“A COMPARATIVE STUDY ON ECONOMIC PARAMETERS

BETWEEN CHINA AND INDIA”.

A report submitted by:
Sithara G
(1SY17MBA52)
Under the guidance of:
Mr.Vivek G S
Assistant Professor
Siddaganga Institute of Technology

Submitted to:

SIDDAGANGA INSTITUTE OF TECHNOLOGY

(An Autonomous institute afflicted to VTU, Belagavi and
accredited by National Board of Accredition, New Delhi)
POST GRADUATE DEPARTMENT OF MANAGEMENT
STUDIES & RESEARCH CENTRE TUMKUR-572103

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 Comparison of economic parameters between India and China

India & China are two large Asian countries experiencing rapid growth during recent
decades. The purpose of the study is to compare the economies of two large Asian
countries India and china. Major factors of comparison in this study are Gross
Domestic Product (GDP), Trade Patterns, Poverty Reduction, Human Development,
and Employment Growth.

Reforms in China are older than they are in India. Therefore, a comparison of
economic parameters shows that during 1980-2015 the compound annual growth rates
of exports, imports and GDP per capita have been better in China as compared to
India.

China and India is the two emerging economy of the world. China and India is 2nd
and 9th largest country of the world, respectively in nominal basis. On PPP basis,
China is at 1st and India is at 3rd place in 2014. Both country together shares 16.08%
and 23.16% of total global wealth in nominal and Purchasing Power Parity terms,
respectively.

Indian rupee was at 4.23 INR per Chinese Yuan (CNY) on 2 Jan 1996. Value of
Indian rupees has fallen to 10.28 INR per 1 CNY in 1 Jan 2019.

Indian Economy v/s Chinese Economy:

Economy of India:

The economy of India is the 10th largest in the world by Nominal GDP. The 3rd
largest by Purchasing Power Parity (PPP). The country is one of the G-20 major
economies and a member of BRICS. On the per capita income basis India is ranked
141st by nominal GDP and 130th by GDP (PPP) in 2015. Economic liberalization,
including industrial deregulation, privatization of state-owned enterprises, and reduced
controls on foreign trade and investment, began in the early 1990s (New Economic
Policy) and has served to accelerate the country's growth, which has averaged more
than 7% per year since 1997. India's diverse economy encompasses traditional village
farming, modern agriculture, handicrafts, a wide range of modern industries, and a
multitude of services. Slightly more than half of the work force is in agriculture, but
services are the major source of economic growth, accounting for nearly two-thirds of
India's output, with less than one-third of its labour force.

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 India has capitalized on its large educated English-speaking population to become a
major exporter of information technology services and software workers. The outlook
India's medium-term growth is positive due to a young population and corresponding
low dependency ratio, healthy savings and investment rates, and increasing integration
into the global economy. India has many long-term challenges that it has not yet fully
addressed, including poverty, inadequate physical and social infrastructure, limited
non-agricultural employment opportunities, inadequate availability of quality basic
and higher education, and accommodating rural-to-urban migration.

Economy of China:

The Economy of China is the 2nd largest in the world by Nominal GDP. The 2nd
largest by Purchasing Power Parity (PPP). The country is one of the G-20 major
economies and a member of BRICS. On the per capita income basis China is ranked
87th by nominal GDP and 92nd by GDP (PPP) in 2015. The Economy of China is the
world's fastest-growing major economy, with growth rates averaging 10% over the
past 30 years. China is the largest exporter and second largest importer of goods in the
world. China is the largest manufacturing economy in the world. The
internationalization of the Chinese economy continues to affect the standardized
economic forecast officially launched in China by the Purchasing Managers Index in
2005. At the start of 2010s, China remained as the sole Asian nation to have an
economy above the $10-trillion mark (along with the United States and the European
Union). Most of China's economic growth is created from Special Economic Zones of
the People's Republic of China that spread successful economic experiences to other
areas.

GDP (Gross Domestic Product):

GDP of CHINA:

The gross domestic product in china expanded 2.20% in the third quarter of 2013 over
the previous quarter. GDP Growth Rate in China is reported by the National Bureau of
Statistics of China. From 2011 until 2013, China GDP Growth Rate averaged 2.0%
reaching an all-time high of 2.5% in June of 2011 and record low of 1.5% in March of
2015.In China the Growth Rate in GDP measures the change in the seasonally
adjusted value of the goods and services produced by the Chinese economy during the
quarter. China’s economy is the 2nd largest in the world after that of United States.

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GDP of INDIA:

The Gross Domestic Product in India expanded 4.40% in the second quarter of 2013
over the same quarter of the previous year. GDP Annual Growth Rate in India is
reported by the Ministry of Statistics and Program Implementation. From1951 until
2013, India GDP Growth Rate averaged 5.8% reaching an all-time high of
10.2%December of 1988 and a record low of -5.2% in December of 1979. In India the
Growth Rate in GDP measures the change in the value of goods and services produced
in India without counting government’s involvement. It excludes the indirect expenses
and includes the original value of the product.

