China Vs India: Where Does India Beat China and Why When the global consultancy major, Goldman

Sachs, coined the phrase BRIC in 2003 and predicted its pre-eminence, it seemed premature. In the last two years however, the term which can be expanded to mean Brazil, Russia, India and China, has been increasingly used by columnists, and with a great deal of respect. The Goldman Sachs report posited the theory of a future economic bloc comprising the four and dominating the world economy by 2050. In India however, the tendency on the part of the media, politicians and the general public has been to compare the country with China.It is not difficult to see why. Of the four, China is India's immediate and most powerful neighbour. A brief war between the two in 1962, ended in the humiliating defeat of the latter. India is home to the Tibetan spiritual leader Dalai Lama and also to thousands of political refugees from Tibet. The two nuclear armed nations also have long standing border problems. China is also the only challenge to Indian economic hegemony in the region. With a far more developed infrastructure and with the resources to make it the largest manufacturing base in the world, China seems to have the edge. The BRIC concept states that while Russia and Brazil would provide the raw material, China and India with their low costs and other numerous advantages would produce goods and services.This concept seems to have great merit; Russia is now the world's largest producer of oil and natural gas, while Brazil leads in such industrial essentials as iron ore and ethanol. But while China has the edge in manufacturing goods, India clearly leads in the services space. What stands in India's favour is its huge English speaking work force, second only to the US. Add to that lower costs and India clearly has the advantage in the services sector.The key to India's advantage in the sector is not just low labour costs, but also its highly skilled human resources; else the country would be losing out to lower cost competitors like the Philippines. That the country possesses a work force with the necessary skills in programming, engineering, biotechnology, research, mathematics or the English language can be attributed to its educational system a system, which has allowed India to produce more scientists and engineers than even China.This is a fruit of its past; a blessing derived from the Nehruvian era, which resulted in the development of institutes like the IITs and an educational system that placed very high stress on mathematics and the sciences. For its English speaking populace, India can thank its far sighted, even if occasionally chauvinistic, ex-colonial masters who introduced English as a medium of instruction and governance.India's lower GDP and growth rate vis--vis China may be attributed to the fact that liberalisation or economic reforms started a full decade later than in China. FDI was also far less forthcoming, though India is now second only to China in that regard.However, capital has been more efficiently used in India. Both private and public sector firms raise capital via the stock markets or debt and are pressurised to ensure higher returns than in China where FDI is abundant and savings rates are high. A capital market run by free market forces as opposed to excessive and arbitrary state control is another Indian attribute.With India's software industry booming, Bangalore and Hyderabad are the new Silicon Valleys. The outsourcing industry has embraced everybody from engineers and doctors to lawyers, architects and accountants.India also has a much more vibrant private sector than China with more world class home grown companies from the private sector. Corporate Governance is another Indian forte, with Indian entrepreneurs and managers being among the most highly respected in the world. One would be hard pressed to find entrepreneurs like Ratan Tata, Dhirubhai Ambani, Narayana Murthy or KP Singh in China.Because of its democracy, India possesses a legal system far superior to China. In India, there is rule of law, even if the legal system is overstretched, occasionally corrupt and inefficient. In China, rule of law is arbitrary and subject to the whims of the party.Herein lies the contradiction: a true market economy can be sustained only in an open society. While China is willing to let go of its stranglehold on the people, albeit very slowly, one never knows the challenges it will face in a country which is already rife with internal tensions.While China may lead in all important indicators like GDP, GDP growth rate, per capita income, birth control and literacy, it is in India that an individual has a free will and is rewarded for taking the initiative.If it is in any one area that India clearly beats China, it is this. It is a democracy and that is what matters in the end. Economic growth, foreign investment, a primary regional role et al are secondary. Six reasons, why will India beat China Ever wondered who will win the economic competition between China and India? Here are the six short answers to your question the reason why India will become the next Asian Tiger while the Chinese dragon be humiliated. Population-India is experiencing a explosive population growth which is predicted to overtake China as the Worlds largest population within the next decade. Thus India has the human resources needed to propel its growth. Currently India has the worlds youngest population almost 1 out of every 10 people in India is below the age of 25. Thus the country has a ton of fresh minds entering the various industry, business, and education sectors. China however is facing a population crisis. The One-Child policy has left many parents to abandon their female children or not desire a female child. Thus more males are born to Chinese families to help with the family income. So China is facing an unequal sex ratio (males: females) in which there are less females for every male in the

