China-India Chartbook

China & India October 10, 2005

A visual essay

The China-India chartbook is a visual essay to depict

key similarities and differences between these two
emerging economies, which are poised to change the
global economic landscape.
Global Risk Analysis

China’s GDP per capita is now 2.2 times higher than

India’s (in USD PPP terms). Until the early 1990s, GDP
per capita in China and India was at comparable levels,
but China adopted wide-ranging economic reform one
decade earlier than India.

The Chinese economy is much more integrated with the world economy through international
trade and investment, which helps to explain its stronger rate of GDP growth during most of the past 3
decades. For its economic development, China has relied on industry and India on services. China’s
ratios of domestic savings and investment to GDP are roughly double those of India’s.

Both economies currently enjoy strong external positions, with ample foreign exchange reserves.
Higher oil prices are not likely to have a significant adverse impact on external liquidity. China and
India have low external debt as a percentage of GDP, and the ratio of short-term external debt to
foreign reserves is low.

Despite declining fiscal deficits, the level of public sector debt is a cause for concern,
especially in India. In particular, interest payments as a percentage of general government revenue
are very high in India, making the prospect of fiscal consolidation more remote. Excess domestic
liquidity presents a bigger challenge to China than India. M2 in China is heading toward 200% of GDP
+49 69 910-31745

with domestic credit almost 170% of GDP. This explains the rapid rise in CPI inflation during 2004, on
which the Chinese authorities are still keeping a tight rein.

Surveys indicate India has better corporate governance standards and its companies are more
commercially-driven. This explains why, despite China’s superior economic growth and macro-
economic stability, India’s rate of return on assets has been much higher, non-performing loans in the
banking sector lower, and stock market performance much better.
Editors: J. A.-Mund / N. Brandt / S. Hansakul, Frankfurt

Social indicators reflect generally improving living conditions for the average Chinese. China
also enjoys superior physical infrastructure, although India’s availability of skilled workers, especially
engineers, is much better regarded.

China’s early steps to liberalise its economy and invest heavily to modernise its physical
infrastructure gave it a substantial edge over India in terms of income per capita levels. They also
made China a more attractive destination to foreign investors. However, although India started
economic reforms only a decade later than China, it is far more advanced in its institutional
infrastructure and corporate governance. This is reflected in contrasting outcomes: foreign direct
investment is considerably lower than in China, but returns on investment are better on average. The
key to unlock India’s potential to rival China as an FDI destination is a decisive effort by the Indian
authorities to push ahead with reforms.

1
 GDP

China & India: Real GDP growth China & India: Nominal GDP
% change, yoy USD bn
18 1900

15
1600
12 India China
China 1300
9

6 1000

3
India 700
0
400
-3

-6 100
1978 1982 1986 1990 1994 1998 2002 1978 1982 1986 1990 1994 1998 2002
Source: IIF Source: IIF

China & India: GDP per capita (nominal) China & India: GDP per capita (PPP)

USD USD
1500 7000

1300 6000
India China India China
1100 5000

900 4000

700 3000

500 2000

300 1000

100 0
1978 1982 1986 1990 1994 1998 2002 1980 1984 1988 1992 1996 2000 2004
Source: IIF Source: IMF

China: Nominal GDP vs. GDP based on PPP India: Nominal GDP vs. GDP based on PPP
USD bn
8000 USD bn
4000
7000
GDP based on PPP nom GDP GDP based on PPP nom GDP
6000
3000
5000

4000
2000
3000

2000 1000

1000

0 0
1980 1986 1992 1998 2004 1980 1986 1992 1998 2004
Source: IMF, IIF Source: IMF, IIF

2
 GDP and structure of economy
China & India: GDP based on PPP as % of world total in 2004

USA
Others 21%
38% Japan
7%

Euro area
15%

India China
6% 13%
Source: IMF

China: Composition of GDP India: Composition of GDP

2003 2003

1990 22%
1990
53% Industry
42%
Services 22% 56%
Industry
31% 32%
46%
32% Services
27%
Agriculture
22%
Agriculture
15%

