Contents

Introduction 1.1. General characteristics of the reference countries 1. 1. China 1.2. India 2. Macroeconomic comparison of China and India 3. External development of China and India Conclusion References

Introduction The main objective of this paper is a comparative analysis of economies of China and India. Why chose these two countries? Comparing India with China regularly and of course: 2 countries with the largest population in the world, top one billion, neighbors and non-competitors who claim to be leaders in Asia and around the world, having the highest GDP growth rates among the G20 countries and many other similarities. Annual economic growth of China in the last 26 years is approximately 8-9%, India has the same growth rate in the last decade. Therefore, China and India seem to be interesting countries to compare their economies. 1. General characteristics of the reference countries 1. 1. China Republic of China - a socialist state, established in October 1, 1949. Its area is 9.6 million km2 (3rd place in the world), the population - 1.3 billion people (1 in the world). China is a permanent member of UN Security Council. (Vani K, 2005) China shares borders with more than ten countries: In the North - with Mongolia and Russia and the West - with Kazakhstan and Afghanistan in the south-west of India, Nepal, Bhutan, Burma, Thailand, Laos, Vietnam, and Korea in the East, has a marine border with the Philippines and Japan. China has enormous economic potential. Growth of industrial and agricultural products are very high. In terms of GDP the country ranks second after the United States, and at the end of XX century, China stood on the seventh place.

China Industry is diversified. With its industrial enterprises and the number of workers, the country ranks first in the world. For the sectoral structure of industry are several disparities: between mining and raw materials, raw materials and processing industries. The highest rates of developing light industry of China, especially is its most important industry - textiles. Developed as garments, knitwear, leather, footwear industry. In second place is the food industry, which brings together flour, cereal, butter-fat, fish, meat, fruits, salt, tobacco, tea, wine and others. Centers newest industries tend to coastal areas, which are better equipped with human resources, have a favorable economic and geographical position, more sophisticated production and social infrastructure. Fuel and energy sector development are based on local raw materials. Annual coal production is over 1 billion tons (potential reserves - 3.2 trillion. T, explored - 0.9 trillion. T). Coal deposits are in almost all provinces and autonomous regions of China, but the volume of reserves and production of secreted North China. (CIA World Factbook, 2011) Oil industry is a relatively young industry. China ranks 5th in the world for oil extraction, 4th place in the production of electricity. Metallurgy is based on iron ore (third-second places in the world). The largest reserves are found in Anshanskomu pool. Of all stages of metallurgical cycle, the largest companies are located in areas of mining ore and coal. The country came out on top in the world production of iron ore, pig iron and steel production. Much attention is paid to the development of chemical industry, which is regarded as an important means of intensification of agriculture. In recent years, intensive development of production of resins and plastics. Recently China developed its building materials industries. In cement production (0.2 billion tons per year) China ranks first in the world.

Agriculture. The leading branch of agriculture in China is crop production. It produces 60% of gross agricultural output. For a variety of agricultural products of China ranks first in the world. Occupy first place for the harvest of wheat, rice, tobacco, peanuts, 2nd place - Cotton 3rd - citrus. The largest number of pigs and sheep in the world, and for cattle takes second place. All farmland in China is 52% of the country, including arable land - 10%, pastures - 41.7%. More than a third of arable land needs irrigation. (CIA World Factbook, 2011) Rice is the main food crops. China growing conditions are different for irrigation (South China) and irrigated (North China) of China. In southern China collect two harvests a year. Wheat is the second most important crop. As China grows as a winter and spring wheat. Winter wheat growing areas are located in the basin of the Yellow River.

Among other crops important are maize, millet, haolyan, barley. Grain in China is 3 / 4 diet. Grow oilseeds such as peanuts and sesame. China has grown green and black tea. China is world's first production of silk. Also cultivated sugar cane, sugar beet, jute, tobacco, fruits. In China, traditionally there were two types of livestock. The first is associated with agriculture and has an auxiliary character: in the agricultural plains mainly bred pigs, traction cattle, poultry in the western districts extensive nomadic or seminomadic cattle. About 90% of meat production accounts for pig production. China ranks third in the world for fishing and fish production. Important place in agriculture of China occupy utility industries (weaving mats, baskets, collecting medicinal plants), which are, as a rule, free from field work time. Foreign economic relations. China maintains trade and economic relations with more than 180 countries. Its main partners are Japan, U.S. and Western European countries, which account for 55% of foreign trade turnover. In foreign markets exported 20% of gross output of industry and agriculture of the country. About 40% of China's imports accounted for machines,

equipment and vehicles. The important role played by special economic zones, which account for a quarter of foreign investments into the country.