Comparison of GDP:

GDP CHINA INDIA

GDP (Purchasing Power $12.38 trillion (2015 est.)
Parity) $11.48 trillion (2013 est.)
$10.51 trillion (2011 est.)
GDP (Real Growth Rate) 9.52 %( 2018 est.)
7.8% (2012 est.)
9.2% (2011 est.)
10.4% (2010 est.)
Note: Data are in 2015 and in US dollars.
$4.735 trillion (2015 est.)
$4.492 trillion (2013 est.)
$4.205 trillion (2011 est.)
6.21% (2018 est.)
5.4% (2012 est.)
6.8% (2011 est.)
10.1% (2010 est.)

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TRADE PATTERNS:
India and China are two most populist countries in the world. India and China together
contain about 37.5% of world’s population. So India and China are huge markets as
these two countries play a massive role in world economy as they have a significant
impact on world economy, but they differ largely in their trading patterns. China’s
economy has grown by increasing investment in the manufacturing industry and
increasing foreign trade, whereas service sector is responsible for the growth of Indian
economy.

POVERTY REDUCTION:
CHINA:

China has maintained a high growth rate for more than 30 years since the beginning of
economic reform in 1978, and thus sustained growth has generated a huge increase in
average living standards. In China there is large population, low per capita income,
and resource scarcity on a per capita basis. But in the 15 years from 1990-2005, China
averaged per capita growth of 8.7%. The whole reform program is often referred to in
brief as the open door policy. This highlights that a key component of Chinese reform
has been trade liberalization and opening up to foreign direct investment.

INDIA:

In 2010 the World Bank reported that 32.7% of the total Indian people fall below the
International Poverty Line. According to 2013 UN Report stated that a third of the
world’s poorest people live in India. However only in India, where the poverty rate is
projected to fall from 51% in 1990 to about 22% in 2015.

In order to go ahead of China, India should firstly focus on the biggest problem i.e.
POVERTY and should reduce it. The only way it can be done is by Educating the
Uneducated and spreading awareness with the educated as it has been a major issue
prior to the independence.

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HUMAN DEVELOPMENT:
HDI is a composite statistic of life expectancy, education, and income indices used to
rank countries in four tiers of human development. Since 2011, the UNDP report has
included an inequality adjusted HDI, also known as IHDI, which attempts to include
the effects of inequality on human development.

CHINA:

United Nations Development Program (UNDP) placed China 101st in a ranking of

187 countries and regions based on the quality of life enjoyed by their populations it
sees China remain above the average level of regions and the BRICS nations -- Brazil,
Russia, India, China and South Africa, according to the 2013 Human Development
Report.

INDIA:

Over the past three decades, India has made good progress on the human development
index (HDI), says the Human Development Report 2013, released by the United
Nations Development Programme (UNDP). India is placed in the “medium
development” category.

EMPLOYMENT GROWTH:
China:

As China spends less on stimulus and tolerates even less over-spending at the
municipal level, the era of full-employment in the country may be coming to an end.
Between 1998 and 2003, employment is estimated to have grown by 17% after having
been almost stable in the previous five years. This growth in employment was
associated with a marked increase in employment outside of the agricultural sector –
more than 70% of the increase in employment came in the secondary and tertiary
sectors of the economy.

Most notable was the almost 50% increase in employment in the secondary sector of
the economy that appears to have been mainly concentrated in small manufacturing
plants in rural areas. Service sector employment, though still larger than the industrial
sector, increased much less rapidly.

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The pace of change in the structure of employment has been slower than in China
despite the strong restrictions on movement of workers and the absence of landless
labourers in the Chinese countryside. Indeed, the speed of the decline in the share of
agriculture in India was only half that observed in China in the period 1978 to 2003.
Out of this working-age population, 767 million were employed, according to
Statistics released by the Ministry of Health and Human Resources, an increase of
2.84 million compared with 2011. There were 371 million people employed in urban
areas, an increase of 11.9 million over the previous year, accounting for 48.4% of the
overall working population. From 2008-2012, the number increased while
employment in rural areas dropped by 6% over those 5 years.

India:

A decomposition of the proximate factors behind economic growth requires

knowledge of the movement of factor inputs. The measurement of such inputs and,
indeed, outputs is problematic in many developing countries where much economic
activity takes place in the informal sector of the economy. People are often employed
on a casual basis or are self-employed.

Even a typical four-way split of employment (urban – rural, male – female) coupled
with a three-way split of industries (primary, secondary and tertiary) results in
adequate sample sizes. Despite the adequacy of the sample size for measuring
employment, the National Sample Survey Organization (NSSO) has never published
level data for employment. Rather it publishes long series of “worker participation
rates”. These ratios measure the proportion of workers in the total population. They
are presented for the typical four-way split described above. The output from these
calculations is a set of twelve time-series showing employment by three principal
industries (agriculture, secondary and tertiary sectors), two locational variables (rural
and urban) and two gender variables.