Source: DBR Source: DBR

China & India: Gross domestic savings China & India: Gross domestic investment
% of GDP % of GDP
55 50
China India China India
50 45
45 40
40 35
35
30
30
25
25
20
20
15
15
10 10
5 5
0 0
1990 1992 1994 1996 1998 2000 2002 2004 1990 1992 1994 1996 1998 2000 2002 2004
Source: IIF Source: IIF

3
 External sector

China & India: Export of goods & services as % of world total in 2004

USA
10% Japan
6%

Other
46%

Euro area
31%

India China
Source: IMF 1% 6%

China & India: Total merchandise trade China & India: Exports of goods
as % of GDP as % of GDP
80 40

70 35
India China
60 30
India China
50 25

40 20

30 15

20 10

10 5

0 0
1990 2004 1990 2004
Source: Reserve Bank of India, CEIC Source: Reserve Bank of India, CEIC

China & India: Merchandise exports China & India: Merchandise imports

USD bn USD bn
700 600

600 500
China India China India
500
400
400
300
300
200
200

100 100

0 0
1978 1982 1986 1990 1994 1998 2002 1978 1982 1986 1990 1994 1998 2002
Source: IIF Source: IIF

4
 External sector

China: Top 5 export partners in 2004, as % of China: Top 5 export partners in 1994, as % of
total exports total exports

South
Korea Germ any
Japan
5.7% 4.9%
20.6%

Japan
15.2%

2004 USA 1994 USA

25.8% Hong 20.5%
Kong
31.1%
Hong South
Kong Germ any
Korea
20.9% 4.6%
4.2%

Source: CEIC Source: CEIC

India: Top 5 export partners in 2003, as % of India: Top 5 export partners in 1994, as % of
total exports total exports

Hong
China
Kong
United 4.7%
5.8%
Kingdom United
4.8% Kingdom
6.4%
USA USA
Hong 2003 19.1%
Kong 18.1% 1994
5.1% Germ any
6.6%
United
Arab
Em irates Japan
8.0% 7.7%

Source: Reserve Bank of India Source: Reserve Bank of India

China: Key export products India: Key export products

% of total exports % of total exports
25
15
2000 2000
2004
2004 20

10
15

10
5

0 0
Clothing & Electrical Yarn & textiles Non-metallic Clothing Textile, yarn,
garments machinery & mineral manuf. fabric
equipment
Source: EIU Source: EIU

5
 External sector

China: Top 5 import partners in 2004, as % of China: Top 5 import partners in 1994, as % of
total imports total imports

Taiw an Hong
11.5% Taiw an Kong
12.2% 8.2%
USA
8.0% EU USA
12.3% 12.1%

2004 1994

Japan
Japan 22.8%
South EU
16.8%
Korea 14.7%
11.1%

Source: CEIC Source: CEIC

India: Top 5 import partners in 2003, as % of India: Top 5 import partners in 1994, as % of
total imports total imports

United United
Kingdom Kingdom
4.1% 5.4%
USA
USA
6.3% Saudi
10.1%
Sw itzerland Arabia
4.3% 5.5%
2003 1994

China Japan
Belgium Germ any
5.3% 7.1%
5.1% 7.6%

Source: Reserve Bank of India Source: Reserve Bank of India

China: Key import products India: Key import products

% of total imports
% of total imports 50
25
2000 2004
2000 2004
20 40

15 30

10 20

5 10

0 0
Electrical Crude oil & Yarn & textiles Basic Mineral fuels Machines &
machinery products manufactures transport
Source: EIU equipment
Source: EIU

6
 External sector

China: Trade balance India: Trade balance

2 5
15 60
USD bn (right) % of GDP (left)
USD bn (right)
50 1 0
% of GDP (left)
10 40 0 -5
30
-1 -10
5 20
-2 -15
10

0 0 -3 -20

-10 -4 -25

-5 -20
-5 -30
1980 1984 1988 1992 1996 2000 2004
1980 1984 1988 1992 1996 2000 2004
Source: IIF Source: IIF