1.2 India
India is located in the south of the Eurasian continent, the peninsula Hindustan. In the northwest borders with Pakistan and Afghanistan (part of the Indian state of Jammu and Kashmir, which borders Afghanistan, is under the control of Pakistan) in the north - with China, Nepal and Bhutan in the east - from Myanmar and Bangladesh. In the south a narrow strait and Polkska Manarska gulf separates it from Sri Lanka. Great Chennel Strait between the islands of Sumatra and Great Nikobar passes maritime border between India and Indonesia. Area - 3,287.3 ths. km. The length from north to south - more than 3000 km from east to west - about 2000 km. (CIA World Factbook, 2011) The population - 1.21 billion people (2011) Capital - New Delhi (over 13 million inhabitants). During the years of independent development, India has developed from a backward agrarian country that barely provided the domestic needs for food, to the modern industrial agricultural, with developed industry, commerce and commodity-money relations.

Mining industry is vital for the state in this area employed approximately 1.05 million. Main products - coal from Bihar, Madhya Pradesh and West Bengal, oil from ACCA and Gujarat (where developed as shelf deposits), iron ore of Bihar, Orissa and western Maharashtra and limestone. India has significant reserves of minerals. Available for operation of coal reserves estimated at 51 billion tons, however, since the deposits are in Bihar and West Bengal in the west, solid funds are for transportation of coal in other parts of the country. (NMCC, 2005) Chemical Industry. In the chemical industry is allocated production of mineral fertilizers and importance is growing of petrochemicals. It produces resins, plastics, chemical fiber, synthetic rubber and has diversified globally in pharmaceuticals. Indian pharmaceuticals

companies have established their base in many CIS and middle east countries. industry is represented in many cities.

Chemical

Light industry is traditional sector of the economy of India. Especially highlighted cotton and jute industry. The largest centers of cotton industry are situated in Bombay and Ahmadabad, Jute specialization from Calcutta. Textile factories are in all major cities. In India's export of textile products and apparel industry is 25%. Food industry produces goods for domestic consumption and for export. The most popular in the world enjoys Indian tea. Its production is concentrated in Calcutta and in the south and in eastern parts of India. Electronics and information technology sectors of Indian economy, which has developed most rapidly in last two decades and IT technology has helped India to improve its performance in all industrial sectors. Agriculture employs about 64% of the population is 25% of gross national income i about 18% of total exports. (NMCC, 2005) The leading branch of agriculture in India - crop (4 / 5 the cost of all products). Most of the acreage occupied by food crops: rice, wheat, corn and others. The main industrial crops of India is cotton, jute, tea, sugar cane, tobacco, oilseeds (canola, peanut, etc.). Also cultivated rubber plant, coconut palm, bananas, pineapples, mangoes, citrus, spices and seasonings. Livestock is the second largest sector of agriculture in India, heavily yielding crop production. Cattle used in farms, mainly as draft power. Manufactured in milk and animal skin. Forestry. Forests are mainly situated in mountainous and hilly areas that cover an area of about 650 thousand square meters. km, or 19% of the country. 3 / 4 forest areas available for use and are a source of income. Half of all forests are concentrated in the central states and one third to one fifth of the north and the south of India. (Srinivasan, 2006) Forests provide domestic needs in pitch and rosin, bamboo and cane, cattle feed, wood and wood construction. Some tree species gathered at the rate of foreign demand. Exported as