population. By 2015, Chinas population will peak at 1 billion and then decrease steadily while Chinese government struggles with providing care to its aging millions. Economy-Chinas current economic growth is due to resource accumulation from trades while Indias growth is increasingly based on a more efficient economic sector. In the long run, a more efficient economy will always overtake and surpass a large cumbersome inefficient economy. This is seen today as China buys debts from foreign powers while trying to market their goods and resources to a global market while India is focusing on specializing their economy and providing better quality services such as the IT sector. Thus unlike China, outsourcing to India has grown rapidly and by 2010, it is expected to be 56 billion dollars a year. Currently every major company has begun to invest heavily in India and has started to rely on Indian engineers for their next-generation products. Google lead scientist, Krishna Bharat is working on the new core search engine technology in Indian tech capital of Bangalore while companies like GM, Boeing, Motorola, Cisco, HP and many others have begun to make their R&D facilities and Asian headquarters in India. Bangalore, in many ways, has become to Silicon Valley in 1999, with much development and growth headed its way. However, China still manages to hold the 9.5% growth lead thanks to its mass production capabilities which has begun to see problems due to their bad quality as been by the lead in Kingfisher toys or the poisons in Chinese imported fish.Industry-China is a leading producer of marketable good and a major mass producer of such goods. Thus to maintain their lead, China is working on industrial plants geared towards their production sector. Meanwhile, India is a rising power in the software, design, services and precision industry. There is no other IT sector in the world that can compare to or even hold its own against India. So what is the key difference maker between India and China? Well China is what we call a light industry producer while India is the heavy Industry producer. While China makes the toys and the T-shirts that we see as common goods on the market, India is making industrial grade steel used in making skyscrapers, tanks and ships while its automotive industry is experiencing unprecedented growth. Thus in the short run, China will experience a growth thats mainly due to its ability to sell common goods, it is going to have trouble with heavy industry. A good example of this would be the Chinese attempt to kick start their automotive industry which continues to be a failure and fails to reach a global audience. Meanwhile Indian companies such as TATA is making headlines by making more cheaper and efficient cars and making deals with western companies like GM and many others. More recent was the takeover of Jaguar and Land Rover by Indian TATA motors an indicator of Indias heavy growth industry seeking to expand its influence worldwide. Education System-Every year both India and China produce over 500 thousand engineers who graduate with high degrees compared to the 60 thousand who graduate in the US. Out of the 500 thousand, a better part of them are Indian graduates. India has the 2nd largest English speaking population out of the English nations and 2nd largest nation with the most English speakers per GDP. Indias education system has proven to be far more advanced than its Chinese counterpart. Indian Institutes of Technology (IIT) is a world prestigious institution that even rivals western universities at the quality of education it provides churning out the engineers and IT professionals of tomorrow. Currently, India is the 2nd largest producer of Engineers, scientist and doctors. Other educational intuitions like the Indian Institute of Science (IIsc) and the Business school have all set standards as the world benchmark. Meanwhile in China, low English speaking populations with high illiteracy rates have been a turnoff for many companies and opportunity seekers. Indias education have steadily been increasing while corruption, and lack of uncontrolled and wasteful spending has not been beneficial to the education sector. Environmental Consequences-As with any developing country, India and China both are heavy producers of pollution which continues to contribute to the global warning. Massive and forcible seizures of land, the destruction of usable housing structures, reduction of arable land, and environmental degradation in China has all contributed to a environmental policies for the near future. In an effort to promote the image of growth and modernization, China has done little to research their environmental impact on the planet and thus is harboring an oncoming crisis within the next few decades. India has however been slow to respond like China to the growth, thus making sure safety procedures are more accurately followed. Even today, Chinese companies do not install filters onto their smoke stacks or care for where they dump their industrial garbage while in India, environmental groups (using their freedom of speech & rights) have begun to advocate for better environmental care. Growth Investment-Chinas economy began its growth spree almost 13 years (1979) before India even emerged on the global economic market. Even when China did emerge, it began to rely on foreign investments too much. Today, China is dependent on foreign investments. The Chinese stock market has already crashed and is still reeling to recover. Almost 70% of the countrys banks have declared bankruptcy and is now riding on foreign investments. Like communist Russia, China is mobilizing its resources trying to issue a mirage of growth by buying US debts, modernizing its army seizing civilian lands for huge building projects but at what price? In the long run, none of this will stimulate the decaying and crumbling Chinese financial/capital market. There are no private run enterprises in China for the fear of individualization and loss of government control of the country. So while China is relying on foreign investments and trade, India has been developing a wave of homegrown, innovative private companies, especially in high tech & information sector. For example, even

when facing severe international sanctions and trade limitations, Indian civilian and military nuclear program has been effectively successfully, springing forth a homegrown nuclear technology capable of processing Thorium unlike all the other nuclear technology that uses uranium.Just like that, Indian companies have grown on their own, and are now emerging on the world markets. TATA Group, Reliance Corp, Mittal Steel and many others have begun to takeover European and American companies expanding their global reach. Indias stock markets have grown exceedingly large; the Bombay stock market has broken numerous domestic and international records. Indian companies are earning more due to the 20% returns on the investment opportunities in India thus the reason for Japans recent 5 billion dollar investment in the industrial corridor of India. Overall, India is growing at a rate that ensures quality while experiencing record breaking growth something China has failed to do .