China: Current account balance India: Current account balance

10 80 4 12
USD bn (right) % of GDP (left) USD bn (right) % of GDP (left)
70 10
8 3
60 8
6 2 6
50
4 1 4
40
2
2 30 0
0
0 20 -1 -2
10 -4
-2 -2
0 -6
-4 -3
-10 -8
-6 -20 -4 -10
1980 1984 1988 1992 1996 2000 2004 1980 1984 1988 1992 1996 2000 2004
Source: IIF Source: IIF

China & India: FX reserves

USD bn
800
China India
700
600
500

400
300

200
100
0
Jan-05

Feb-05

Mar-05

May-05

Jun-05
1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Apr-05

Source: CEIC

7
 External sector

China: Oil imports India: Oil imports

40 12 35 40
USD bn (left) USD bn (left)
35 % of total imports (right) 30 35
10 % of total imports (right)
30 30
25
8
25 25
20
20 6 20
15
15 15
4
10
10 10
2 5
5 5

0 0 0 0
1994 1997 2000 2003 1994 1997 2000 2003
Source: CEIC Source: Reserve Bank of India

China: External debt India: External debt

30 250 40 140
USD bn (right) USD bn (right)
% of GDP (left) 35 % of GDP (left)
25 120
200
30
100
20
150 25
80
15 20
100 60
15
10
40
10
50
5
5 20

0 0 0 0
1980 1984 1988 1992 1996 2000 2004 1980 1984 1988 1992 1996 2000 2004
Source: IIF Source: IIF

China: Short-term debt India: Short-term debt

250 80 400 18
USD bn (right)
USD bn (right)
as % of reserves (left) 70 16
200 as % of reserves (left)
60 300 14

50 12
150
10
40 200
8
100 30
6
20 100
50 4
10 2
0 0 0 0
1990 1992 1994 1996 1998 2000 2002 1990 1992 1994 1996 1998 2000 2002 2004
Source: IIF Source: IIF

8
 FDI inflows

China: Net FDI inflows India: Net FDI inflows

240 60 150 7
USD bn (right) USD bn (right)
210 % yoy (left) % yoy (left)
50 120 6
180
90 5
150 40
120 60 4
30
90 30 3
60 20
0 2
30
10
0 -30 1

-30 0 -60 0
1990 1992 1994 1996 1998 2000 2002 2004 1990 1992 1994 1996 1998 2000 2002
Source: DBR Source: Reserve Bank of India

China: Top 5 sources of FDI in 2003, China: Top 5 sources of FDI in 1994,
in % of total utilised FDI in % of total utilised FDI

Japan
14.2%
Hong
Kong
South
67.5%
Korea Taiw an
Hong
Kong 2003 12.7% 1994 11.5%
50.2%
EU-15 USA
11.1% 8.5%

USA EU-15
11.8% Japan 5.3%
7.1%
Source: CEIC Source: CEIC

India: Top 5 sources of FDI in 2004, India: Top 5 sources of FDI in 1994,
in % of actual flows in % of actual flows

United
USA Kingdom
Mauritius 16.6% 20.6%
58.9% USA
2004 55.4%
Singa-
1994
pore Germ any
United 9.6% 9.0%
Arab
Em irates Mauritius
United 8.5%
9.5% Japan
Kingdom
5.4% 6.4%
Source: CEIC Source: CEIC
9
 Fiscal accounts

China: Fiscal balance & total public sector India: Fiscal balance & total public sector
debt debt
% of GDP % of GDP
30 -5 % of GDP % of GDP
90 -12
25 80
-4 -10
70
20
-3 60 -8

15 50
-6
-2 40
10 30 -4
-1 20
5 -2
10
0 0 0 0
1998 2000 2002 2004 1998 2000 2002 2004
Total public sector debt (left) Total public sector debt (left)
Central gov't fiscal balance (right) General gov't fiscal balance (right)
Source: DBR Source: DBR, Reserve Bank of India

China: Central government revenues & India: Central government revenues &
expenditures expenditures
% of GDP % of GDP % of GDP
25 25 % of GDP
16 16