plywood. Fishing brings the country a modest profit, but provides employment for more than 1 million people. Shipping plays an important role in India, which has a large coastal strip of about 7516 km. In early 2000, there were 102 marine companies, including navigability Indian union. This union is the largest carrier in India i have merchant fleet of 112 ships. Main ports: Bombay, Calcutta, Madras. (China and India, 2011) Foreign trade. The basis of Indian exports is 15 commodity groups. In particular, agricultural and industrial raw materials, food and textile products, Pharmaceutical products, jewels, rice, tea, wool, yarn, metal products, machinery and equipment, production software. Leading imports - oil, petroleum products, machinery and equipment, vehicles, ferrous and nonferrous metals, electronic components and fertilizers. The main trading partners are U.S., EU, Japan and Russia, Iraq, Iran and Central and Eastern Europe. (China and India, 2011)

2. Macroeconomic comparison of China and India Dynamics and structure of GDP. The result of high economic dynamics of China's recent decades is that a country with a total volume of production, became the second country in the world (after the U.S., ahead of Japan in 2010, the economy of a long time were not attainable for all other countries). India still can not argue with many developed countries in the ranking in terms of the economy (Human Development Report, 2011). At present, China's GDP in dollar terms over four times India's GDP ( see Table 1). However, since the price level in India is still relatively low (low purchasing power of the general population and poverty for the country remains in place), then taking into account purchasing power parity (PPP) differences in the total GDP and GDP per capita vary significantly less ( see Table 1) (Human Development Report, 2011).

Resistance economic growth contributes to the preferential solution of inflationary problems (IMF, 2011). China managed to better cope with inflation - the average annual inflation in the last decade has dropped to 3% (from 6% in the previous decade). India is not yet possible to achieve sustainable low inflation (see Table 2) (IMF, 2011). .

Table 1 Compare GDP of China and India

($ Trillion., At the current rate * 2010.)

GDP PPP $ trillion.

Table 2

Inflation

Obviously, differences in income is largely due to the fact that upward of a typical higher

salaries in industry - in China in this sector forms almost 50% of GDP (see Table 3) (World Bank, 2011). In India, it markedly expands current scope of services - its share steadily over the 50% level (see Table 4) , which promises to be the foundation for sustainable prosperity in the future, but still forms a lower income (compared with industrial-oriented China)(China and India, 2011) Table 3

GDP (PPP) per capita $ PPP

GDP by sector 2010 % of total

Table 4

Macroeconomic structure formation of GDP % of GDP GDP 1995 728 356 $ bn 2008 4327 1159 Agricultural 1995 20 26 sector 2008 11 17 1995 47 28 Industry 2008 49 29 1995 33 46 Services 2008 40 54

China India

Dynamics in certain sectors confirms the orientation of the policy development in the countries: support industry in China and the dominance of the service sector in India. Drivers of economic success of India was elected, except the service sector, knowledge-intensive industries

such as information technology or pharmaceutical, with the dominant role was played by a steady and reliable functioning private sector. Note that in recent years, China is also trying to expand the scope of services (a percentage of GDP continuously increases) (see Table 5) (World Bank, 2011). Table 5

Economic dynamics by sector, average annual growth,% GDP $ bn 1990 2000 10,6 5,9 2000 2008 10,4 7,9 Agricultural sector 1990 2000 2000 2008 4,1 9,4 3,2 3,2 Industry 1990 2000 13,7 6,1 2000 2008 11,7 8,4 Services 1990 2000 11,00 7,7 2000 2008 10,7 9,5

China India

Of course, the nature of economic growth in many respects determined by the structure and volume of natural resources and their efficient use. Arguably, one could argue that while there is considerable potential in both countries. Thus, the agricultural sector is still growing relatively slower rate in both countries and without reform and intensification is unlikely to satisfy domestic demand, particularly given the significant improvement in purchasing power and welfare in general due to high economic dynamics (in China today, in India - in perspective .) It should be pointed out that the expansion of industry and services in both countries is, in fact is due to the agricultural sector (including as a result of the rapid outflow of labor from rural states in large cities), and therefore in some way enhanced food security risks. Expansion is the service sector in both countries in some way reflects the natural process of the globalization era. 3. External development of China and India Different models of economic development of China and India do not find their best

reflection characteristic in balance of payments. Export-oriented expansion of China has formed a significant positive balance of payments (see Table 6) (IMF, 2011). Orientation is India's internal resources and relatively low volumes of exports of goods (which are not keeping pace with increasing domestic demand) induced the formation of the country's trade deficit, which, however is not threatening the macroeconomic stability of the country. (World Trade Organization, 2011) Table 6

