level of education/training is in better condition. In this regard, China will be in better position than India for at least next 50 years.

Total factor productivity

Total Factor Productivity (TFP) of a nation represents institutional arrangement for making rule of game and its execution, rule of law and order situation, infrastructure, endowment of natural resources and technology/idea know-how. The value of TFP for China is quite higher than India.

Capital resources

There are different ways of creating capital. Among them, one of the trusted options is FDI flow through Multinational Corporations (MNCs). It is a striking fact to note that China is the best for FDI inflow, and at the same time, the FDI outflow from China contributes a lot to its national economy. India’s position in this regard has remained incomparable until now and will probably remain for long time.

Market integration and network

China is very quick in market penetration and network establishment. Chinese entrepreneurs have covered most part of the world with tremendous production and market diversification. Indians seem weaker in this respect.

Politics-economy matrix

Until now, India’s economy is not fully capitalistic. On the other hand, the political regime in India is democratic and its working efficiency is unsatisfactory. Centralized but functional system of Chinese politics is prolific for economic transformation.

Saving and investment

China has spectacular saving rate of 47 percent of GDP out of which 43 percent is invested annually. In addition, the capital inflow by MNCs plus exports contributes to total savings. This structure is apparently weaker in India’s case.

In conclusion, China, with current economic race and cautious democratization, will be performing better than India by around 2065 AD. Meanwhile, situation can get better if these two giants work hand in hand to curb the problem of economic inequality, environmental vulnerabilities, social exclusions and governance problems, thus making a big chunk of population safe and happy.

(The writer who completed Masters in International Trade from Ajou University South Korea is working as an Under Secretary for the Government of Nepal.)