20 20
12 12
15 15
8 8
10 10

4 4
5 5

0 0 0 0
1990 1992 1994 1996 1998 2000 2002 2004 1990 1992 1994 1996 1998 2000 2002 2004
Central gov't expenditures (left) Central gov't expenditures (left)
Central gov't revenues (right) Central gov't revenues (right)
Source: DBR Source: DBR, Reserve Bank of India

China & India: Interest payments as % of general government revenues

7 40

30
5

4
20
3
China (left) India (right)
2
10
1

0 0
1997 1998 1999 2000 2001 2002 2003 2004
Source: Moody's

10
 Monetary sector and prices

China: Monetary sector (M2) India: Monetary sector (M3)

30000 200 25000 80

RMB bn (left) INR bn (left)
% of GDP (right) 180
25000 % of GDP (right)
160 20000 70

20000 140
15000 60
120
15000
100
10000 50
10000 80
60
5000 5000 40
40

0 20 0 30
1980 1984 1988 1992 1996 2000 2004 1980 1984 1988 1992 1996 2000 2004
Source: DBR Source: Reserve Bank of India, DBR

China: Domestic credit India: Domestic credit

3 180 0.5 65
RMB tr (left) INR tr (left)
% of GDP (right) % of GDP (right)
0.4 60
150
2
0.3 55
120
0.2 50
1
90
0.1 45

0 60 0 40
1990 1992 1994 1996 1998 2000 2002 2004 1990 1992 1994 1996 1998 2000 2002 2004
Source: IFS Source: IFS

China & India: Annual inflation China & India: Recent inflation trend
% yoy % yoy
25 10
India: WPI, aop China CPI India WPI
China: CPI, aop
20
8

15
6
10
4
5

2
0

-5 0
1990 1992 1994 1996 1998 2000 2002 2004 2004 2005
Source: DBR Source: Bloomberg

11
 Exchange rates & interest rates

China: Exchange rate (nominal & REER*) India: Exchange rate (nominal & REER*)
Index, 2000=100
Index, 2000=100 inverted scale inverted scale
300 0
350 0

300 RMB/USD, aop (right) 250

2 10
REER (left)
250 200
4 20
200
150
150 6 30
100
100
8 40
50 50 RMB/USD, aop (right)
REER (left)
0 10 0 50
1980 1983 1986 1989 1992 1995 1998 2001 2004 1980 1983 1986 1989 1992 1995 1998 2001 2004
* a low er value indicates depreciation * a low er value indicates depreciation
Source: IIF Source: IIF

China: Base lending rate* India: RBI Bank Rate

% %
6.0 8.5

8.0

7.5

5.5 7.0

6.5

6.0
* 12 month w orking capital
5.0 5.5
2000 2001 2002 2003 2004 2005 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05
Source: CMABB Source: Reserve Bank of India

China: 7-year generic government bond yield India: 10-year government bond yield

% %
6 8

5
7

6
3

2 5
Feb 03 Jun 03 Dec 03 Apr 04 Sep 04 Jun 05 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05
Source: Bloomberg
Source: Bloomberg
12
 Banking sector & financial markets

China & India: Bank return on assets China & India: NPL ratios
% of total loans
35
China India
2002
30
India
China 25

20
2001

15

10
2000
5

0
0 0.5 1 2000 2001 2002 2003 2004
Source: IMF Source: IMF

China: Stock market India: Stock market

2600 300
8000
BSE National Index, eop
250 Mumbai SENSEX 30 Index, eop 7000
2100
6000
200
1600
5000
150
1100 4000
100
3000
600
50 2000
Shanghai B-Share Index, eop (right)
Shanghai A-Share Index, eop (left) 1000
100 0
2000 2001 2002 2003 2004 2005 2000 2001 2002 2003 2004 2005
Source: Bloomberg
Source: Bloomberg

China & India: Bond issuance China & India: Price earnings ratios*
USD bn
5 35
China India
30
4 China India
25