The current account balance % of GDP China India 2003 2,8 1,5 2005 7,1 -1,3 2007 10,6 -0,7 2008 9,6 -2,0 2009 6,0 -2,8 2010 5,2 -3,2 2011 5,7 -3,7 2012 6,3 -3,8

Along with this, while exports of goods as significant as China, the amounts, and their place in the structure of GDP, India's service sector is much broader niche in the structure formation of GDP than is observed in the structure of China's GDP (see Table 7 ) (IMF, 2011). Table 7

International trade in GDP % of GDP Goods Services

Conclusion India and China - are very similar to each other, ranging from the history of creation, ending with international ties. These countries have similarities in location and method of placement of common neighbors and relations with each other. Also, many countries have the resources, mineral resources, industry, environmental problems, which are also very similar or identical. Of course, India and China are connected by highways. In my opinion, the country has a very advantageous position, because having access to the seas and oceans, they expand their opportunities in industry, so those external relations, and this in turn gives a large profit. For example, countries can build international ports, use sea and ocean resources. In addition they have nearby islands, which also provides certain advantages. You can use the islands and agriculture and industry. And yet, whose economy is stronger than China or India, who will become a powerful country in Asia? Today, of course in all respects is leading China, but if you look and compare the main differences between India and China, we can say with confidence that India can become a financially powerful nation. And what are these differences in the way of the financial power? India has to copy the model of China's exports of labor-intensive start with the goods It found a suitable niche for himself - took up the export of services: 1. Computer Programming, 2. Outsourcing 3. banking services. A recent example of outsourcing - the transfer of Boeing, and Reuters in India of its centers of information support and accounting. India over the years evolved into the first

exporter of information services, today they make up half of the country's exports. China is engaged in the development of industrial production. development of high-tech industries in India: pharmaceutical, biotechnology, automotive, and in this field, India has made impressive progress. rate for skilled labor In India, a bet not just for cheap labor, as in China, and the skilled labor force. Many world famous companies (General Electric, Intel, Texas Instruments) have opened their laboratories in India, because skilled labor is here many times cheaper than the U.S.. In fact, if the average annual salary in America, a programmer in 2007 was $ 90 thousand, in India - $ 30 thousand less dependent on foreign investment Indian model is less than China in FDI, China depends on massive inflows of foreign investment. Direct investment gives India the Chinese figure at times. Here the growth is primarily due to clever use of internal resources, active development of its own private business, especially small and medium. focus on the huge domestic market The orientation of India's huge domestic market, whose volume can be compared with the market ... the whole EU. Experts McKinsey Global Institute predicts that in the next 20 years just domestic consumption will be the engines of economic development in India, and in 2025 it would turn into the 5th world market. Because of India's population is regarded not as cheap labor, but as a vast army of consumers.( Indian Economy, 2011) democratic political system India called the largest democracy in the world. Due to the fact that elections are held in the country for three whole weeks, and even in five stages, they are even listed in the Guinness

Book of Records. UK The Economist at the time called democratic system of India, an important advantage to authoritarian China. Among these advantages, the experts are usually called as follows:

- Building a business from the bottom up, not top, as is done in China; - Distraction centers of power, and therefore, the best competition; - Responsive to emerging opposition parties, etc. In general, the political system in India has the flexibility which is lacking in China. You can also select multiple advantages of India over China: 1. China is already close to the peak of ultrahigh growth rates, production-based "standard" products: already risen considerably workforce investments will continue to grow at several times, the interest, China's share in world markets is very large, etc. 2. Reforms in India began a decade later than China, which means that it has a decent head start. 3. China has invested annually in its economy up to 50% of GDP, India - no more than 25-35%. 4. India has a more transparent and efficient financial market and legal system. 5. The Indian economy is affected by the crisis less than China, it has a high position in the service sector, which according to experts, is the future of the global economy.

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