20
3
15

2 10

5
1
0
2000 2001 2002 2003 2004
0 *China: Shenzhen A-Share Index; India: Mumbai SENSEX
2000 2001 2002 2003 2004 30 Index
Source: IMF Source: IMF

13
 Population & labour force

Population: CN, IN, DE, US China & India: Urban population

millions of people
1400
CN IN DE US 28
India
1200
2003
1000 China 39

800

600
26
400 1990

200 27

0 as % of total
1960 1970 1980 1990 2005 E 0 10 20 30 40 50
Source: UN, DBR Source: World Development Indicators, 2005

Workforce, ages 15 - 64: CN, IN, DE, US China & India: Labour force participation*

millions of people
1000
CN IN DE US India 71

800 2003
China 87

600

72
400
1990
89
200
%
0 20 40 60 80 100
0
1960 1970 1980 1990 2005 E as % of total population, ages 15-64
Source: UN, DBR Source: DBR, World Development Indicators,

China & India: Female labour force China & India: Skilled labour & engineers
participation

India 8.94
Qualified
India 45
engineering
2003 China 4.129

China 79

7.8
Skilled labor
4.8
42
1990
0 2 4 6 8 10
80
*) Data are based on response from Institute for
as % of total Management & Development's annual Executive Opinion
0 20 40 60 80 Survey. High score equals high availability of skilled labour
Source: World Development Indicators, 2005 and qualified engineers.
14
 Social indicators

China & India: Average life expectancy China & India: Infant mortality*

India 63 India 63
2003
2003
China 30
China 71

84
59 1990
1990 38
69

years 0 20 40 60 80 100
0 20 40 60 80 * per 1000 live births
Source: World Development Indicators, 2005 Source: World Development Indicators, 2005

China & India: Health expenditure in 2001 China & India: Gini coefficient

Health 5
expenditure,
% of GDP
5.5 India 33

2003

Health India China 44.7

24
expenditure
per capita in
USD China 49.0

0 10 20 30 40 50 60 0 10 20 30 40 50
Source: World Development Indicators, 2004 Source: World Development Indicators, 2005

China & India: Adult literacy* China & India: Tertiary enrolment rate

India 68 India 11
2003 2003
China 95 China 13

62 6
1990 1990
87 3

0 20 40 60 80 100 0 5 10 15
* % ages 15 or older
Source: World Development Indicators, 2005 Source: World Development Indicators, 2005

15
 Infrastructure

China & India: Fixed-line vs. mobile phones China & India: Internet users per 1000 people
per 1000 people in 2003 in 2003

25
Mobile
phones
215 India 17

India 46 China 63
Telephone
mainlines
China 209

0 40 80 120 160 200 240 0 20 40 60 80

Source: World Development Indicators, 2005 Source: World Development Indicators, 2005

China & India: PCs per 1000 people in 2003 China & India: Aircraft departures in 2003

India 7 India 264

China 28 China 946

in thousands

0 200 400 600 800 1000

0 5 10 15 20 25 30
Source: World Development Indicators, 2005 Source: World Development Indicators, 2005

China & India: Roads network in 2001 China & India: Electric power in 2001

India 46 Transmission 27
Paved roads, & distribution
% losses, % of
China 91 output 7

3 Consumption India 365

Total road
netw ork, per capita,
millions of km kw h China 893
2

0 20 40 60 80 100 0 200 400 600 800 1000

Source: World Development Indicators, 2004 Source: World Development Indicators, 2004

16
 Business environment & investment climate

China & India: Governance indicators* China & India: Obstacles in doing business
indicators

Control of India
India
corruption China Employment
law index*
China

Rule of law

Procedures
Regulatory to enforce a
effectiveness contract

Government
effectiveness Days to start
a business

Political
stability

Number of
Voice and start-up
accountability procedures

0 1 2 3 4 0 20 40 60 80 100
*) The six governance indicators are measured in units ranging from
about -2.5 to 2.5, with higher values corresponding to better
governance outcomes. Data have been rescaled to 0-5.
*) Higher score = more rigid labour laws
Source: World Bank Governance Index Source: World Development Indicators, 2004
2002

17